Military Life: Deployment, PCS Moves, TDY
Deployment, permanent change of station (PCS moves) and temporary duty (TDY) all bring changes and financial challenges that are unique to military life. This partner packet provides resources to help service members and their families face these financial trials head-on and save money.
Please share this article, social media content, and resources provided with your constituents, your partners, and the general public. As always, please encourage individuals to take the Military Saves Pledge, an important step in creating a plan to reach their savings or debt reduction goals. After all, savers with a plan are twice as likely to save successfully for things like emergencies and retirement.
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Combat Changes in Your Paycheck with Battle-Hardened Transition and Emergency Funds
By Alecia D. Blair, Military Saves Project Manager/Consultant, AFC® Candidate, FINRA Foundation Fellow
Permanent change of station (PCS) moves, temporary duty (TDY), deployment—all of these major changes are a constant in military life. While a military paycheck is predictable twice a month, these life changes bring significant income volatility and increases or decreases in expenses, which can make your budget a moving target. Here are five solutions to help meet these challenges.
1. Prepare for the Unexpected with Transition and Emergency Funds
The months leading up to and following a PCS move, TDY, or deployment require significant financial adjustment. Give your family time to tweak the family budget by saving now for a:
- Transition fund: Money meant to help pay for unexpected costs associated with changes in your paycheck until you're reimbursed due to PCS moves, TDY, deployments, etc. In other words: military life! Secure enough money to cover food, lodging, and transportation for one to two weeks, or about $500.
- Emergency fund: Money earmarked to offset urgent, unexpected expenses so they don't destroy your budget and/or force you into debt. For example, a fender bender could set you back $500, or even $1000, for an auto insurance deductible.
If you're expecting or have received a tax refund for 2016, consider saving part of it with SaveYourRefund to build each of these funds and be entered for a chance to win up to $25,000 in cash prizes! For more information, visit saveyourrefund.com.
2. Think Ahead: Changes in Basic Allowance for Housing during a PCS
One of the first things you should compare is the amount of Basic Allowance for Housing (BAH) you receive at your current duty station and the amount you will receive at your new duty station. Is there an increase or decrease? How will this affect your budget? Here are some guidelines when considering housing affordability. Bottom line: Don't buy too much house, or become "house poor."
Before you jump to purchase a home using the BAH at your new duty station, remember that your next duty station's BAH might be significantly lower. BAH is based on location and is not consistent from one duty station to another. If you purchased a home, couldn't sell it immediately, and/or decided to rent it out after your next PCS movie, would you have to pay out of pocket to cover the mortgage? A difference in your BAH at your next duty station could be financially devastating. Consider this and run the numbers ahead of time. When in doubt, be conservative to keep your housing costs in check.
3. A Tactic for TDY
TDY can be for days, weeks, or months and might require a service member to live in a different location from his or her family. This can mean a significant increase in expense on the family budget (at least temporarily) for food, lodging, and transportation until those costs are reimbursed.
Instead of taking out your credit card (with interest) and using it to pay for these expenses up front, use the money you saved in your transition fund and replenish it as soon as you've been reimbursed.
4. The Low Down on Deployments
Deployments to certain locations bring significant financial benefits, including tax-free income and special pays. Increases in pay can tempt the most disciplined soldier and spouse to spend, spend, spend. But remember that deployments aren't forever (thank goodness!) and all of those special pays and the tax-free income will eventually come to an end.
Before spending additional cash, adjust your monthly budget accordingly and set some savings goals for your family. Talk about this together. If you can, consider saving all special pays towards those goals—paying off debt, setting up emergency and transition funds, saving for a home or new car, or increasing your retirement savings. After all, you lived without all of these special pays before the deployment. Why not continue? Take the Military Saves Pledge to help set these savings goals.
Just as your family needs an adjustment period moving into and out of deployment, your finances will need time to adjust too. Resist the urge to make large purchases until your family budget has adjusted. Once again, a transition or emergency fund can help your family weather income fluctuations with greater resiliency as you start and end a deployment.
If you took advantage of the Savings Deposit Program, this account will close 90 days after your deployment ends. Have a plan for this money as well.
