Preparing for a military deployment can be hectic and stressful. A prolonged separation from friends and family isn't easy to handle, particularly if the deployment might bring the soldier into harm's way. On top of the emotional concerns a service member must contend with are financial needs.
While deployed, military personnel are still responsible for financial commitments back home. This can include everything from rental or mortgage payments to credit card debt to utilities. If the service member doesn't plan for these commitments, he or she could accrue significant debt while away from home.
In the United States, the government provides limited financial protection to members of the military who are on active duty. But in many cases, service members need to be aware of these protections to take advantage of them. Whether you have a wide network of friends and family members to help you maintain your finances while you're gone or even if you just have a few trusted people close to you, you need to put some thought into your finances before leaving.
On the next few pages, we'll take a look at 10 tips, listed in no particular order, that you should consider to get yourself ready for military deployment.
Make a Budget
The first step to preparing your finances before your deployment is to make a monthly budget. Look over the expenses your household typically encounters on a monthly basis. Itemize your financial accounts. The budget should include every expense that you pay at regular intervals. Here's a sample list:
- Rental or mortgage payments
- Car payments
- Credit card bills
- Insurance bills
- Food expenses
Once you've determined your monthly budget, it's a good idea to add some padding in case you encounter unforeseen expenses. You may also want to look into ways you can make your dollars go further by exploring various savings opportunities.
Your budget information will be invaluable to anyone who handles your finances in your absence. The more data you can provide to that person, the better your chances will be that you won't need to fix any financial problems when you return.
The budget should give you a good idea of what financial issues you and your family will face each month. It might also reveal ways you can save money while deployed. A monthly budget is a great idea even when you're not scheduled for deployment.
Designate Someone to Oversee Your Finances
While you may be able to handle many of your financial transactions over the Internet even when deployed overseas, you may encounter a few situations in which you'll need someone to attend to something in person. You'll need to give someone the authority to act upon your behalf while you're away. Most financial institutions require proof that you've given this authority to someone else before they'll complete a transaction.
If you're married, you can create a joint account at your financial institution. That will allow your spouse to handle financial issues in your absence. For unmarried service members -- or those who wish to retain their own personal bank accounts -- it's a good idea to designate a trusted friend or family member with the power of attorney.
Power of attorney is a legal designation that allows you to appoint someone else to act in your place in financial or legal affairs. You'll need to be able to provide the certified documentation proving you've appointed someone else with the power of attorney.
Sign Up for Direct Deposit
Direct deposit is an effective way to streamline your finances while away. Your wages will automatically deposit into your account without any need for a visit to your bank's local branch. Check with your bank or credit union to find out what you'll need to do to set up direct deposit.
Many financial institutions will allow you to direct funds into multiple accounts. If you want to create an account specifically for expenses, you can designate a specific percentage of your check to deposit into that account with any remainder going into a separate account. For example, you may wish to set aside a portion of each check to go directly into a savings account.
You won't have to spend any time worrying about your designee making time to drop by the bank or the post office losing your check in the mail. Your account should receive your paycheck every pay day, just like clockwork.
Sign Up for Electronic Statements
Just because you aren't home to look over the bills doesn't mean you should remain uninformed. Many services offer an electronic statement option either in place of or in addition to paper statements. You'll be able to keep an eye on your bills even if you're on the other side of the world.
Mortgage companies, utilities, credit cards and other corporations offer electronic alternatives to paper billing in an effort to cut down on costs. It doesn't hurt that these companies can promote these services as green initiatives. In some cases, the companies may send you a notification via e-mail. In others, you'll have to visit the Web site of the respective company and create an account.
Electronic statements give you the opportunity to catch problems before they escalate. Deployment is stressful enough without the additional burden of financial surprises when you return home. Let your designee know you'll be receiving electronic statements while deployed. However, you may not be able to receive all your bills in electronic format, so make sure your designee knows which paper bills they'll need to review.
Use Automatic Bill Pay Options
Some bills are going to be the same amount every time they arrive in the mail. Rent or mortgage payments and insurance payments should remain constant over time. Your bank or credit union may have an automatic payment feature that will allow you to set up a payment from your account on the same date each month.
Many banks and credit unions will let you create an automatic bill payment process online. You'll need to log in to your financial institution's Web site and set up the details for each account. The site will likely ask you for information like your account numbers and the billing address for each bill.
Some utility companies offer an automatic payment option that will deduct your monthly bill directly from a bank account or credit card of your choice. These options require you to share account information with an outside party. For that reason, you may wish to create a bank account specifically to cover the cost of monthly bills and use your primary account for other banking needs.
Get a Check Card
While it's a good idea to bring cash and checks with you on your deployment, you may also want to secure a check card from your bank or credit union. Check cards are convenient and easy to carry around. Many check cards are affiliated with global credit card companies like Visa. Any vendor who accepts credit card payments from these companies should also accept a check card as payment.
You may not need to ask your bank for a check card. Several financial institutions combine check cards with ATM cards. Just bring your ATM card along on deployment.
There's a major difference between a credit card and a check card. Credit cards extend credit to you and you repay the credit card company with interest for any purchases you make with the card. Check cards debit any charges from your checking account. When you use a check card, you won't have to worry about paying interest on the purchase later.
