How Veterans Can Avoid Financial Hardship
U.S. veterans often face more financial hardship than the general civilian population. Often, the lack of good financial management starts while on active duty. A 2014 survey by the National Foundation for Credit Counseling (NFCC) found that average military family had:
7% higher unsecured debt balances
16% fewer tangible assets
15% higher monthly debt-related expenses
Once military duty ends, financial hardship increases for many veterans, with some facing circumstances as dire as being homeless. Veterans are also targeted by predatory loan sharks who charge exorbitant interest rates and closing fees, and scammers going after military paychecks and pensions.
Many vets unwittingly fall into the financial traps these fraudsters set for them. Others are simply unprepared for the living expenses of everyday civilian life once their military salary and benefits stop.
How Veterans Can Avoid Falling Into a Financial Hole
Most military personnel enter the service when they are young. Their post-military life, especially in regards to finances, isn’t top of mind. The U.S. military offers great benefits — a competitive monthly salary, cash bonuses, special pay and incentives, medical benefits, and education benefits.
Once you exit the military, though, that security disappears, dropping many veterans into a financial pit that they struggle to get out of. Here’s what you can do to avoid financial hardship as a veteran and plan a strong financial future after your military career ends.
1. Have a Plan For When You Return From Duty
When you enlist, take advantage of the military’s financial readiness program, but don’t stop there. See it as a stepping stone to further improve your financial knowledge.
Consult a financial advisor to educate yourself on investments, start saving early for retirement, and have an additional savings fund in place to fall back on when the time comes to search for a civilian job. Having a financial cushion will help with plans to find a place to rent or buy a car when you return from duty.
2. Deal With Trauma First
If you’ve suffered trauma from exposure to combat, it’s important to deal with that first. Mental health conditions like depression, grief, or PTSD affect every part of someone's life, including decision-making. Many vets with trauma-related conditions don’t make sound financial or life decisions. Some turn to alcohol, prescription drugs, or illegal drugs as a coping mechanism, which only leads to a further downward spiral. If you’re struggling to cope, contact the U.S. Department of Veterans Affairs mental health services.
3. Coping With Medical Expenses
If you sustained an injury or disability while on active duty, sign up with the VA’s health care services. It covers checkups with your primary care physician, appointments with specialists, urgent care, prescriptions, medical equipment, prosthetics, home care, and elderly care.
Copayment rates apply but these are nominal compared to private health care services. Some veterans are exempt from copays due to their disability rating, income level, service record, or other special eligibility factors. For example, if you’ve received the Medal of Honor or suffered a catastrophic disability, your VA health care will be free.
4. Finding Employment
Many veterans find it difficult to find employment. Unemployment is one of the main reasons many vets go through financial hardship. Being in the military equips you with a specific set of skills that may not be in high demand back in the private sector. Word your resume in a more business-world friendly way and emphasize the strengths of your military training, such as a strong work ethic, punctuality, tenacity, and leadership skills.
If finding employment is proving difficult, why not start your own business? According to the Small Business Administration, there are 2.4 million veteran-owned businesses in America. There are examples of veteran entrepreneurs who started a coffee company, mobile juice business, and a shoe company called Combat Flip Flops with shoe names like the Men’s AK-47 and the Women’s Floperator.
Once your veteran-owned small business is up and running, register it with the VA’s Office of Small & Disadvantaged Business Utilization (OSDBU). You’ll have access to small business support and resources, and be able to bid on government contracts.
5. Managing Debt
Debt is a crippling problem for most Americans. Veterans are often worse off due to the fact that they rely on credit cards to survive while trying to find their feet in the civilian world. The NFCC survey found that 58% of veterans carry some credit card debt over from month to month compared to 34% of civilians.
If you must use credit cards, do so cautiously and try to settle the balance every month to avoid attracting interest. Avoid retail credit and only take out auto and home loans once you are financially stable. If you do have a car or home loan, don’t skip or make late payments as this will lower your credit score.
6. Take Advantage of Military Discounts
There are literally hundreds of discounts for military personnel and veterans at retail stores, restaurants, hotels, flights, tourist attractions, and amusement parks, and more. Veterans also qualify for lower car insurance rates. According to The Zebra, veterans can save between 3% and 7% on auto insurance. Don’t be afraid to inquire about military discounts. The savings can provide some welcome relief for your family during times of financial hardship.
How Can Disabled Veterans Become Financially Stable?
Disabled veterans face a tougher challenge but there is help available and your options may not be as limited as you think.
VA disability compensation. If you got sick or injured while serving, you may qualify for monthly tax-free compensation. If your service caused an existing condition to become worse or triggered a mental health condition, like post-traumatic stress disorder (PTSD), you can also apply for VA disability compensation.
Aid and Attendance and Housebound Allowance. If you are housebound and need daily aid for activities like bathing, dressing, or feeding, you qualify for this allowance. It will be added to your monthly VA pension amount.
Find a job. Being disabled doesn’t mean relying on grants for the rest of your life. Disabled persons are employable. If you have access to transport, you’ll be able to get to work and back. If the severity of your disability prevents you from traveling daily, then try to find work online. Having a job will help maintain your independence.
Financial Assistance For Veterans
Apart from government financial assistance, veterans can turn to the following organizations should they need financial help.
Operation Family Fund — Financial aid for disabled veterans, caregivers and family of those who were injured during Operation Enduring and Iraqi Freedom.
USA Cares — Financial assistance for veterans to cover medical expenses, housing, and emergencies. USA Cares also helps veterans acquire skills and tools to find employment.
PenFed Foundation — Emergency financial aid for disabled veterans.
Combat Female Veterans Families United (UFVF) — Provides transition services to female veterans returning from combat and their families.
Debt.org — Debt relief assistance for veterans.
Veterans Inc. — Assists homeless veterans to find housing.
Preparing For Life After Military Service Begins When You Enlist
Transitioning from the military to civilian life is hard in many respects, including financially. The military has recognized the financial struggles of its vets and implemented personal financial readiness classes that teach enlistees the basics of banking, credit, and investing.
With more financial awareness, more vets are faring much better than their predecessors. Research in 2018 found that veterans report 6% less financial anxiety, 4% higher scores in financial well-being, and 12% are more likely to use financial planning technology. Preparing for financial success after military service begins the day you enlist.
This article does not necessarily reflect the opinions of the editors or management of EconoTimes