How to Celebrate Military Appreciation Month: 5 Financial Tips for Service Members and Their Families

May is Military Appreciation Month, a time to honor and thank those who serve or have served in the U.S. armed forces and their families. Being in the military comes with unique challenges, such as frequent moves, overseas assignments and deployments to conflict zones. These can make it hard to manage your personal finances. But don’t worry, there are special benefits and programs that can help you save money, reduce taxes and plan for the future. Here are five tips to make the most of your military financial perks.

Tip #1: Save for Retirement with the Thrift Savings Plan

The Thrift Savings Plan (TSP) is a retirement savings plan that is similar to a 401(k) but only for military members and federal employees. You can choose to contribute to a traditional TSP, which lowers your taxable income now but taxes your withdrawals later, or a Roth TSP, which taxes your income now but lets you withdraw tax-free in retirement. You can also contribute to both a Roth TSP and a Roth IRA, as long as you don’t exceed the annual contribution limits. A Roth IRA is another type of retirement account that has no income restrictions and allows you to withdraw your contributions at any time without taxes or penalties.

Tip #2: Earn High Interest with the Savings Deposit Program The Savings Deposit Program (SDP) is a special savings account that pays up to 10 percent interest per year for eligible service members who are deployed to designated combat zones. You can deposit up to $10,000 and keep earning interest for up to 90 days after you leave the combat zone. This is a great way to grow your savings quickly and safely. Compare that to the average interest rate of less than one percent for regular savings accounts at most banks.

Tip #3: Use Tax-Free Combat Pay to Fund a Roth IRA If you receive tax-free combat pay, you can use it to contribute to a Roth IRA and enjoy double tax benefits. Since your combat pay is not taxed, you can deposit it into a Roth IRA without paying any income taxes. And since Roth IRAs allow tax-free withdrawals in retirement, you won’t pay any taxes when you take out your money later. This means you can save tax-free income and spend it tax-free in retirement. Plus, if you are in the military, you don’t have to wait five years to take out your earnings from a Roth IRA without penalties.

Tip #4: Take Advantage of Your Education Benefits The Post-9/11 GI Bill covers the full cost of tuition and fees for in-state public colleges and universities for up to 36 months, plus a monthly housing allowance and an annual book stipend. You can also use it to pay for private or foreign schools, vocational training or online courses. If you don’t need or want to use your education benefits yourself, you can transfer them to your spouse or children if you meet certain requirements.

Tip #5: Protect Your Family with Low-Cost Life Insurance The Servicemembers’ Group Life Insurance (SGLI) is a term life insurance program that provides low-cost coverage for eligible service members. You may be automatically enrolled in this program if you qualify. You can also choose other life insurance options depending on your branch or status. It’s important to review your life insurance coverage regularly and make sure it meets your current needs and goals. Sometimes independent carriers may offer cheaper rates than SGLI, so it’s worth shopping around.

More Ways to Improve Your Financial Situation Besides using these specific programs and benefits, there are some general steps you can take to boost your financial health and security.

Set Goals Having clear and realistic goals can help you stay focused and motivated on your financial journey. Make sure your goals are specific, measurable, achievable, relevant and timely.

Create a Budget A budget is a tool that helps you track your income and expenses and plan how to spend your money wisely. Having a budget can help you avoid overspending, save more and reach your goals faster.

Pay Yourself First One of the best ways to save money is to pay yourself first. This means setting aside a certain amount of money from each paycheck for your savings before spending on anything else. You can automate this process by setting up direct deposits or transfers to your savings account.

Build an Emergency Fund Life is unpredictable, especially for military families. That’s why having an emergency fund is essential. An emergency fund is money that you save for unexpected expenses or emergencies, such as car repairs, medical bills or loss of income. Ideally, you should have enough money in your emergency fund to cover three to six months of living expenses.

Reduce Your debt, having less debt just makes life easier. To me cash flow is king so the less debt your have the more of your income you can use on yourself.