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    Tips for Living Within Your BAH

    Budgeting. How many of us have broken our budget before? An even bigger question would be, how many of us bother to set a budget?

    As dull, tough to follow, and confining as it is, a budget is essential. When calculated correctly, a budget offers financial freedom and the peace of mind to spend money that’s accounted for. Housing is, of course, one of the larger categories we have to factor. And as military families, the cost of housing is always fluctuating, which means that it requires constant evaluation. A significant component for a military member's budget is The Basic Housing Allowance. 

    “The Basic Allowance for Housing (BAH) is a U.S. based allowance prescribed by geographic duty location, pay grade, and dependency status. It provides uniformed Service members equitable housing compensation based on housing costs in local civilian housing markets within the United States when government quarters are not provided.” — Defense Travel Management Office 

    How they get to that specific number that pertains to you isn’t random or vindictive; it's intentional and calculated. The DoD looks at over 300 military housing areas across the U.S., pulls rental data, and takes the average cost of utilities for the area into consideration. 

    But here’s what you might not realize. Your BAH isn’t intended to cover 100% of your housing expenses—95% is more accurate. That leaves the remaining 5% coming from the remainder of your paycheck. Is 5% a lot? As far as percentages are concerned, no. But depending on where you live, you might find that 5% equates to several hundred dollars—a crucial thing to keep in mind as you start drafting your budget to stay within your new BAH rate. 

    Get the latest on 2021 BAH rates and changes.

    Tips for Living Within Your BAH

    Tips for Living Within Your BAH

    Start With the Basics

    First, what does living within your BAH mean to you? This might seem like a silly question to ask when the allowance is a specific number, but there are enough variables that generate a range of answers. 

    Calculate all living expenses when considering your BAH.

    For example, do you want all of your living expenses, rent/mortgage, utilities (electric, gas, water, sewage, and internet/cable) to fall within the allotted BAH? What about groceries and gas? While your housing allowance doesn't factor in groceries and gas, some military families like to keep all cost of living expenses under the BAH umbrella when possible. 

    On the flip side, are you okay with the allowance covering just the monthly rental or mortgage payment, which means you'll pull utilities and all other expenses from your basic pay?

    Learn more: Understand Your Basic Allowance for Housing

    Here’s the thing—there are no right or wrong answers here. We’re all different, have different goals, and live in different places. On top of that, what might’ve worked in, say Nebraska, might not work in California. My point? Your answer today might be different than it was one year ago. 

    The key to figuring it out? Look at your income, the cost of living, your debt, and your goals. You might’ve heard of the 30% rule. It’s a traditional method employed to determine how much you should spend on housing and dictates that you should not spend more than 30% of your annual income on rent or mortgage. Some feel that the rule is a little outdated and that spending beyond 30% is not only standard but okay. Just remember, there’s no cut-and-dried answer here—it comes down to the individual household. 

    Some people have mountains of debt and a desperate need to save, in which the 30% rule can help them stay on track. Others have little to no debt, are maxing out their retirement savings, and can afford to comfortably spend over the "written in stone" 30%. And then others fall somewhere in between those two extremes. The first step is figuring out where you fall on the spectrum. 

    Run the Numbers

    Answering how much you should spend on housing is one of the hardest things to do when moving to a new duty station, isn’t it? All of a sudden, the pressure between wanting to save and wanting a home with all the bells and whistles come head to head, declaring war in your mind—or is that just me? 

    Your Basic Housing Allowance isn’t your budget. You create your budget. So, how far do you want your BAH to stretch? 

    Your Basic Housing Allowance isn’t your budget. You create your budget. So, how far do you want your BAH to stretch? 

    Let’s look at all the variables: 

    How much is your BAH? How much are you working with here? While it’s not the be-all, end-all of your budget, your BAH sets a pretty good foundation to build from. Check 2021 BAH rates here

    How much are utilities? The average cost of utilities in the U.S. is $398.24 a month. Crazy, right? Once upon a time, we all budgeted about $200 a month for utilities, but now experts say to expect to pay about $400 a month. But this number really boils down to where you live. 

    For instance, Hawaii rings the bell at an average of $587.79 a month. Yep, that’s over $7,000 a year. But don’t worry, they’re known to have the highest utility average in the U.S., so nearly anywhere else you live should be a little easier on your pocket. Texas’ utility average is about $411.82 a month, D.C. is $383.05, and California’s is $379.39. But again, all of this depends on the exact region in which you live.

    Want to stretch your dollar? Save on utilities with these money-saving tips:
    • Use energy-efficient light bulbs.
    • Get a smart thermostat.
    • Hang insulated curtains.
    • Replace your water heater (if it’s more than ten years old).
    • Unplug all your electronics when you’re not using them.
    • Invest in solar panels for your house.
    • Replace your furnace’s air filter four times a year (every three months).

    Your commute will matter when considering your living expenses.

    Where do you want to live in proximity to the base? Proximity to the base is everything, especially when you're stationed in a major city like D.C. or San Diego. The cost of being close to base is astronomically higher than living somewhere out of the main metropolitan area. Take Camp Pendleton, for example. It’s not even located in San Diego (40 miles north) and has a wide range of housing prices. 

    Oceanside, right outside the main gate, has a median house value of $564,054, while Temecula, a few miles northeast (and away from the coastline), is $491,103. But here’s the real difference in value. Central air conditioning is an expected amenity in Temecula. However, homes in Oceanside are a hit or miss—look carefully at listings! 

    In cases like this, you have to determine if it's worth the higher cost of living to be a couple of miles from the base. or would getting more house for your money be of higher priority to you? 

    Pro tip: Take a look at gas prices to make sure that you’re saving money living further from the base rather than redirecting it to another expense. 

    Which amenities are must-haves? The last thing you have to budget for is amenities. Start with the big things like the type of property (condo, apartment, single-family home) that you want or need. Then move down to the number of bedrooms and bathrooms you need to be comfortable. Lastly, look at the details. Everything has a price. If a fenced-in yard, pool, fitness center, proximity to great schools, and a two-car garage are critical to you, that helps narrow your budget and your search. While some perks may fit within your budget, others will have to go—this is typically the step where your financial planning is tested!

    Fitting everything you want and need into a reasonable budget that reflects your financial goals for the future is easier said than done, right? On paper, it’s easy. However, when it comes time to pick and choose the details, it gets a little more complicated. 

    Want to get your finances in order before you buy a home? Download our free resource! 

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    Danielle Keech


    Danielle Keech

    Danielle is just like you — another down-to-earth military spouse learning every day how to navigate the craziness. As a mama of two, she knows what it takes to juggle solo parenting, a work-from-home career, and the demands of military life. She’s a firm believer that community is a key part of thriving and hopes to remind readers that they’re not alone through her writing. Want to connect? Find Danielle on Facebook, Instagram, Twitter, and LinkedIn.

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