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Research of the Week: Military Families Face a Financial Confidence Gap

Service Members are more confident than their spouses about their ability to be financially stable in the short and long-term.

Each week, Consolidated Credit searches for financial research that can help you deal with your debt and budget. This week…

The interesting study

First Command Financial Services exists to help military personnel and their families achieve and maintain financial stability. They created the First Command Financial Behaviors Index® to track financial trends among military families. Each month, they conduct a survey to see how military Service Members and their families feel about their finances.

This month, the survey focused on asking military Service Members and spouses about their financial confidence. They asked about financial confidence in the short-term and long-term to see how both partners felt.

The big result

The survey reveals what First Command dubbed the “financial confidence gap.” It basically shows that military Service Members are vastly more confident than their spouses. In military families, the non-serving spouse is generally the one that manages the household finances. That means that the person in charge of money management lacks confidence, while the Service Member that is the primary income earner may feel more confident.

The fascinating details

The financial confidence gap exists when it comes to both current finances and long-term financial plans.

  • 72% of Service Members say they feel confident or extremely confident that their financial situation will improve in the next year, but only 59% of their spouses agree
  • 70% of Service Members say they are confident or extremely confident in their ability to retire comfortably, but only 54% of their spouses feel the same

Spouses do have some confidence in certain other areas of their military financial life:

  • 81% believe they will be prepared when their Service Member spouse eventually transitions to civilian life
  • 75% say they are financially prepared for if their spouse faces a combat-related death or disability

“These findings are particularly noteworthy in light of the key role that many spouses play in managing their family finances,” explains Scott Spiker, chairman and CEO of First Command Financial Services. “Their unique experience is often one of shouldering the primary responsibility for family budgeting, savings and retirement planning. This has become particularly true during the extensive deployment schedules endured by the Service Members in the past 15 years of overseas conflicts.”

What you can do

Spiker goes on to say that financial coaching can have a significant impact on financial stability and preparedness. “Financial coaching can play a key role in closing the financial confidence gap between Service Members and spouses. Military families who work with a financial advisor feel more financially confident than their do-it-yourself colleagues.”

Consolidated Credit’s own financial experts agree. But they also say that the spouse often has a better picture of where the family finances really stand.

“Service Members are focused on the mission,” explains Gary Herman, “but their spouses are in the trenches when it comes to day-to-day money management. Spouses often protect their partner from the reality of the situation, which may contribute to the financial confidence gap.”

Essentially, the spouse in charge of the money sees when things get tight. They know the size of the emergency savings safety net, how much credit is used to cover budget gaps, and how much juggling is done to ensure all the bills get paid. As a result, the Service Member sees a more positive view, because they may not be aware of how much work it took to keep everything balanced.

“This also reveals the potential risks for non-married Service Members,” Herman continues. “If you’re living on the base in a highly structured environment and receiving active-duty military pay, you may think that the transition to civilian life will be easier than it actually is. These Service Members don’t have a spouse there to ensure a smooth transition. I think this leads to some of the problems we see with Veterans facing debt problems and homelessness. They are simply not prepared for the financial realities they will face.”

Where to find free financial coaching and resources

Herman encourages both married and single Service Members to use the free resources available to them. This can help make managing their money easier and give them a better grasp of where they really stand.

“Organizations like Consolidated Credit partner with groups like Army OneSource and Southern Command to offer free financial education and one-on-one coaching to Service Members, Veterans and their families,” Herman says. “Take advantage of workshops that are often offered, online resources and free financial coaching sessions.”

Consolidated Credit has a section of our website dedicated to Military Financial Education. We also offer specialized information about military debt consolidation.

If you’re facing debt and need help to find solutions, talk to a certified credit counselor for a free evaluation.

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