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Military Finances 101: Start Your Financial Plan

Managing Your Finances

In the military, you don't start an operation without a plan. But for some reason, many go through life without a plan. You may not be aware, but October is Financial Planning month.

Let’s use this month to celebrate the importance of proper financial planning and share some tips and tricks on how to get your financial planning started.

Create a Spending Plan

The first step in understanding and taking control of your finances is creating a spending plan and sticking to it. Everyone’s plan will look a little bit different, but the 50/30/20 rule is a good place to start.1

The 50/30/20 rule states that 50% of your budget should go to essentials, such as rent, food, and utilities; 30% should go to wants, such as entertainment or travel; and 20% should go to savings and paying off debt.

There are also a lot of helpful apps to help you stick to your spending plan, such You Need a Budget (YNAB) and Honeydue for budgeting with a partner.

Be Smart With Your Debt

Not all debt is created equal, meaning debt isn’t always a “bad” thing if you are smart with it. For example, taking on a car loan and making all the payments on time can help you afford a car if you don’t have enough money to pay cash and can help you build up your credit score. But be wary of high-interest debt because that can get you into problems quickly.

Understand Interest Rates

Speaking of interest rates, it’s important to understand how they impact your finances and debt. Depending on the current market and your credit score, mortgage rates generally hover between 3% and 6%, although more recently, average interest rates are closer to 7%. In contrast, the average credit card interest rate as of May 2024 was nearly 23%. With that high of a rate, you can see how getting into credit card debt can quickly pile up and make it hard to take control of your finances.2,3

In addition, understanding interest rates can help you make strategic financial planning decisions. Rather than paying all cash for an asset (e.g., a car or a house), if you can get a low-interest loan, you can consider investing the cash you would have spent on an investment vehicle that could generate a higher return than you are paying in interest.

For example, if you have $10,000, you might consider putting $2,000 toward a car and financing the rest at a 2% interest rate while investing the other $8,000 in the S&P 500, which has delivered a compound average annual growth rate of 10.2% per year over the past 20 years.4

Get Covered by Insurance

Lastly, another thing you can do to celebrate Financial Planning Month is to ensure that you are properly covered with the right insurance. If you have dependents or people relying on your income, life insurance is a must-have. Life insurance can ensure that the people you love will be taken care of if something were to happen to you. In addition, you should definitely consider renters or homeowners insurance, car insurance, disability insurance, and health insurance.

There are lots of things you can do to take control of your finances for National Financial Planning Month, and these are just a few. Kick off the holiday season by strengthening your financial fitness.

Military Finances are Different

When you're on Active Duty, you have benefits not available to your civilian counterparts. That holds true when you retire from the military too. If you're an Active or Retired Senior Military Officer or NCO, that's why we think you should work with a financial planner or advisor that deals with your unique situation each and every day. If you'd like to find out how we work with people like you, use the button below to schedule a free initial consultation.

If you found this article useful, you might like the following blog posts:

Retired Military Finances 101: Financial Planning for Fall Home Maintenance and Renovations


Retired Military Finances 201: Test Run Your Ultimate Retirement this Summer


Military Finances 101: Managing Finances for Recently Commissioned Officers





  1. https://www.investopedia.com/ask/answers/022916/what-502030-budget-rule.asp
  2. https://www.bankrate.com/mortgages/historical-mortgage-rates/#tens
  3. https://www.forbes.com/advisor/credit-cards/average-credit-card-interest-rate/
  4. https://www.investopedia.com/ask/answers/042415/what-average-annual-return-sp-500.asp

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