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NFCC Survey Shows Military Families Financial Struggles

The U.S. economy might be bustling for civilians, but not all active enlisted members of the military are thriving in it.

More than one-third of enlisted military members do not pay their bills on time and about half say they had to get a second job to supplement their income.

Those extraordinary findings came from the 2019 Military Financial Readiness Survey conducted by Harris Poll on behalf of the National Foundation for Credit Counseling (NFCC) and Wells Fargo.

If that’s not alarming enough, the survey determined that the number of military households that couldn’t pay their bills has more than doubled (34% vs. 16%) since the last time the poll was conducted in 2014 and that 11% of enlisted families had debts in collection.

More than 84% of enlisted members and their spouses/partners said they have worries about personal finances and many expect to put life decisions like buying a house or going back to school on hold until they sort things out financially.

“Men and women in uniform face many challenges and daily sacrifices while serving our country. Financial concerns shouldn’t be one of them,” Rebecca Steele, NFCC President and CEO, said.

Lieutenant Colonel Joel Levesque, the Chief Financial Officer for the Army Emergency Fund, said his organization provided $67.2 million of assistance to 40,413 soldiers and families in 2018, but started a “Just Ask” campaign this year in hopes they can do even more.

“Our sense is that the need for financial assistance is greater than what we spent,” Levesque said. “Consequently, we are using all available media channels to encourage soldiers and families to ‘Just Ask” if they are unsure AER can help.

“AER is not just for emergencies. It can be accessed by soldiers and their families with any financial challenge.”

The biggest financial challenge for young enlisted military is the same as the one facing civilians of the same age: finding affordable housing and meeting basic living expenses (food, transportation, utilities, etc.) with an entry-level income.

The starting salary for a private in the Army is $20,160 or about $387 per week. If the soldier is promoted to sergeant and managing 8-10 people, he/she must be in service for six years before reaching the $36,000 per year ($693 per week) level of pay.

By contrast, the manager at a McDonald’s restaurant with 8-10 employees on a shift, can expect to make $46,500 a year ($894 per week).

“We know that military families face financial stress,” Shelley Kimball, senior director of research and program evaluation for the Military Family Advisory Network, said. “And we know that financial health can create a ripple effect on mental health, relationships, and so much more.

“It’s important that families take necessary steps to educate themselves and engage in productive discussions about money as a family.”

The low salaries for enlisted military almost disappear each month just trying to make ends meet. The average cost for rent has gone up 12.7% across the country the last five years and more than double that in many major metropolitan areas.

And while soldiers living off base receiving a housing allowance, the median price nationally for a 2-bedroom apartment in 2019 ($1,185) can consume more than 50% of the soldier’s income.

The lowest median by state in the country is Arkansas ($725 per mo.) while not surprisingly, California is the highest at $1,839 per month. Texas, the state with the highest number of active Army soldiers, has a median rent of $1,060 per month. Georgia, home to the second highest number, has a median rent cost of $1,035.

Another problem the military families have in common with civilians is operating without a monthly budget. Less than half (46%) of the service members keep a budget as compared to just 49% of civilian households.

Budgeting is a major factor in a family or individual’s ability to manage money properly says the NFCC’s Steele, whose 55 nonprofit credit counseling organizations give free advice on setting up an affordable monthly budget, regardless of income.

NFCC member agencies also provide financial education on issues like credit, insurance, housing, retirement and money management and savings. The survey results show that military families could use it. The percentage of service members that grade themselves at ‘A’ or ‘B’ for personal finance knowledge declined from 70% in 2014 to 62% in 2019.

“The NFCC is committed to ensuring that members of the military and their families have access to the financial tools and information they need to live a financially stable life,” Steele said. “NFCC member agencies are proud to assist military personnel through dedicated military-specific programs.”

One positive note from the survey were that military members are much better than their civilian counterparts in putting away money for the future. Almost 90% of active service members have both retirement and savings accounts.

Bill “No Pay” Fay has lived a meager financial existence his entire life. He started writing/bragging about it in 2012, helping birth Debt.org into existence as the site’s original “Frugal Man.” Prior to that, he spent more than 30 years covering the high finance world of college and professional sports for major publications, including the Associated Press, New York Times and Sports Illustrated. His interest in sports has waned some, but he is as passionate as ever about not reaching for his wallet. Bill can be reached at [email protected].

Military father holding his new born baby

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Sources:

  1. McClary, B. (2019, May 21) 2019 Military Financial readiness Survery. Retrieved from https://www.nfcc.org/clientimpact/2019-military-financial-readiness-survey/
  2. NA. (2019, May 21) Harris Poll Shows Military Service Members, Spouses And Partners Rely On The Gig Economy To Supplement Household Income. Retrieved from https://www.nfcc.org/press/harris-poll-shows-military-service-members-spouses-and-partners-rely-on-the-gig-economy-to-supplement-household-income/
  3. NA. (2019, January 1) Military Pay Chart for 2019. Retrieved from https://www.militaryrates.com/military-pay-charts-e1_e5_2019
  4. Salviati, C. (2019, June 1) Apartment List National Rent Report. Retrieved from https://www.apartmentlist.com/rentonomics/national-rent-data/
  5. NA. (2019, May) Military Active-Duty Personnel, Civilians by State. Retrieved from https://www.governing.com/gov-data/public-workforce-salaries/military-civilian-active-duty-employee-workforce-numbers-by-state.html