Financial Planning Tips for Veterans

Article summary 

• Gather essential documents like your DD214 and use resources like FINVET to easily access your military benefits, special discounts and financial tools.
• Create financial breathing room by sticking to a clear budget, paying off high-interest debt and saving three to six months of living expenses for unexpected emergencies.
• Protect your wealth with the right insurance coverage, invest your money wisely for long-term growth and watch out for financial scams that sound too good to be true.

For many veterans, transitioning from service to retirement means it's time to enjoy those well-deserved benefits. But it can also present complicated financial concerns. Fixed incomes coupled with the rising cost of healthcare and longer life expectancies mean budgets can often feel strained. From maximizing Veterans Affairs (VA) benefits and pensions to managing debt and avoiding financial scams, military veterans, especially seniors, face unique financial challenges that call for tailored strategies. Here are some financial tips that can help.

Acquire important documents

Your DD Form 214 (or DD214) is a vital document for your financial outlook, since it is proof of your military service. With this form, you can access important VA benefits, special military discounts and more. Be sure to review the form to ensure accuracy (ideally before your separation) and file an appeal as quickly as possible to correct any errors. Keep an official copy in a safe or safe deposit box for safekeeping.

Get resourceful

The VA offers a whole host of resources through the National Veterans Financial Resources Center, also known as FINVET. From this springboard, you can find helpful tools about how to increase your income, budgeting, managing debt and setting future goals. You can also find a comprehensive list of veterans discounts, employment and housing assistance, and more. Remember that many cell phone providers, utility companies, grocery stores and other retailers offer veterans discounts. Make sure you’re taking advantage of every resource available—you’ve earned it.

Stick to a budget

Income minus expenses equals margin. That simple calculation is the key to creating a solid budget. If everything you earn from all sources of income is used up with no wiggle room, it can create stress. Whether you need to get a part-time job to supplement your benefits and pension or you have to cut back on your budget—or both—the key is to have enough income and low enough expenses to create financial breathing room. Start by listing everything you spend in a month. What is necessary, and what can go? Do you have too many subscriptions, or are you dining out too much? You may need to track your spending for a couple of months to see the full picture, and then adjust accordingly. 

Pay off debt

Sometimes, VA benefits are distributed in lump-sum payments. While it’s never really a bad thing to receive money, using a large amount in an unwise way can be catastrophic for future needs. Consider paying off high-interest debt, like credit cards, since the interest on most investments can’t keep pace with the often higher rates on credit cards. You can access the VA’s “debt-destroyer” tool to help guide you. The less debt you have, the more your income can work for you.

Save for emergencies

Emergencies are going to happen, and when they do, you need a plan. Grandma used to call it a “rainy day” fund—and we know it’s eventually going to rain. Aim for three to six months of your monthly household expenses in a safe, easily accessible account, like a high-yield savings account. This amount includes necessary budgetary line items, including food, utilities, shelter and transportation. Examples are groceries (not dining out, only necessities), prescriptions or medical expenses, mortgage or rent payment, water and electric bills, car payment, gas for your car, or a bus or train pass. This figure doesn’t include vacations and unnecessary purchases. If you have variable income or only one person in the household works, aim to save up to six months in your emergency savings account. If your income is stable and you have no dependents, for example, you can usually get by with three months’ emergency savings.

Protect yourself with insurance

Like many military operations, every good financial strategy needs strong offense and defense tactics. While spending wisely and saving for the future are key offensive elements to financial success, having the right insurance in place is a key defensive strategy. To start, be sure you understand all the benefits you qualify for, including disability compensation, burial benefits, long-term care assistance and more, before you buy into any other products. To help you navigate that wide sea, call on a Veterans Service Organization representative, or VSO, to guide you through your unique situation.

Medical, auto and home insurance are non-negotiable and will help protect your finances if the unexpected occurs. For healthcare, many veterans supplement their VA health care benefits with Medicare for additional coverage. If anyone depends on your income, or you just want to leave a cushion for your loved ones when you die, life insurance is key. Both term- and whole-life policies are available, and they are very different products, so speak with a qualified life insurance agent to determine which is right for you. If you have a higher net worth, also consider an additional umbrella policy, usually up to $1 million in coverage. These over-and-above policies help protect your assets in the event of an accident on your property or some other unforeseen situation that could deplete your entire net worth. 

Invest wisely

Consider dedicating some of your income to investments with long and reliable track records. Remember that saving is different from investing. Savings are typically funds you need for upcoming expenses, like travel or home repairs. Investments are intended to stay put for future, long-term growth and use later in life. If you need guidance, consider hiring a certified financial planner who specializes in working with veterans. The Veterans Benefits Banking Program (VBBP), for one, offers veterans up to three free sessions with an accredited financial coach.

Avoid scams

Be wary of “can’t miss” opportunities, late-night ads, new investment vehicles that haven’t yet been proven or anyone who promises guaranteed returns. Slow, steady, well-tested methods are usually a safer bet. For other helpful tips on how to avoid fraud, visit Investor.gov. You know the saying: If something sounds too good to be true, it probably is.