Deployments change everything about your daily routine. Although you’re busy preparing yourself and your family emotionally, you’ll also want to think about your finances. Additional entitlements or hazardous pay usually accompany deployment, which can impact income and spending.
So what do you do? Start with these tips to prepare your finances for deployment.
1) Set financial goals.
Any shift in finances, whether positive or negative, calls for a conversation about your financial goals. Is this deployment your opportunity to tackle debt? Maybe you can save some money for a down payment on your next home. Financial goals can also be as simple as taking a breather from any financial strain or putting away funds to plan for travel.
In order to put a plan in action to meet your financial goals, you need to budget, and it begins by reviewing your current one.
2) Know your entitlements.
Learn what entitlements you’ll receive and how they’ll affect your monthly income. You might be eligible for hazardous or difficult duty pay, imminent danger pay, hardship duty pay, and family separation allowance. Learn more about these entitlements through the Defense Finance and Accounting Service (DFAS).
In addition to entitlement pay, deployed service members gain access to the Savings Deposit Program (SDP).
“The DOD Savings Deposit Program (SDP) was established to provide members of the uniformed services serving in designated combat zones the opportunity to build their financial savings. Amounts up to $10,000.00 may be deposited, earning 10% interest annually. Members must be receiving Hostile Fire Pay and be deployed for at least 30 consecutive days, or 1 day in each of 3 consecutive months in order to participate in the program.”
The SDP guidelines and stipulations are available on the DFAS website above.
3) Review your current budget and build a new one.
Budgeting requires constant re-evaluation, so if you're married, discuss your current budget before the active duty spouse leaves. Where is your money is going? How much is going to living expenses, and how much is getting saved? How much is free to spend? These questions are particularly important to discuss if the non-active duty spouse doesn’t already handle the family’s finances.
If your financial goal is to save money or tackle debt, talk about where you can cut costs. Consider amenities you won’t need while the service member is deployed, especially for single service members. Review expenses like your phone plan, auto insurance for a car that may sit for months, cable, and any auto-subscriptions like Netflix, Hulu, Spotify, and magazines. If you know you're going somewhere you can't use these services, cancel or suspend them.
And don’t forget to plan for new expenses. While there are sure to be areas you can cut costs, new ones will likely emerge. Things like pocket Wi-Fi, comfort purchases, and spending associated with eating out or entertainment when the schedule allows are all outgoing expenses that can easily get out of control when not budgeted for correctly.
Then circle back to your financial goals. Now, let’s say that you’ve taken care of the essentials and there’s a little left over. What should you do with it?
Some financial investments worth considering:
Build an emergency fund. If you don’t already have one, set aside three to six months of living expenses. Although unemployment isn’t a pressing concern for service members, misfortunes do happen. Cars break down, and other expenses appear out of nowhere. An emergency fund helps avoid a trap of consumer debt through credit card spending when unexpected costs arise.
Pay off debt. After you establish an emergency fund, attack your debt. Start with the highest interest or delinquent debt and work your way down.
Save and invest. Talk with your spouse and discuss your priorities. One might want to save, while the other wants to pay for a much needed vacation. If you can't do both, figure out a compromise and save what you can. However, it’s always a good idea to financially prepare for your retirement.
As deployment approaches and you prepare yourself emotionally, remember to also plan financially. Deployments are a great opportunity to increase your savings for the future, so keep these tips in mind to help capitalize on the additional income you receive.
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