Update Life Insurance and Wills
In many cases, military deployment involves risk. Men and women in the service may operate in hostile environments and combat missions. With this increased level of risk comes a need for responsibility. It's a good idea to make sure your life insurance and will are up to date in case the worst should happen.
While it's not pleasant to think about the worst case scenario, it's better to prepare for it so that your friends and family aren't burdened with financial and legal problems. Taking the time to make sure those you leave behind are cared for and that your property goes to the right people can prevent hardship down the road.
To make a will, you'll need to create a list of your assets, debts, possessions and beneficiaries. You'll also need to visit your military installation's legal office to make your will official. Keep in mind that you may have designated beneficiaries in other documents such as life insurance or military forms. In many cases, these names will take precedence over anyone you name in your will. Make sure all of your forms match your wishes.
Consider Traumatic Injury Insurance
The United States Department of Defense (DoD) instituted a traumatic injury protection plan as part of the Servicemember's Group Life Insurance (SGLI) program. Under the SGLI, men and women who meet eligibility requirements can elect for traumatic injury insurance. The insurance costs a monthly premium of just $1. Payouts are between $25,000 and $100,000, depending upon the nature of the injury.
The insurance is similar to death and dismemberment insurance. It isn't meant to compensate the injured person for lost compensation. For that, you'll need disability insurance. You should also note that certain kinds of injuries aren't covered by SGLI. These include:
- Injuries sustained during a suicide attempt
- Self-inflicted injuries
- Medical or surgical treatment of an illness
- Injuries sustained as a result of using illegal substances
Traumatic injury protection terminates when the service member ends all SGLI coverage or leaves military service. The beneficiary for all traumatic injury insurance payouts is the injured service member.
Ask Your Bank About Active Duty Policies
Your bank or credit union may have special services designed for deployed military personnel. Some institutions will handle delays in payment or provide extensions with extra leeway for service members. Other services could include streamlined or discounted loan application processes and special seminars to help you understand all your options.
Some institutions may have other services available that have little to do with your finances. For instance, the credit union at Travis Air Force Base partners with the Red Cross to offer families of deployed service members the chance to record a video greeting. The greetings are sent to deployed service members around the world. While not every financial institution will have similar programs, it doesn't hurt to ask if there are any special services you can take advantage of while deployed.
Research Your Rights
The Servicemembers Civil Relief Act (SCRA) is an important piece of legislation with which all service members should familiarize themselves. The law provides extensive financial protection to people deployed in the United States military.
Under the law, deployed service members and their families receive eviction protection on any home lease amounting to $2,932.31 per month [source: Military.com]. In addition, service members deployed for 90 days or longer can elect to terminate a housing lease without penalty.
Protection also extends to credit. The SCRA limits all interest on credit issued before the service member was deployed to 6 percent. Any interest above 6 percent that the service member would normally accrue is forgiven.
There are other laws and protections in place to help military personnel protect their finances. Soldiers deployed to designated combat zones are eligible for the Combat Zone Tax Exclusion. All earnings for that month are exempt from taxation. It doesn't matter how much time the soldier spent in the combat zone -- as long as their official duties brought them into the designated areas, all earnings for that month are exempt.
Before deployment, do your homework. It'll pay off in the long run.
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Related HowStuffWorks Articles
- Air Force Federal Credit Union. "Deployment Tips." (Feb. 12, 2010) http://www.airforcefcu.com/deployment.htm
- Force Health. "Pre-Deployment Tips." Jan. 8, 2010. (Feb. 10, 2010) http://fhpr.osd.mil/preDeployment.jsp#financial
- Military4Life.com. "Deployment OIF/OEF Military Pay Entitlements." (Feb. 11, 2010) http://www.military4life.com/militarypay/
- Military.com. "Servicemembers Civil Relief Act Overview." (Feb. 10, 2010) http://www.military.com/benefits/legal-matters/scra/overview
- Military.com "Traumatic Injury Protection." (Feb. 12, 2010) http://www.military.com/benefits/veteran-benefits/traumatic-injury-protection
- Military Officers Association of America. "Financial Tips for Deployment." (Feb. 11, 2010) http://www.moaa.org/usergroup/usergroup_fam/usergroup_fam_spouse/usergroup_fam_spouse_financial/usergroup_fam_spouse_financial_deploytips/default.htm
- Russell Country Federal Credit Union. "Financial Preparations for Deployment." (Feb. 12, 2010) http://www.russellcountryfcu.org/information/articles/financial_preparations_deployment
- Travis Credit Union. "Military Resources." 2010. (Feb. 12, 2010) https://www.traviscu.org/learnpro.aspx?id=228
- United States Department of Veteran Affairs. "Servicemembers' & Veterans' Group Life Insurance." (Feb. 12, 2010) http://www.insurance.va.gov/sgliSite/default.htm
- USAA. "Plan Smart: Preparing Your Will." (Feb. 11, 2010) https://www.usaa.com/inet/ent_utils/McStaticPages?key=advice_deployment_preparing_a_will_01
- USAA. "Prepare Your Finances for Deployment." Jan. 15, 2009. (Feb. 12, 2010) https://www.usaa.com/inet/ent_utils/McStaticPages?key=2005_08_Deployment_finances_01&offerName=prepare_finances_deployment
- Von Der Bruegge, Karen. "A pre-deployment checklist for military families." Military Connection. (Feb. 11, 2010) http://www.militaryconnection.com/spouses/a-pre-deployment-checklist-for-military-families.html