A Road Map to Make Your Military Transition Spending Plan

By Alecia D. Blair, Military Saves Communications Associate

Separating from the military—whether after four or 24 years—is a life-changing event. Serving in the military isn’t just a job; it’s a lifestyle in many ways. There are so many things to think about and decisions to make as you prepare for this exciting (albeit scary) next stage of your life.

While you may have dreams about what your overall life will look like after you transition from the military, the day-to-day details are equally important. What will your household spending plan look like after you leave the military? Planning early and as realistically as possible will take a little of the unknown out of the transition to civilian life, making it less stressful and less scary. Here are four tips to get started:

1. First, make the Department of Defense’s Transition Assistance Program (TAP) your first stop when planning your separation from the military. TAP was redesigned in 2013 to better prepare servicemembers from all branches of the military for civilian life. From the TAP website, simply select your branch and access the program in person, by phone or virtually. Don’t delay. Do this as soon as you know you’ll be separating.

2. In addition to the TAP, take stock of all the resources available to you to more easily budget your transition and actually use them! Here are just some of the resources available to you, according to Military OneSource’s Transition Budget page.

    • SaveAndInvest.org offers the Military Transition Toolkit with articles on job searching, benefits, assessing civilian/military compensation and housing. (See number three for more information. This Action Plan is especially helpful!)

    • Personal Financial Managers (PFMs) are available at your military installation to provide FREE financial guidance as you prepare for transition. Yes, you read correctly, FREE financial guidance! To find a local PFM office, visit: Military Installations, then select Personal Financial Management Services.

    • Even Military OneSource is available 24/7 with “confidential financial counseling.” The site’s Transition Assistance page offers a list of links to many other helpful resources and articles.

3. Estimate what your civilian income will look like once you leave the military and compare it to what you currently make in the military.

    • Do you have a potential civilian job lined up? If yes, that’s great! Use the information you have about your future income to complete this step. If you’re in the process of polishing your military-to-civilian resume and networking by night, estimate your income for the job you want, but be realistic.

      For those retiring from the military after 20 or more years, take into account money you will receive from your military pension on a monthly basis (Active Duty or Reserve) and any other retirement income, for that matter.

    • Use the  SaveAndInvest.org Transition Action Plan’s Compare Total Compensation Worksheet to list your current military compensation and benefits. Use the same worksheet to estimate potential compensation and benefits at your new job, as SaveAndInvest.org recommends. Look at these numbers side by side.

    • Knowing what your expenses are now, estimate and itemize what your monthly expenses will be in your civilian life. Think about where you will plant roots after you separate from the military. The geographic location of where you live can influence so much, including the availability of jobs, higher education, healthcare and the cost of housing and utilities.

    • Once you subtract your estimated civilian expenses from your income, ask yourself whether you will be able to maintain your current standard of living in the civilian world without going into debt? Will you need to make some cuts, at least temporarily? What can you cut now, in advance, to increase emergency and rainy day savings?  If you find you need to cut back on your spending check out these tips on savings on a tight budget.

4. This tip begs its own mention. Create your military transition spending plan as early as possible and revisit/revise if often, as SaveAndInvest.org recommends. Doing so will help you identify any financial deficits and give you time to address them by making adjustments and bolstering your emergency and rainy day savings.

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