How the National Guard and Reserves may impact your budget

Like their active-duty counterparts, members of the National Guard and Reserves serve because they love their country. In recent years, the Reserve component has been called to serve more and more.

"When I was supporting the war on terror in Afghanistan, I was active duty but served each day alongside members of the National Guard and Reserves," says Josh Andrews, USAA Military Life Advice Director and a retired U.S. Air Force lieutenant colonel. "We are just one big family."

Income is one thing among many that often changes when National Guard and Reserve members are called to active duty. How it changes depends on individual circumstances. If you're a CEO as a civilian and a non-commissioned Army officer, you'll face a large decrease in pay when you're activated. On the other hand, if you make a modest income working for a nonprofit, you may get a bump in pay when activated.

Regardless of your situation, take these steps now to prepare your budget for changes in the future.

1. Build a reserve fund.

You may already know the importance of an emergency fund. This is an account which stores three to six months' worth of essential living expenses. An emergency fund covers unexpected expenses, like if your air conditioner goes out or you need to pay a hospital deductible. For members of the National Guard and Reserves, a "reserve fund" is on top of that.

This reserve fund can help reduce financial stress caused by your service to our country.

On average, deployments last between 6 and 12 months. Therefore, your goal is to save 6 to 12 months' worth of essential living expenses. Your deployment might be only a month or two, but if you have an income gap, it's critical to have cash on hand that can bridge the gap.

To further refine how much savings makes sense for you and your family, consider your typical deployment duration and "dwell period," or time between deployments.

2. Make a reserve budget.

Once you're financially prepared to be called into service, it's time to adjust your budget. Make sure it reflects your new Reserve or National Guard income. Putting pencil to paper — or using a budgeting app — helps you know how to alter your spending and saving to fit your new income.

If you're adjusting your income down, you may have less money to spend for things like vacation or dinners out. If you're receiving a bump in pay, consider budgeting the extra to improve your financial situation by paying down debt or increasing your retirement savings.

3. Use auto payments to your advantage.

Set up automatic bill payments before you deploy. You'll find this beneficial for certain expenses like utilities, car payments, credit cards and mortgage. If you don't have someone staying behind to pay the bills, this ensures you pay your bills on time.

"If you don't, you might come back with your finances or your credit in a worse situation than when you left," says Andrews. "My wife runs our daily finances, which made things much easier when I went TDY or deployed."

If you can't set up automatic payments and plan to give someone permission to conduct your finances on your behalf, make sure you choose a person you can trust and rely on. Use caution before giving them a power of attorney.

This person will act as your financial "stand-in," so they need to be capable of conducting your finances. "Even if you trust your best friend or parent completely, do you want to trust them to pay your bills on time if they pay their own bills late? Probably not," Andrews says.

Don't forget that your financial institution may have its own power of attorney form you'll have to complete. Taking care of all the paperwork before deployment orders drop can reduce stress and allow you to focus on other important aspects of preparing for deployment.

4. Know your benefits.

The Servicemembers Civil Relief Act (SCRA) provides extra protections for service members "if legal or financial transactions adversely affect their rights during military or uniformed service." SCRA protections begin on the date you enter active duty and terminates when your military service ends. In most cases, these benefits aren't mandatory or automatic; you have to request them.

Here are some examples of how SCRA benefits members of the National Guard and Reserves.

• For debts incurred prior to active duty, you may qualify for an interest rate cap for the duration of your active-duty period.
• Your landlord can't evict you without a court order, unless your rent is higher than a certain amount, which is set each year.
• You can't be foreclosed on without a court order if the mortgage was taken out prior to military service. This protection applies a period of time while you are serving and for one year after you complete your service.
• You can request postponement of proceedings if your military service prevents you from attending a scheduled court appearance. This includes divorce and child support hearings but not criminal proceedings
• The owners of a self-storage facility can't sell your items for overdue rent without a court order. Like a mortgage, this applies to the period of active duty and for one year after.
• You can end a vehicle lease you signed before entering a period of active duty and that active duty period continues for at least 180 days.

Additional benefits and protections are also available. To learn more, check with your local JAG office or the U.S. Department of Justice's SCRA website.

5. Meet with human resources.

Schedule an appointment to talk with the HR department of your civilian employer. During this meeting, discuss the status of your position during your deployment and what you can expect when you return. Make sure you and your family have health, vision, dental and life insurance during your deployment. Determine if your civilian employer or the military provides these insurance coverages while you're serving your military duty.

Members of the National Guard and Reserves should always notify their employers of their military status well in advance of being activated. It's important for civilian employers to understand that sometimes service members receive no-notice deployments as well.

6. Seek help when needed.

The military offers free legal and financial counseling, and emergency financial assistance to all military members in every branch of service. Take advantage of all resources available to you. Here are some commons ones to consider.

• Army Emergency Relief^{See note1}
• Air Force Aid Society^{See note1}
• Navy-Marine Corps Relief Society^{See note1}
• Coast Guard Mutual Assistance^{See note1}
• We Care for America (National Guard Relief Fund)^{See note1}

Remember that access to relief agency support may change based on status: Title 10 versus Title 32 versus State Active Duty for National Guard, or on/off orders for Reservists.

Balancing expectations from civilian employers, military job and family life often causes stress for members of the National Guard and Reserves. Having a financial plan in place ahead of time helps limit that stress and lets you focus on the priorities that are most important to you.

For more information, education and resources to support your overall financial situation, visit usaa.com/advice.