How to Manage Your Finances When Serving in the Military

Every branch of the military recognizes that managing your finances as a soldier is a critical element in being prepared to carry out the duties needed to protect our nation.

As a service member, it’s difficult to train effectively for an assignment if a soldier has anxiety about credit card debt, past-due rent, utility bills, or car payments and struggles to pay student loans. Leaders in service branches have made a priority to teach military personnel and their family members how to manage money and stay out of debt. It’s that important.

Financial Support Offered by the U.S. Government for Service Members

Given that reality, the Department of Defense developed a website — militaryconsumer.gov — to improve financial literacy among active duty and retired service members and their families. DoD created the site with help from the Federal Trade Commission and Consumer Financial Protection Bureau.

Militaryconsumer.gov offers education and advice in key financial areas:

• Buying homes and cars
• Budgeting for individuals or families
• Checking credit reports and credit scores
• Avoiding scams directed at members of the military
• And other money problem areas for military personnel

The military also partners with the National Financial Educators Council to develop a financial education program to help each branch of service fulfill the requirements from a July 2016 law that mandates financial literacy training for all service members.

That program and militaryconsumer.com are two ways DoD makes financial literacy a prominent part of a soldier’s training, from the time they sign up for service until the day they leave.

Why Do Military Personnel Need Help with Finances?

Military life is not for the faint-hearted. Constant relocations, spouses losing jobs or having a hard time finding one and the possibility of deployment on a moment’s notice are just some of the strains for military families. There is also the pervading worry, especially by spouses, when a deployment happens.

Personal finances are also a reality. More than 90% of service members and their families called financial stress a major concern of everyday life, according to a 2019 Military Family Advisory Network survey. Many of those families also said that stress affects the focus on their military responsibilities.

In fact, data compiled by the Consumer Financial Protection Bureau shows that active-duty service members, especially younger enlistees, experience many more negative financial outcomes than civilians. These include late payments on car loans and revolving credit card accounts, plus personal and and retail installment loans.

Their issues don’t end when their service concludes. It’s common to see their credit card debt rise and credit scores fall in the initial two quarters of civilian life and to have debts fall into collections or charge-offs and to have vehicles repossessed.

Why do military personnel need help managing their money? It’s not hard to understand. Relative to civilians, enlisted soldiers don’t make much. Base pay across all branches of the military has not kept pace with rising salaries over the past decade. Inflation has also made low pay less valuable.

The Department of Defense classifies enlisted jobs into 25 categories (called grades), and all the job titles in the Army, Navy, Marines and Coast Guard fit into one of these 25 slots. (The Coast Guard only uses 24 of them.)

DoD compensates soldiers based on their grade and years of service. Pay scales range from $25,734 to $129,096, not counting special, incentive or active-duty pay.

Enlisted personnel fall into the bottom nine grades. An enlisted soldier with 10 years of service and an E-5 pay grade, which is in the middle of the 25 grades and the nine for enlistees, has an annual base pay of $50,814.

Married soldiers and soldiers who have dependents are eligible for a housing allowance, but often that allowance only makes a dent in housing costs if the family lives off-base. “Recent trends in the housing market indicate that entitlement rates trail the rapidly increasing cost of living expenses (like rent and utilities near major military installations,” the Army University Press reported in 2025.

So, while the problem of debt is universal, being in debt often is more common for active armed forces personnel and their dependents than for non-military families. Still, taking steps toward eliminating debt, which include debt management plans, debt consolidation and debt settlement, are available to everyone.

Personal Finance Counselors

Admitting to having a problem with debt is one of the major problems members of the military must overcome. Too many people see admission of a debt problem as a sign of weakness. Often, they keep the issue hidden until it becomes too big to handle.

The Department of Defense’s Office of Financial Readiness addressed the issue by offering Personal Finance Counselors (PFC) to any servicemember that requests one.

The Personal Finance Counselor provides:

• One-on-one financial counseling
• Classes on money management and how to get out of debt
• How to apply for emergency financial help
• How to access your credit reports and credit scores

U.S. Code 992 mandates that all military personnel and their families have access to a Personal Finance Counselor and financial literacy training. The goal is to assist personnel and their families in financial readiness.

The PFC is an independent contractor and does not endorse products or offer investment advice. But financial literacy training is intended to be updated at each life-changing station in a soldier’s career, including initial training; first duty station, promotions; marriage; divorce; birth of first child and disabling sickness. It also should be part of leadership training, deployment training, separation from service and retirement.

Debt Relief Strategies

Military personnel and families who get overwhelmed with credit card or some other form of debt, have three major choices for relief: debt management programs, debt consolidation loans or debt settlement. Each has pros and cons that make them the best — or worst! — choice for a given situation.

The problem is that every consumer’s financial situation and goals are different. So, no single solution works for everyone. It’s best to research each of these to figure out which is the best debt consolidation option for military members.

Other debt-relief strategies can also work, including the popular “snowball” method. Snowballing begins with making a list of one’s financial obligations and then attacking the smallest one first, while paying only the minimum amount on larger debts. Each succeeding larger debt gets repaid in order until they are all retired.

