| September 9, 2015

Are Servicemembers Becoming More Financially Savvy than Civilians?

Financial education backed by action proves effective.

Among the many attributes associated with our servicemembers, savvy money manager is hardly ever one of them.

“Veterans at Risk Due to Lack of Financial Literacy,” says one headline with the subhead “Lack of financial literacy is causing homelessness among vets, a new study finds.” “Military Families Stressed by Sequestration and Downsizing,” says another with the subhead “Military service members are saving more, but they’re still reporting health-related concerns over finances.”

However, it looks like the tides may be changing. A new report by the First Command Financial Behaviors Index show military personnel are doing much better than civilians in every aspect of money management.

 
Middle-class commissioned officers and senior NCOs who earn at least $50,000 a year, were significantly more likely than members of the general population to pay close attention to their household finances consistently.

“At a time of widespread uncertainty about sequestration and defense downsizing, many military families are conscientiously tracking their finances,” Scott Spiker, CEO of First Command Financial Service, Inc. says.

The results are telling… and civilians should take note.

When it comes to budgeting and sticking to it the discipline that service members were taught in the military is evident. While only 40 percent of civilians stick to their budget, 65 percent of military families follow theirs to a tee.

While forty-nine percent of the general population monitors their pay stubs, a whopping 70 percent of middle-class military families do.

As for other financial areas…

  • 63 percent of military families monitor their investments; just 33 percent of the general population monitors theirs.
  • 55 percent of servicemembers check allocations to their mutual funds whereas just 26 percent of civilians do.
  • 49 percent of servicemembers check the interest rates on their loans; just 17 percent of the general population does.
  • 54 percent of military families check the interest rates on their deposit accounts whereas only 19 percent of civilians do.
  • 55 percent pay close attention to their taxes and any changes that may occur; only 16 percent of civilians do.
  • 54 percent stay updated on the stock market, only 30 percent of the general population does.

Servicemembers also trump the general population in keeping up with their credit rating. While 52 percent check their credit scores only 26 percent of civilians monitor theirs.

Evidently, career military people do much better than civilians in nearly everything about money. Is fear of downsizing or another sequestration their only motivation for keeping up with their finances?

“Seventy percent of career servicemembers feel anxious about cuts to defense spending,” Spiker says. “That’s about twice the rate we see in the general population. Our men and women in uniform are responding to this heightened anxiety through a variety of proactive financial behaviors. By diligently monitoring their finances, they are preparing themselves for an uncertain future. The frequent reliance on financial advisors underscores the important role a professional can play in helping military families get their finances squared away.”

Regardless of their reason for taking charge, it is commendable that they do. In addition to keeping an eye on their financial matters, a vast majority of servicemembers admit to meeting with a financial advisor frequently. Forty-five percent meet with an advisor versus seven percent of the general population who say they do.

This suggests that the efforts to help members of the military become as disciplined with their finances as they are in the military are bearing fruit.

“It’s comforting to see servicemembers translating their military discipline into financial stability and long-term success,” Maria Gaitan, Consolidated Credit’s Housing and Business Development Manager. She’s also an advocate in helping military service members and veterans achieve financial independence. “It’s indicative that the efforts of those of us who are in the business of helping to educate our servicemembers so they can successfully manage their money are making headway. Now members of the general population need to take a page out that book and endeavor to implement these same principles, practices and discipline in their financial lives.”

Adding to the list of healthy financial practices civilians should adopt, Consolidated Credit says create a spending plan, find areas in your budget to trim fat from, negotiate with your creditors to lower your interest rates, use cash more often than credit, negotiate lower rates with your cable, telephone and car insurance companies to see if they can lower your bill, pay your bills on time and in full even before it comes to avoid paying fees and interest – a few dollars here and few cents there adds up.

If you need help streamlining your budget or paying down credit card dial acertified credit counselor will be happy to help you. You may also request help online by filling out this form.

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