The 3 Biggest Mistakes Ex-Military Service Personnel Make with their Money

In a perfect world, financial planning would be a breeze no matter what stage of life we are in. The hard truth is that for most, avoiding money pitfalls is easier said than done. Here are the 3 biggest mistakes ex-military personnel make - and how to avoid them!

Mistake 1: Failing to Take an Active Role

Whilst you’re in the military, there are fewer active money decisions that need to be made. Pension contributions and life insurance, for example, are taken care of for you, without much if any input needed by you.

But once you’re in the civvie street, you have to take a more active role in arranging your finances.

Quite a bit more decision-making is necessary after military service, especially when it comes to your workplace benefits package. For example, many employer pension plans will match your contributions up to a limit, but often the employer’s default option is not the maximum available.

Tip - make sure to contact your employer’s HR or Payroll department and find out what the maximum matched contribution is. 

A second area is life insurance. Many larger employers either provide life insurance as a core part of their benefits package or it is available as an add-on. But the problem is that most employees don’t sign up for the benefit, or don’t pay the very small premium to get comprehensive life insurance.

Tip - contact your employer and find out if they provide employees with a ‘Death in Service’ benefit and what the cost is to increase it, if you need to.

Mistake 2: Avoiding Basic Financial Skills

Countless life skills are developed during military service, but financial management isn’t always one. Part of that is because some of the big ticket items are provided for you, like your housing, food, and travel costs. There simply isn’t the time or need to create a personal finance budget or dive into money management strategies.

In the civvie street, that just isn’t the case!

Instead of avoiding these basic financial skills altogether, ex-military can do themselves a favour by getting to know how these tools work to their benefit. For instance, a budgeting app or an excel spreadsheet can be your best friend in getting a handle on your money each month.

Keep it simple by dividing expenses into basics, leisure, luxury, and milestone categories.  Be clear about the income you have at your disposal each month. From there, you can determine what’s left to spend and save.

Tip - download a budgeting app to hold you accountable and keep you on track, top recommendation: YouNeedABudget.

Mistake 3: Not Having a Plan

Planning, strategy, implementation. This is the bread and butter of the military, but it’s amazing how often we forget all the best laid plans when we are taken out of the environment. It’s not uncommon for ex-military personnel I meet to tell me about the change of structure and organisation in their personal lives that they had in their military lives.

Creating a plan with a trusted partner not only gives you an understanding of what where you are, and where you’re heading, but it provides you with detailed next steps and contingency plan. Without a plan, there is no real way to know if the steps you are taking are helpful or harmful to your bigger financial picture.

Tip - take a piece of paper, and write down what you want to achieve, personally and professionally, within the next 3 years. Then work out the steps to achieve them.

The old saying, "those who fail to plan, plan to fail", is painfully true when it comes to your financial life.

Transitioning out of military service does not mean you are doomed to face one of these common financial mistakes, but without taking active steps, you are likely to face these challenges. Commit to doing one thing today to sidestep these common pitfalls, no matter how big or small.

As an exclusive offer for friends, family, and colleagues of our valued clients, we provide a Second Opinion Service to help the ones you care about understand their financial situations better. If you know someone who would benefit from this second opinion service, feel free to pass this information on to them directly.