Military members should get finances in order well before deployment
Good financial planning means being prepared for life's unexpected occurrences. For military families, that's particularly important because of the transient nature of military life. Repeated back-to-back deployments make it imperative that both spouses have the same financial goals and decide how the stay-at-home spouse will hold down the financial fort while the service member is away.
"It's vital that they talk about where they want their money to go, what's important to them and how they're going to get there," said Lisa Wright of Cleburne, whose Marine Corps husband is stationed at Camp Pendleton, Calif., and is expected to deploy to Afghanistan in March.
Here's what Wright and other experts say military members and their families need to do before deployment:
Get your affairs in order
Make sure your bank and credit accounts are joint accounts so your spouse will have access to your financial accounts and other assets while you're deployed.
Update your beneficiary designations on your insurance policies and bank accounts.
Make sure you have adequate life insurance. The military offers life insurance through the Servicemembers' Group Life Insurance with a maximum coverage of $400,000.
If you have other life insurance policies, check to see if they have a war clause that says the insurer won't pay benefits if you're a casualty of war.
Draw up important documents, such as your will, durable power of attorney, medical power of attorney and living will.
Mangage your extra pay
Review the extra pay you may be receiving, for such things as family separation, imminent danger and hardship.
"These are temporary entitlements, and you should not become reliant on them for daily living expenses," said Joe Morrin, director of financial planning at First Command Financial Services Inc., which works with military members.
Establish a budget
So what do you do with the extra money?
"Because finances are so often tied up with the amount of stress a person has, it's good to have a budget in place," Wright said. "Sketch out a guideline on what's going out, what's coming in, and if there is extra money, what do you do with that extra money?"
Have savings equivalent to at least as much as three months of expenses, Wright said. Many financial planners recommend six months.
Watch your credit
Make sure you're current with your bills and paying off or paying down your debt. Having good credit is especially important for military members because bad credit can cause them to lose their security clearance.
"There have been many cases where they've been denied or their clearance code has been revoked because they're considered a security risk," Walbert said.