8 Financial Tips for New Recruits

Joining the military means lots of changes. These tips can help you keep your finances in order.

By Navy Federal August 18, 2020
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Congratulations on your decision to join the military. As you adjust to the many changes that come with life as a servicemember, take care to give plenty of attention to your finances. Steps taken early in your service can help you establish financial security for the short and long term—no matter where your military career may lead. Here are eight tips to get you on that path:

  1. Create a budget.

    A budget is a monthly spending plan to help you determine your income and expenses, as well as identify areas of potential savings. Even if you had a budget before joining, revisit it to take into account your military pay and benefits, such as the Basic Allowance for Housing (BAH), if applicable. To create one on your own, you can make a list of income and expenses each month, use budgeting software or try out the Navy Federal Credit Union budgeting template.

  2. Set up checking and savings accounts.

    Establish accounts to help you manage and grow your money. Take advantage of free online and mobile banking so you can stay on top of your finances from wherever you’re stationed.

  3. Create an emergency fund.

    If you’re eligible for an enlistment bonus, you might be tempted to buy something you’ve been dreaming about. But you may be better off stashing that money away to cover unanticipated expenses. Many financial advisors suggest having a savings cushion to cover at least three months of living expenses in case you or a family member has an illness or accident, your spouse loses their job or you’re faced with unexpected home or auto repairs.

  4. Minimize debt.

    Avoid impulse shopping. Stay off online shopping sites if you have trouble resisting the temptation to add items to your shopping cart. Try using credit cards only when you can pay off the balance each month. If you’re in debt, create a plan to pay it down as quickly as possible.

  5. Use credit wisely.

    Wise use of credit can help you build on and improve your credit score—a ranking that determines your future credit interest rate. Paying off loans, making payments on time and not using credit excessively can get you headed in the right direction. Shop around for the best interest rate when taking out a loan for a major purchase, like a car, motorcycle or home. Investigate government-supported financial assistance for military members and their families, such as VA loans and the GI Bill. Finally, if you’re in financial difficulty and can’t pay monthly bills, beware of the costs of payday loans. These short-term loans generally have very high interest rates, and many people fall into a trap of reborrowing. As interest costs pile on, they fall further behind. Instead, look into taking out a small personal loan or applying for a checking line of credit. You may also want to consider financial counseling.

  6. Save for retirement.

    Take advantage of the Thrift Saving Plan (TSP) (or Blended Retirement System (BRS), now available to new servicemembers). These plans allow you to save on a tax-deferred basis for retirement. Even if you expect to remain in the military long enough to qualify for a full military pension, it may not be enough to cover all your retirement expenses. And, plans change—you could leave your military career early. In that case, you can roll over your TSP balance into an Individual Retirement Account to keep your money working for you until you need it.

  7. Protect your finances.

    Consider what insurance coverage you may need. While your military service provides group health insurance, you may need other coverage such as auto, homeowners, renters, life and/or long-term disability. These types of insurance help you to protect your assets or provide financial security to your dependents in the event of your untimely death or disability. Find out more about how insurance can help protect your finances.

  8. Practice cybersecurity.

    When setting up your financial accounts, be sure to use strong passwords. Avoid accessing your accounts over public Wi-Fi systems. Protect your account and personal identification numbers (PINs). Be alert to unauthorized charges on credit cards or unusual withdrawals from your savings and checking accounts. Notify your financial institution immediately in the event of suspected fraud.

We’re Here to Help You Achieve Financial Readiness

Navy Federal is here to be your trusted financial partner, so you can concentrate on your critical role as a servicemember. We offer a full range of financial products and services as well as online resources such as Military Life to help you navigate your new life in the military.

This article is intended to provide general information and shouldn't be considered legal, tax or financial advice. It's always a good idea to consult a tax or financial advisor for specific information on how certain laws apply to your situation and about your individual financial situation.