When retired Army Brig. Gen Mike Meese, Ph.D., was a junior officer, he learned a financial lesson: Constrain yourself to get ahead. His car payment and credit cards were the teachers. At the end of the year, he’d review reports totaling his interest paid.
“Those dollars weren’t going to me,” Meese said.
Instead, a loan company and Visa had his money. Better to save and buy outright, without interest, and pocket those dollars, Meese realized.
Now president of AAFMAA (American Armed Forces Mutual Aid Association), Meese shares this insight and more with fellow veterans. He hopes they build a solid financial foundation for themselves and their families following these steps:
Learn and understand your military benefits
Make sure you’re aware of your benefits as a veteran, and share the details with your family. People leave the military, and, in the final week, they might go through a transition class. However, they’re busy getting ready for their new life. Their attention is divided, and details are lost.
“They frequently don’t realize that they have a lot of benefits,” Meese has observed, “and then they may or may not ever tell their family.”
Establish a financial plan
A solid plan includes two parts: A short-term emergency fund and a long-term savings fund.
Meese’s rule of thumb: Stash four to six months of your living expenses.
That way, if your income suddenly decreases or disappears, you aren’t tempted to pay bills with credit cards.
For long-term savings, take advantage of programs available to you. While you’re still in the military, participate in the Thrift Savings Plan. Afterward, contribute to your employer’s 401k program. Save a minimum of 10% of your income.
You might also want to save for your children’s college tuition and living expenses. Meese notes that most states have tax-lowering savings plans called 529s.
Protect your income
To do this, take one step: Buy term life insurance.
“The most valuable thing that a veteran has is his or her ability to earn income from the time they leave the service through age 65 to 70, whenever they stop working,” Meese emphasized. “Say you unexpectedly passed away during that timeframe, your family is not going to be able to fulfill all the objectives that you have for them, including college funds and retirement funds.”
In the military, you may have a $400,000 life insurance policy, but you lose that when you leave the service. Investigate and secure new coverage before you separate or retire.
Research your new home state
Many separating or retiring from the military choose to move. If that’s you, do your research first. Look at home prices, income taxes, property taxes, additional fees, and government services, such as public schools and local recreation. Ensure your budget and expectations match your new home.
Proceed with caution
“One of the mistakes I see,” Meese said, “is putting too much money into one basket.”
Some people will find a get-rich-quick scheme and put a lot of money into it. Maybe through a hot stock tip, or in day trading or investing in GameStop or cryptocurrency, he noted.
“And although that might be worth doing with a very, very, very small amount of your assets, maybe 1% or 2%,” Meese continued, “you don’t ever want to put too much money into any one financial vehicle of any type.”
Over-communicate
Meese describes his fellow veterans as kind of individualistic. They sometimes don’t share all of their information with their spouse.
“If somebody passes away, we deal with this a lot of times as an insurance company, the spouse is lost,” Meese said. “They may have very good assets; there may be a very good plan. But that plan doesn’t do any good. The veteran spouse isn’t aware of what that plan is and what he or she should be doing.”
Learn more at aafmaa.com.