5. Manage Your Money with Confidence
Remember Murphy's Law: Anything that can go wrong will go wrong. Manage your money with more confidence by imagining all of the scenarios that could happen during your next PCS, TDY, or deployment and build a transition fund and an emergency fund to help cope with these expensive "gotcha moments" that can sink your budget. Set a goal. Make a plan. Save automatically!
Social Media Content
Share the following messages with your Facebook & Twitter followers. (Right click on images to save and use.)
Prepare for unexpected military life expenses by creating a transition & emergency fund >> http://bit.ly/2mZTcqh v/ @MilitarySaves #SavingsTipTuesday
Be proactive in managing your finances for a PCS move >> http://bit.ly/2nSbxT0 via @militarydotcom h/t @MilitarySaves #SavingsTipTuesday
Be prepared & review your finances before deploying >> http://bit.ly/2ndK0GO via @usaaef h/t @MilitarySaves #SavingsTipTuesday
Make the most of military deployments: save in the @DeptofDefense Savings Deposit Program: http://bit.ly/2oC4kue #SavingsTipTuesday
6 Financial decisions you need to make before & after #deployment: http://bit.ly/2nD4XCY h/t @MilitarySaves #SavingsTipTuesday
Adding an "active duty alert" on a credit report can reduce the risk of identity theft during deployment. #SavingsFactFriday v/ @MilitarySaves
The @DeptofDefense Savings Deposit Program offers a 10% return on up to $10k during #deployment http://bit.ly/2nKwqPC #SavingsFactFriday h/t @MilitarySaves
Getting your finances under control can help reduce pre-deployment stress: http://bit.ly/2oC4HF8 @MilitarySaves #SavingsFactFriday
Special deployment pay can be an opportunity to save. What are you saving for? >> http://bit.ly/2nHpJBp @MilitarySaves #SavingsFactFriday
Reduce stress by developing a deployment financial plan. Here's how: http://bit.ly/2p1llu1 from @MilitarySaves
Hostile Fire Pay, Family Separation Allowance, Hardship Duty Pay. Learn more about these special pays during deployment: http://bit.ly/2nEvjQC v/ @MilitarySaves
Getting financial & legal matters in order today can help avoid problems during #deployment: http://bit.ly/2oamyBW v/ @MilitarySaves
Trim your bills and save money during a military deployment. Here's how: http://bit.ly/2nYbDJA v/ @MilitarySaves
Military Saves Resources
- Review Your Finances Before Deployment
- Your Deployment Finances
- Deployment: More Reasons to Save, and More Options Too!
- How $100 Can Become $100,000
- Savings Deposit Program for Deployed Troops
- Setting Savings Goals During Deployment
- How to Build Wealth When You're Not a Homeowner
- Preparing to Purchase a Home
- The Inadvertent Landlord
- Five Ways to Reduce Financial Pressure During a PCS Move
- Service members: 5 Ways to Protect Your Home
- Five Tips to Avoid the Financial Stress of a PCS Move: Part 1
- Five Tips to Avoid the Financial Stress of a PCS Move: Part 2
- Should you Buy or Rent With Your Next PCS?
- PCS Coming? Ask Yourself These Money Questions
- 5 Bad Reasons to Jump into Real Estate
- 5 Tips for Finding a Great Rental Home
- 8 Overlooked Costs of Homeownership
- Changing Where You Stay? Make the Change to Your Thrift Savings Plan (TSP) Account in myPay
- Consumer Financial Protection Bureau
- Defense Finance and Accounting Service (DFAS)
- Federal Trade Commission
- Hands On Banking
- In Charge Debt Solutions
- Internal Revenue Service (IRS)
- Military OneSource
- National Military Family Association
- Getting to know the Service members Civil Relief Act (SCRA)
- Preparing your finances for deployment
- Talk to your spouse about money
- How to Shop for a Mortgage
- PCS Financial Tips for Military Families
- USAA Educational Foundation
- Department of Veterans Affairs (VA)
- Written by Katie Bryan
- Category: Uncategorised
- Published: 06 April 2017