Many of us can trace at least one of our impulse buys to a stressful moment or event. A deployment can be that trigger.
As a retired U.S. Air Force lieutenant colonel, I understand this from personal experience. During or after a deployment, it's often tempting to spend extra money on items you want but truly don’t need, like a motorcycle or a nice piece of jewelry. It's such a stressful time that in a lot of ways you feel like you deserve something special and nice.
Deployment can be daunting from a financial perspective. But like any lifestyle change, preparation is the key to success. Read on for advice on how to prepare your finances for the challenges of deployment.
Create a deployment budget.
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Service members typically earn more money during deployments. First, there's the Family Separation Allowance, which is paid when a military member has to be away for more than 30 continuous days. Then there's Hostile Fire Pay, which is paid to military members deployed to a combat zone. On top of that, any form of military pay earned while on deployment in a combat zone is generally excluded from federal income tax. You can get a good estimate of how much extra you could be receiving by using USAA's deployment pay calculator.
But just because you're making more money doesn't mean you'll have a budget surplus. Often, military families move closer to their extended families for added support during long deployments. Maintaining two households brings additional expenses.
The bottom line: As you prepare for a deployment, update your budget to reflect all of your income and expenses. If it's been a while since you've created or updated your budget, jog your memory with our advice and tips on how to budget.
Take care of all bills.
Consider this important statistic: Your payment history makes up a significant portion of your credit score. For example, FICO weighs it at 35%, while VantageScore 3.0 weighs it at 40%. If your bills aren't paid on time while you're deployed, your credit score will likely take a hit.
You may think you'll have the ability to manage your finances and pay your bills from your deployed location, but expect the unexpected.
When I was in Afghanistan, a rocket attack took out our internet for three days. I wasn't worried about my bills being paid because my wife handles the day-to-day finances. Considering how much time I spent away from our home, it just made sense for us to work the finances that way.
Before you leave home, make a plan for how your bills will be paid. Ask someone you trust to pay your bills or set up automatic bill pay through services like USAA’s Pay Bills.
Even if you end up with the ability to pay bills from your deployed location, you'll appreciate having that financial burden lifted.
Cancel services you won't need while you're deployed.
As you think through your upcoming bills, ask yourself the following questions to determine whether there are easy opportunities to save money while you're gone:
Should I cancel Netflix while I'm deployed?
If your family will use it while you're gone, probably not. If you can access it from your deployed location and will have time to use it, Netflix or other streaming services can be a handy mental escape.
But if you answered both of these two questions with a resounding “no,” cancel and save that monthly bill. While you're at it, don't forget about other monthly services, such as Amazon Prime, Hulu, or Disney+. Before you act, consider any early termination fees that might apply.
Should I cancel my car insurance before I deploy?
Unless you're getting rid of your vehicle, definitely not.
But your policy may need to change while you're gone. If you and your family won't be driving the vehicle, you can put it in storage and save some money.
Putting your car in storage doesn't mean you actually need to get a storage facility to house it. You're just declaring that you won't drive the vehicle. Therefore, there's less of a risk of an accident and you may be eligible for lower premiums. For more information on how to protect a vehicle that won’t be driven for a while, check out these smart tips for long-term vehicle storage.
Learn more about how USAA can help with auto insurance needs while you deploy.
Should I cancel my home utilities before I deploy?
If you're keeping your home or apartment, you probably don't want to cancel all utilities. Keeping your home cooler in the summer helps protect your furniture and electronics. In the winter, you'll want the heat turned on to avoid frozen pipes, which can be a huge disaster.
But you may not need home internet, cable TV or a home phone — unless, of course, your security system depends on it.
If you find opportunities to lower your expenses during your deployment, reallocate those funds toward other financial goals. This is your chance to emerge from the deployment in better financial shape than when you entered.
Put someone you trust in charge of your financial affairs.
A power of attorney allows someone else to make financial decisions on your behalf if the need arises. Choose this person carefully. You want somebody who's trustworthy but also capable. Think about how they manage their own affairs before you put them in charge of yours.
There are also other powers of attorney that you should consider. Actually, there are 6 different types that can benefit military members and their families. You can read this article to learn more about those 6 powers of attorney.
Need help drafting a power of attorney or a will? Contact your unit’s servicing Judge Advocate for free legal help.
Review your life insurance before you deploy.
Is Servicemembers' Group Life Insurance, also called SGLI, all your family will need if the worst-case scenario happens? This is a good time to consider private life insurance. Plus, when you eventually leave the military, SGLI will go away.
What is your plan to make sure your family continues to have the protection they need? Securing private life insurance now, while you're at your youngest and healthiest, may allow you to lock in the best rates. Learn more about life insurance.
Make some more money.
The Department of Defense's Savings Deposit Program, or SDP, was established to give service members a chance to build their financial savings through a military savings account.
Service members are eligible while they're serving in a designated combat zone or are receiving hostile fire or imminent danger pay as they serve in a Qualified Hazardous Duty Area. SDP currently pays 10% interest per year.
Use SCRA to your financial advantage.
The Servicemembers Civil Relief Act, or SCRA, provides financial and legal protections for service members and their families. The SCRA also applies to Guard and Reserve members when they're called to serve.
SCRA can help you save money by lowering your interest rate or getting out of a lease. As you take a look at your finances, see if it can help you save money. Learn more about SCRA protection in our article Top 10 things to do before deploying.
Have some fun!
As you prepare for deployment, think about how to use any budget surplus toward your financial goals. Some common financial goals are:
If you’re unsure what to do with the extra, just park it in a savings account. That way, you don’t spend it while you’re deciding what to do with it.
But even in the midst of saving for your financial goals, USAA believes in setting aside up to 10% of extra deployment income for fun items. You've earned it.
A word of caution: Don't trade deployment stress for financial stress. Plan a post-deployment escape that fits within your budget, so you can return relaxed and reconnected without extra debt.
Use discipline as you prepare for deployment.
You probably began preparing for this deployment months ago through tactical training, education, physical training and physical exams. Just as you've prepared for the military aspects of your deployment, remain disciplined in your financial approach to deployment.
Having a plan before you deploy not only keeps everyone involved on the same page, but it also helps to reduce stress.
Prepare for deployment.
Learn more about actions you can take to prepare for your deployment at USAA's Deployment experience.