Preserving Operational Readiness
Ways to Keep Financial Issues From Affecting the Mission
July 10, 2014 by Mark Dye
The Department of Defense (DoD) has listed financial struggles as an issue that could impact a military member’s operational readiness. Simply put, if a military member is worried about finances back home, he or she is most likely not focused on the mission at hand. Money problems can even lead to a loss of security clearances and put a military career in jeopardy.
In response, Congress passed the Military Lending Act in 2007, which put in place specific protections and restrictions on certain types of loans, including payday, tax refund anticipation, and car-title loans for military members and their dependents. In addition, the DoD began to offer more robust education programs aimed at helping military members better understand their finances.
Even with these efforts, financial struggles can still be a problem for some service members. According to a recent survey of active-duty military by the National Foundation for Credit Counseling (NFCC), 57 percent are concerned about how potential federal budget cuts will affect their income, and more than half are not prepared to deal with a financial emergency. Given the potential impact on readiness this might have, the results of this military finance survey are even more relevant.
Thankfully, there are actions military members can take that might help lessen these worries.
Monitor regularly—Keeping tabs on your credit report is easy (and free once a year from www.AnnualCreditReport.com) and an absolute necessity. Make sure your payments are listed accurately and quickly correct anything that is wrong. Also check things like your address and personal information, as this tends to be the area with the most issues.
You also need to monitor your spending. We all have times when we buy things without considering the impact on our budgets, but those impulses have to be controlled when money is tight. This doesn’t mean you have to go without, though, as there are ways you can get what you want without breaking the bank.
Borrow smart—It’s a fact of American life: we all need to borrow money. For some military families that can be difficult due to their relative youth (under 25), short credit histories, and frequent moves. In fact, 60 percent of respondents in the NFCC survey who had borrowed money in the past year did so from a non-traditional lender.
Before you use any lender, find out how long they’ve been around, if they follow the Military Lending Act and DoD guidelines, if they have some sort of guarantee or other protections, who regulates them … basically, everything you can to make sure you can get the money you need without regretting it later.
Save often—From a simple savings account that houses money for emergencies, to contributions to the TSP, make sure you’re setting money aside for your future. And if you think you don’t have enough income to save, think again, as there are ways to find savings in every budget.
The key here is to make it automatic, whether that’s through allotment or direct deposit. Doing so means the money is set aside before you even see it. This is called “paying yourself first” and can be a very effective way to build up a cushion.
Keep learning—Some 80 percent of those in the NFCC said they would welcome more financial education opportunities. That is a very impressive number and shows that these families understand that knowledge is power.
The DoDo offers a number of financial education programs for all branches, including the National Guard, as does Military OneSource. (And there is, of course, this very blog and our entire Learning Center.) Simply put: the more you know, the better you might be financially.
If you’ve done all you can to get your finances in order, but are still struggling, it is perfectly okay to ask for professional help. It could be from an on-installation financial counselor, a military aid society, or non-profit. They are there to help, not to judge, and can often get you assistance for no cost.
Maintaining your finances can help maintain your operational readiness and might set you up for a successful military career.