Snowballing can help someone get out of debt over the course of a few years if new debt is not added.

Other strategies that could help military families eliminate debt include:

• Set short-, medium- and long-term financial goals
• Set up a budget and live by it
• Save a portion of earnings every month; save a larger portion of bonus pay or tax-free pay
• Create an emergency fund
• Keep credit card spending to a minimum
• Investigate Internal Revenue Service (IRS) advantages extended to military families
• Take advantage of military discounts for insurance needs.
• Save for retirement

Servicemembers Civil Relief Act

The U.S. government has long recognized the need to offer financial assistance and protection to its military members, which was the spark for passing the Servicemembers Civil Relief Act (SCRA) in 2003. The main purpose of the SCRA is so service members can focus on their jobs and not worry about adverse financial consequences while they’re training or deployed.

The SCRA protects members of the Army, Navy, Air Force, Marine Corps and Coast Guard while they’re on active duty, while they’re recovering after being wounded or while they’re on leave. It also protects members of the National Guard on active duty and who are active commissioned officers of the Public Health Service or the National Oceanic and Atmospheric Administrations.

Spouses and children of covered members can also qualify for certain protection. So can anyone for whom a servicemember supplies more than half of their financial support.

The SCRA doesn’t cover civilian employees or military contractors.

Benefits of the SCRA start the same day a service member begins active duty. They expire the day the active-duty period ends. However, companies can extend SCRA benefits for six months to a year for certain financial products, such as credit cards and mortgages.

The SCRA protects many financial areas, but most of them deal with homes, vehicles, and credit cards. It provides protection related to mortgage foreclosures, rent agreements, car repossessions, change in credit card rates, life and health insurance and income tax payments.

Some of the more commonly invoked provisions of the SCRA include:

• Capping Interest Rates: Companies may not charge more than 6% interest per year on any credit card, mortgage, or loans during a member’s period of active duty. This cap does not apply to new loans or credit card charges made while on active duty. It also doesn’t apply to student loans.
• Legal Protection: Lenders can’t deny or revoke credit, change the terms of an existing loan or refuse credit because someone seeks SCRA protections. Similarly, insurers may not refuse to insure someone after a SCRA protection is invoked.
• Judicial Relief: If active duty prevents someone from attending a scheduled court appearance — including actions involving bankruptcy, divorce or foreclosure — SCRA allows the member to request a postponement for at least 90 days.
• Protection Against Evictions: Without a court order, a landlord can’t evict a service member or any dependents while the person is serving on active duty.
• Ability to Terminate Property Leases: Service members can terminate without penalty any residential or business property lease that began before the active-duty assignment.
• Cancellation of Automobile Leases: Service members can terminate a truck or car lease if they get called to active duty for 180 days or longer after signing the lease.
• Relief from Foreclosures and Forced Sales: Real estate may not be foreclosed on, and vehicles can’t be repossessed without a court order if the terms of the purchase contract are violated because of active military service.
• Insurance Coverage: Service members are entitled to have their health insurance reinstated if it is terminated while on active duty. Life insurance also protects against lapses, termination, and forfeiture for nonpayment of premiums or indebtedness for the period of military service plus two years. Members can suspend their professional liability insurance during any period of active duty. Members must make those requests through the Veterans Administration.
• Cell Phone Service: Members can terminate their cell service if they relocate to an area that doesn’t support their current mobile contract.
• State Tax Relief: The SCRA prevents service members from having to pay state taxes on their military income — or personal property, such as a car — to any state other than their home state of legal residency. If military orders require a move to another state, the “domicile” or state of legal residence for tax purposes does not change.
• Small Business Owners: Military pay and non-business assets are protected from creditors.
• Voting Rights: Cities, counties, and states can’t suspect a service member’s voting rights if there is an absence because of military service.

Waiving SCRA Rights

Although it’s hard to imagine a situation where it helps, service members can waive the rights and protections afforded by the Servicemembers Civil Relief Act.

To waive these rights, a member must sign a waiver during or after a period of military service. Any waivers signed before entering military service are invalid.

Any service member considering waiving these rights should read the document carefully and seek the advice of a qualified lawyer before signing a waiver.

Veteran Saves Campaign

In 2007, the Department of Defense (DoD) launched “Military Saves,” a department-wide financial marketing campaign to persuade and motivate servicemembers and their families to reduce debt and save money. That project now exists as “Veteran Saves.”

The program encourages members to take a “Veteran Saves pledge” and to push groups and organizations to promote year-round savings by allocating a portion of their paycheck for a designated savings account. Veteran Saves is aimed primarily at former military personnel, their spouses, and children.

The goal of the program is to get former military families, especially those members who only recently left the military, to commit to feasible financial goals that help them create a more stable home life.

