A Financial Assessment for Young Military Recruits

A Financial Assessment for Young Military Recruits

Young recruits in the US military will tend to go on a spending spree after basic training and soon after every pay period. These recruits do not see the need to save for living expenses since the government will provide them with the basic necessities, including meals, housing, health care, laundry, etc. Even after they get out of the military, the government can provide them with a monthly check through the Montgomery GI Bill, which is part of their educational benefits. Currently, the GI Bill pays $1,473 per month for full-time students. Hence, many soldiers do not see the need to save money while in the military.

Local businesses are aware of the spending spree and prey on young recruits who are inexperienced in credit matters. For instance, businesses often offer "the inferior quality of their existing product portfolio" to younger recruits, including lower-quality vehicles, expensive flat-screen televisions, and luxury furniture. I do not advise anyone to buy vehicles around military bases. Honestly, young, single soldiers do not need a vehicle since everything they need, on the military base, is within walking distance; including convenience stores, barber shops, gym, medical clinics, etc. When it comes to the flat-screen televisions and furniture, chances are, these recruits will sell them at bargain prices since they will be moved to another duty station within a year or two.

The first thing the recruit should do…is “not to buy a vehicle as many of them do,” but to open an account with USAA, which is a financial institution for military personnel and their families. USAA offers insurance services, banking, and investment opportunities. USAA has the best customer services in the nation among major financial institutions and insurance companies. USAA provides no-monthly-fee checking accounts. Moreover, USAA pays for ATM fees and the customer can re-order checks for free. All military personnel can become members of USAA. Once they become members, they are members for life.

The recruit should also open a personal savings account with American Express, which pays 0.90% APY. http://personalsavings.americanexpress.com/open-account.html. The recruit should start a monthly allotment of $300 dollars to be sent to the American Express personal savings account. The allotment can be started at www.MyPay.Gov (which is the government pay roll website). At the end of a 3-yearsmilitary commitment, as an example, the recruit would have saved close to $11,000.  It is important to understand the meaning of savings and the need for it. For example, the $11,000 savings can be used towards a down payment for a house. I wish for them to open a savings account with American Express, not only because of the competitive interest rate (one of the highest in the nation), but because money is not readily accessible, making it less likely for the soldier to spend that money. 

The first thing soldiers should do when they get out of the military is to file for unemployment (while enrolling for college and looking for a part-time job). It is almost guaranteed unemployment benefits will be granted. The veteran should not get student loans to pay for college. There are many programs for veterans to pay for college, including scholarships, financial aid, and student work-study programs. The veteran can apply for military scholarships, such as including Pat Tillman Military Scholarship (http://www.pattillmanfoundation.org/tillman-military-scholars/apply/). If the veteran served in Afghanistan or Iraq, he or she didn’t pay federal income tax for that year (which is an added benefit for serving overseas); making the veteran eligible for free student financial aid once they get out of the military. Also, the veteran should get on the student work-study program for part-time employment, which is paid by the GI Bill (1888-442- 4551). 

Lastly, soldiers should be seen by military medical personnel for any type of injury, regardless of severity, including exposure to loud noises, knee, elbow, and ankle injuries. Veterans can get a monthly compensation for injuries incurred on active duty. For instance, a soldier can get $125 monthly compensation for the constant ringing in his or hers’ ear.

Some of the mistakes common mistakes made while serving in the military and after your service is complete, include:

-       Buying a vehicle after basic training; the car broke down two months later.

-       Getting student loans (up to $28,000) when there was no need for it.

-       Not applying for unemployment benefits after the military.

-       Not applying for military scholarships.

-       Not having an allotment to save money while in the military.

-       Applying for too many credit cards while in the military.

-       Not saving, no even a penny, in college.

I hope you do not make these same mistakes. If you do, don’t be afraid to talk to a financial expert to get some necessary help.