Financial Mistakes We Often See Military Members Make

By Brett Gottlieb

Members of the U.S. Armed Forces are known for their eagerness to take on challenges. But when it comes to money, some on active duty are prone to making costly financial mistakes that can affect their families’ futures.

Most of the financial mistakes servicepeople make are also common among civilian families. However, certain facets unique to military life can make these errors more impactful than they might otherwise be. In this post, I identify five of the most common missteps military members make and how to avoid or correct them.

Excessive Credit Debt

Many servicemembers fall prey to high-interest credit offers. Companies target them (especially new enrollees) because they’re gung-ho about building credit history. All too often, they feel a false sense of safety because they’re in a structured, disciplined environment that offers deployment pay or bonuses. That illusion can drive credit use out of control.

It’s not always easy to repay credit debt, especially with skyrocketing interest rates attached. Before long, you might find your credit score in decline, damaging your future buying power.

To avoid this possibility, take steps to build credit responsibly and take advantage of SCRA (Servicemembers Civil Relief Act) safeguards. Ideally, you should talk to an on-base financial counselor before taking on any new credit responsibilities.

Risky Investments

Enlisted servicemembers sometimes make investments in extremely risky commodities. This is usually done in an effort to generate some quick cash through unproven investments like crypto, penny stocks, multi-level marketing schemes, and other unregulated “alternative” investments. Some may be subject to peer pressure, which can lead to serious financial mistakes.

High-risk investments almost never correlate with long-term financial goals. To begin your investment career, seek out diversified, long-term plans with time-tested strategies, like the Thrift Savings Plan (TSP). Always inspect opportunities with great caution, and talk to veterans who have successfully avoided financial mistakes.

Not Saving for Retirement

Retirement can feel like a far-off prospect, especially to servicemembers under age 30, who make up more than 72% of all active-duty personnel. These individuals might think their military pensions can carry them through retirement or make minimal contributions to their TSPs, if any. But relying on just one or two retirement vehicles simply isn’t enough.

It’s never too early to start saving for retirement. Set up a retirement fund as soon as you’re able, and make automated contributions to it each month. You might also qualify for the Blended Retirement System and earn government matching for your contributions.

Buying a House at the Wrong Time

Military life is famously mobile. Permanent change-of-station cycles can make it extremely difficult to buy a home. Some may overestimate the length of time they’ll be stationed in one place. Others may believe that their properties are guaranteed to appreciate in their absence, though unpredictable real estate markets make that uncertain at best.

Consider whether it’s truly a good time to take on the massive responsibility of homeownership. Depending on your situation, it may be more advisable to rent for a while. If you’re ready, take time to analyze the local market. Also, be realistic about how long you expect to stay where you are now.

Lack of Deployment Plans

When you’re called to serve in a remote location, it’s important to structure your finances while you’re gone, especially if you have a family. Some members head off without making firm plans for automated bill payments or account access. They may also neglect to make plans in the event of serious injury or loss.

Well, before you depart, make a pre-deployment checklist to keep your finances intact. Important items include legal documents, household budgets, emergency savings, powers of attorney, and a reliable method of communication between you, your loved ones, and your financial representatives.

Avoid Financial Mistakes With Comprehensive Advisor

Financial preparedness is almost as important as the physical preparedness the military demands. Fortunately, a few small measures in the present can help you avoid bigger challenges in the future.

Comprehensive Advisor can help you stay on track. When you work with us, you’ll benefit from an experienced team that can steer you away from the most costly financial mistakes. Our priority is to help you feel confident in your financial future. To get started, email us at [email protected] or call (760) 813-2125.

About Our Advisors

Brett Gottlieb is the founder of Comprehensive Advisor and a financial advisor with nearly two decades of industry experience. He graduated from California State University-Chico with two bachelor’s degrees, in business administration and economics, and is Life Insurance licensed in several states. He is passionate about guiding his clients on retirement income planning, helping each client pursue their specific retirement goals, and defending the assets his clients have worked so hard to achieve. Brett is a California native and currently resides in San Elijo Hills with his beautiful wife and three children.

Our team of qualified professionals have experience in the financial service industry, and our advisors hail from some of the largest independent broker/dealers and banking institutions in the country. They have dedicated their professional careers to creating personalized financial strategies for individuals and families who seek successful retirement planning and currently offer investment advisory services through AE Wealth Management, LLC. Our advisors take a common-sense approach to the planning process and work with clients to create a comprehensive retirement roadmap to help ensure their assets are preserved and they receive the income needed to enjoy their future. Based in Carlsbad, California, they work with clients throughout San Diego County and beyond. Learn more by connecting with Brett on LinkedIn or email them at [email protected].

Investment advisory products and services made available through AE Wealth Management, LLC (AEWM), a Registered Investment Advisor. Insurance products are offered through the insurance business C.A. Financial & Insurance Services. Comprehensive Advisor, LLC is an Investment Advisory practice that offers products and services through AE Wealth Management LLC (AEWM), a Registered Investment Advisor. AEWM does not offer insurance products. The insurance products offered by C.A. Financial & Insurance Services are not subject to investment Advisor requirements. CA Ins. Lic. #6000262. 3200044 – 8/25