Goals that Veteran Saves sets for its members include:

• Develop a personal financial plan
• Establish a good credit record
• Start a savings account for emergencies
• Open a retirement savings account
• Save for a vehicle

All four DoD Services (Army, Air Force, Marine Corps, and Navy) and the Coast Guard and the National Guard Bureau, have participated in various savings plans. Since the program’s inception, it has reached more than 4.1 million people.

During Veteran Saves Week in 2024, nearly $1.8 million hit new or existing savings accounts, and another $418,00 was pledged to similar accounts, according to participating financial institutions.

The campaign asks participants, through a digital tool, to set savings goals. It suggests delegating 30% for an emergency fund, 22% for debt repayment and 14% for housing-related items (buying or renting a home, home repairs, etc.).

Military Retirement Savings

The Thrift Savings Plan is the most common place for members of the military to save for retirement, but there are tax advantages on Roth IRAs available to service members in combat zones that make them worth considering.

The Thrift Savings Plan (TSP) originally was a retirement savings program for federal employees but opened its doors to military members in 2000. It allows members to invest in traditional or Roth IRA retirement accounts. Members can invest up to $23,500 in 2025. That rises to $24,500 in 2026.

Those who are 50 to 59 years old can invest an additional $7,500 in “catch-up contributions” in 2025. And there’s a higher contribution cap, up to $11,250, for those aged 60 to 63.

The catch-up cap drops back to $7,500 for people who are 64 and older.

The government offers matching funds that vary from 1% to 5%, based on the level of your investment. For example, someone contributing 5% or more of their salary to TSP will receive the maximum 5% matching funds.

The government also waves a yellow flag when people turn 64. If you raise your contribution level after you turn 60 and you fail to lower it in the year that you turn 64, you will get to your catch-up cap quicker and disqualify yourself from receiving matching contributions after you hit the new lower cap.

The Roth IRA contribution advantage comes when you are in a combat zone making tax free money. You can contribute that money tax-free to a Roth IRA and when you take the money out, it comes out tax free.

So, you earn the money tax free. Deposit it in a Roth IRA where it grows tax free. Then, withdraw it tax free when you retire.

Student Loan Repayment Choices for Military

Service members paying off student loans have several options for reworking loan terms or having payments deferred or suspended. The Servicemembers Civil Relief Act has provisions for how financial institutions manage these loans that military personnel have. It mandates that interest rates on student loans to active-duty personnel be capped at 6%. This applies to all federal student loans and some private student loans.

The SCRA allows service members to request a postponement of loan repayments during specific times of active duty and immediately after active duty. Service members should make sure their loans are recorded in an authorized military database. Members may have to supply a copy of their active-duty military orders.

Members who served at least 10 years or served in another public service position for at least 10 years may be eligible for more relief under the Public Service Loan Forgiveness program.

There are several options available for active-duty military personnel with student loans.

Service members qualify for deferment on any federal loans while serving active duty or performing National Guard duty during a war, military operation or national emergency. Deferment halts payments while they are on active duty. There is no time limit on the military deferment. It does not end until six months after the service member is released from active duty.

Deferment applies to direct loans, Federal Family Education (FFEL) Loans and Perkins Loans. Perkins Loans are small need-based loans to students with “exceptional need.” The money for these loans comes from the Department of Education, but the school services the loan and sets the rules for loan payment.

Members of the military can petition schools for up to a three-year grace period or seek forbearance. Loan holders can also waive collection actions on service members, who inform them of their military obligations.

Service members could include their time in the military as part of the Public Service Loan Forgiveness Program (PSLFP). The PSLFP fully discharges what’s left of your federal student loan if you put in 10 years in either the military or public service or some combination of both. You must make on-time payments for your student loan during those 10 years.

The 10 years of on-time payments could be made as part of the Standard Repayment Program, the Income Based Repayment (IBR) program, the Income Contingent Program (ICP) or Pay As You Earn (PAYE) program. Only payments made after Oct. 1, 2007, count.

The IBR, ICP and PAYE programs base monthly payments on amounts earned and family size, which could be the best choices for members of the military.

It should be noted that the PSLFP applies to federal loans and not private student loans.

Troops stationed in hostile fire areas do not have to pay interest on their student loans for five years. If they are injured, they could have all their federal student loans discharged.

The National Guard pays up to $7,500 a year on student loans for members who enlist at least six years and meet other requirements. The maximum benefit is $50,000.

Eligible healthcare professionals in the National Guard can qualify for up to $250,000 in loan repayment help through the Health Care Professional Loan Repayment Program (HPLRP). This benefit requires a seven-year service commitment.

Military service members can also quality for forbearance, graduated repayment, extended payment, payment reductions, or consolidation loans.

Take Advantage of Military Financial Programs

From basic personal finance training to debt programs to relief opportunities for loans and student loans, soldiers and their families have ways to alleviate their debt. It should be said directly: There’s no shame in taking advantage of these programs.

Enlisted soldiers often don’t make the same money as civilians of the same age. Military leaders expect that pay rates will rise over time, but will those be enough? History suggests it may not be.

Military members train for any event they could encounter in the field. It’s a good policy to train the same way for the financial side of life.