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Military Financial Preparation: An Introduction

military financial preparation

Utilize Military and Civilian Benefits in Your Financial Preparations

When first joining the military understanding your military pay factors, military benefits that can save you money, and tricks to reduce spending is crucial for financial planning. Understanding your finances from the start and developing a healthy cost-saving mindset can help you throughout your military career.

Understanding Your Military Pay Factors

The Difference Between Home of Record and State of Legal Residence

  • Home of Record (HOR) – The State in which you first enlisted or commissioned. HOR is used for travel allowances when leaving the military.
  • State of Legal Residence (SLR) – The State you consider home and where you intend to live after leaving the military. It is where you will pay taxes, register to vote, and get a driver’s license. State of Legal Residence can change due to orders.

Two Types of Military Compensation

  • Basic Military Pay – Determined by rank and time in service.  Find updated military pay charts here.
  • Basic Allowance for Housing (BAH) & Basic Allowance for Subsistence (BAS) – Determined by pay grade and registered dependents.  BAH rates and calculator and BAS overview.

For more info on DFAS, please go here.

Save For Retirement Early with the Thrift Savings Plan (TSP)

The Thrift Savings Plan is a contribution plan and is designed like a 401(k) or Roth 401(k). The TSP offers many paths for investing in your retirement.

Know Your Legal Protections

Service Members Civil Relief Act (SCRA)

SCRA protects active-duty military members when breaking rental leases if Permanent Change of Station (PCS) orders are received, break a car lease and/or cell phone contract, and protects against certain legal actions during deployments.

Extra Ways to Save

Banking and Insurance

  • USAA – Free checking and savings accounts with no minimum balance fees, free checks, free debit card rewards, free overdraft protection, free web bill pay, no ATM fees, early availability of payroll with direct deposit, and government shutdown protections.
  • Wells Fargo – Up to four U.S. domestic and four international ATM cash withdrawals at any ATM each month at no charge (with direct deposit), home awards for disabled veterans, and hands-on banking a free resource for career transition, deployment, military retirement, PCS, and military home buying.
  • US Bank – No ATM Transactions fees, overdraft protection with no-fee transfers, free mobile check deposit, and family member accounts with no monthly maintenance fee. More benefits can be found here.
  • Armed Forces Insurance – Auto insurance discounts, business insurance, renter insurance, and more.

Purchasing a Vehicle

  • Utilize your family readiness center when buying a car. They offer programs and assistance to help guide you in the right direction to avoid unreliable car dealerships and tying yourself to an overwhelming amount of debt.
  • Take advantage of discounts offered to the military community by car companies. Find car and truck discounts for military and veterans here.

Travel and Recreation

  • Morale, Welfare, and Recreation program (MWR) – Located on base or online offers great discounts on tickets and entertainment all over the world.
  • American Forces Travel – Access to discounted rates on airfare, rental cars, vacation packages, cruises, and more.
  • Armed Forces Vacation Club – Has an “R&R” program with destinations around the world that the military community can access starting at $359 per week.

RELATED: Travel Savings Guide and Planning and Travel Discounts for Military and Veterans

Military Discounts

Discounts offered by several types of companies can be a great way to save money. Check out our discount section to find a verity of discounts.


>> Never miss a military discount!  Sign up to receive the MyMilitaryBenefits discount newsletter and start saving today!


Knowing the basics of your military pay will help you plan for a successful financial future. By pairing military benefits with civilian benefits you can maximize your budget. Always make sure to plan for curveballs by practicing good saving habits.





About the author

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Lori Waddell serves as Co-director of an emergency response COAD in Montana, a freelance writer, and an Air Force Key Spouse. She is passionate about empowering communities and individuals through knowledge and resources. She currently lives in Montana with her husband and two children.