Military personnel put their lives on the line every day for all of us. They make the biggest sacrifice of all so that we can enjoy the freedoms and rights we have as a nation. Memorial Day is a chance for us to reflect on all we’re grateful for and give thanks to the men and women who make it possible.
But being in the military comes with its own set of challenges — beyond the obvious. And one of those challenges is managing finances. A four-year survey conducted by USAA and Blue Star Families found that 65% of military families experience financial stress. The survey goes on to show that the main obstacles among military respondents are saving for the future (69%), living/moving costs (64%), spouse unemployment/underemployment (52%), and low income or limited knowledge of money management (42%). A lot of these obstacles can be traced to financial behaviors. The Financial Education Council conducted a survey that found 45% of respondents would use a $1,000 interest-free credit towards big or unexpected purchases and 12% would use it for gifts.
What’s more, according to Consumer Credit findings, “14% of military respondents reported having both a mortgage and a credit card balance of $10,000 or more.” Additionally, 52% of enlisted personnel have no savings at all. Though these findings are troubling, they might not be all that surprising. With deployment, unexpected moving expenses, and unstable or lower pay, it can be hard for military servicemembers to manage finances.
Government Assistance Programs
Serving in the military is arguably one of the most honorable and difficult jobs. And to help, the US has developed a few programs that provide financial assistance to military members. The Servicemembers Civil Relief Act (SCRA) of 2003 was enacted to help servicemembers focus on their job responsibilities without fear of adverse financial consequences for themselves or their families while they are training or fighting in battle.
Servicemembers also qualify for deferment of federal loans while on active duty or performing National Guard duty during a war, military operation, or national emergency. It applies to direct loans, Federal Family Education (FFEL) Loans and Perkins loans.
Furthermore, in May 2018, new protections for servicemembers and veterans were signed into law. The Federal Trade Commission (FTC) and the Bureau previously highlighted the new federal law that went into effect on September 21, 2018 requiring free security freezes and one year fraud alerts at the three nationwide credit reporting agencies (CRAs).
Military Personnel Want More Financial Advice and Guidance
Although the government has helped servicemembers in a variety of ways, military personnel still feel like they’re not getting the financial guidance they need to manage their finances more successfully. And this is exactly where financial institutions can step in and help out. The survey by USAA and Blue Star Families found that 90% of military families wanted more advice on financial planning. Subsequently, Consumer Credit findings show that when military personnel were asked about their satisfaction with their current financial situation 19% said they are dissatisfied, 26% are satisfied, and 55% are neutral. These findings show that there’s a lot of room for improvement.
However, according to an article by Ann Marsh in Financial Planning magazine, financial advisors hired to help service members are instructed to stick to financial education, not detailed planning. While financial education for our military members seems minimal at best, the USAA and Blue Star Families survey shows that “88% of military respondents feel that financial readiness training should be more personalized to the specific needs of each family, and 81% of them feel that spouses should be included in unit-level financial readiness training.”
When it comes down to it, financial stress can weigh heavily on people's minds, keeping them from focusing on their jobs. And military personnel are often faced with life or death decisions, so they can’t afford to be distracted by outside factors.
How MX Can Help
Military personnel have a tough job, one of the toughest jobs in the world. We should do our part to help them focus on that job by making it easier for them to manage their financial lives. Fortunately, financial institutions are in a great position to become true customer advocates. Educational courses on finance are a great way to start. However, adding innovative tech solutions to the mix can enhance those efforts, making it so that knowledge is easily applied. Over time, technology has the power to turn financial knowledge into better, long-lasting financial habits.
At MX, we provide financial institutions and fintech companies with tech-savvy solutions and innovative products that enable their customers to alway stay in the know when it comes to their finances. Now, financial institutions can help servicemembers budget smarter, keep track of bills, and ensure payments are made on time. This hands-on approach enables military personnel to avoid getting into debt due to overspending or lack of budgeting for the future. And with proactive AI-driven notifications, customers are always aware of what’s happening with their finances. Not only will this reduce stress and strain for servicemembers while they’re on active duty, it will also help them plan for the future as they transition back into civilian life.