The Importance of Financial Literacy for Service Members

The Importance of Financial Literacy for Service Members


Financial literacy for USBA service members- Dad and daughter reading book

Some of us consider ourselves “good with money,” and others, well, not so much. The term “financial literacy” is a more formal way of measuring one’s ability to understand a variety of important financial skills and concepts like budgeting, investing, and personal finance management. Becoming financially literate lays the foundation for an intelligent relationship with money. The sooner you establish that foundation, the stronger your long-term financial security can be.

Budgeting doesn’t have to feel like a big deal
A big component of financial literacy is budgeting. A budget’s purpose is to help you understand where your money goes and guide you to spend within your means, and it should be that simple.

To create a budget, outline your monthly income (salaries, allowances, side jobs, pension, etc.) and subtract your monthly expenses (rent/mortgage, utilities, groceries, childcare, etc.). Your surplus is what you have left to spend on the fun stuff, put into savings, or pay off debt – ideally, a little bit of all three.

Financial literacy for USBA service members- Dad and daughter reading book

One common budgeting strategy is the 50/30/20 rule, which recommends putting 50% toward needs, 30% toward wants, and 20% toward savings goals. This helps define spending thresholds and keep control of your finances. This strategy helps military families simplify cash flow with a big-picture approach, so you don’t have to stress over every small detail.

Creating a budget you can stick to is the real key to financial success. To get started with your budget, you can go old school and use a pen and notebook, create a spreadsheet in Excel or Google Sheets, or get some help from technology. Applications like EveryDollar and YNAB are available on your phone or desktop and make budgeting even easier.

Navigating your finances in the military 
Money matters for service members and their families are often complicated. Relocations, deployments, childcare, and employment option limitations for spouses are common factors that compound financial stress. Additionally, income for service members is not as straightforward as that of the average civilian.

Base pay for rank and years served is a service member’s primary compensation. It’s paid twice a month and is the most consistent source of income. Military pay can also include several allowances, some of which are tax-free, as well as special pay based on where you are stationed, military specialties, and other factors. These may be paid monthly or annually based on the type of allowance or special incentive, making them harder to factor into a recurring budget.

Check out Military Pay 101 from Military OneSource to get all the details about military pay amounts, allowances, special pay and incentives, and other benefits. Having this information will increase awareness and ability to plan for the future.

Many Military compensation benefits go beyond an account deposit. Service members also receive paid time off, retired pay, health insurance, affordable life insurance, personal & professional development, tuition assistance, job stability, signing bonuses, and military discounts. Many of these far exceed private sector benefit packages. 

Service Member resources for financial management 
Money may not buy happiness, but did you know financial stability can impact more than just your pocketbook? Studies done by the National Institute of Health reveal growing evidence that financial strains and worries play a significant role in mental health. Lt. Col. Melissa Boyd, a clinical psychologist, wrote in the Army Public Health Center’s Health Promotion and Wellness Directorate that financial stress has been linked to other health issues, and it’s important for service members to be aware of resources available to help.

An abundance of financial planning and management resources are available to military service members and veterans. It can be a lot to track down, from apps to online courses and tip sheets. We’ve compiled a list of some of the best resources to kick-start your financial literacy journey:

  • provides a single point for military members, veterans, and their families to review their free credit reports.
  • The Military Financial Readiness Project delivers free financial education tools and training to service members, their spouses, and on-base financial educators.
  • MilLife Learning offers online resources, including Courses to Increase Your Economic Security and Money Matters Courses, to service members, their families, survivors, and those who support them. 
  • MilSpouse Money Mission is a financial education website for military spouses launched by the Department of Defense to provide spouses with relatable and trusted financial education.
  • MyPay is an online system that allows you to view your military pay information as well as make a number of changes without using a paper form. 
  • PenFed works to empower service members, veterans, and their communities with the skills and resources to realize financial stability and opportunity. 
  • Personal Finance Calculators, offered by Military OneSource, help show you ways to pay off debt and better manage life’s financial decisions.
  • Sen$e is a mobile app available on iOS and Android that provides personalized financial education and tips to help you with everyday financial topics.
  • The Shop Smart: Savvy Buying Tips for Military Families Check one-page tip sheet offers ways to save, complete links to commissary savings, exchanges, and even a personal financial manager or counselor.

What better time than right now to start your financial literacy journey? The sooner you get on the path to financial security, the better. (or… the stronger you’ll be in the future). There are often financial planning resources on base to help you get started. Or take advantage of free one-on-one financial counseling from Military OneSource

If you’re looking for more insurance coverage as part of your financial plan, USBA has affordable life, supplemental health, accident, and auto insurance options for active and retired service members. To learn more, contact one of our Product Specialists at 800.821.7912 or order a free information kit

Uniformed Services Benefit Association (USBA) is a not-for-profit Association that provides group life insurance, health insurance supplements, and other products and services to military personnel, Federal employees, National Guard and Reserve members, Veterans and their families.

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