As we honor Veterans Day and Remembrance Day, it’s crucial to reflect not only on the valiant service of our military personnel but also on the often-overlooked financial challenges they endure. While we pause to remember their sacrifices, let’s also shine a light on the financial hurdles veterans confront daily, exploring ways to support their financial well-being beyond the traditional observances.
Veterans often face unique challenges when transitioning to civilian life. One significant aspect of this transition is managing finances. The main issues veterans face after returning to civilian life include:
- Income transition: Veterans often face challenges transitioning from a military career to a civilian career. There can be a period where they are looking for a new path and a new job, as well as learning the skills needed to succeed within those structures. Understanding the new income structure and budgeting accordingly adds further stress. Furthermore, families that are always moving have issues finding employment. The unemployment rate for military spouses is 25%. In Canada, programs such as the income replacement benefit (IRB) pay veterans 90 percent of their salary at the time they are released from the military, which helps ease the transition but does not resolve it.
- Physical and mental health costs: Medical expenses can be a significant concern for veterans dealing with service-related injuries or mental health issues. It is essential to understand their health care benefits and those not covered.
- New budget structuring: On active duty, veterans usually did not have to consider housing and healthcare costs or various taxes. When transitioning to civilian life, those costs may prove to be significant and should be budgeted for before discharge.
- Accumulation of debt: Many veterans may go into debt during their service, with student loans, medical expenses and credit card debt. A survey found that 27% of service members had more than $10,000 of credit card debt. With this debt accumulating, many veterans have to resort to more expensive financing options.
In this article, we explore how veterans can overcome these challenges for financial success.
How can veterans best position themselves financially?
Generally, many programs and benefits are offered by the military to veterans who have completed service, including income support, disability benefits, benefit navigation and career transition service.
Beyond the military, there are several support programs, such as the Royal Canadian Legion, as well as private companies, like Morgan Stanley that offer pro-bono financial planning assistance.
Whichever support service veterans choose, the key advice is to start planning early.
Before discharge, it is recommended that veterans start boosting their savings and building an emergency fund. The usual advice suggests three months of savings, but this can differ based on specific individual and family circumstances. This emergency fund is to cover any period when veterans are looking for a new job, especially as veterans start paying for housing and healthcare on their own.
Moreover, veterans should realistically estimate their post-service income and make a budget to fit their expenses, including what might be higher than expected taxes.
Finally, as mentioned, there are several programs designed to help veterans. But it can be difficult to know what exactly is available. A good rule of thumb is that in cases of big purchases or financial changes, like when buying a home, going back to school or retiring, there is usually a plan dedicated to veterans. For example, veterans who qualify for VA Home Loans can get a mortgage without a down payment and with lower closing costs.
Building savings and investing habits
For veterans with debt, tackling the most expensive debt with the highest interest rates is first and foremost. Paying this debt off first will save valuable time and money in the long run. Then, saving for an emergency fund or sinking fund (money set aside for a specific purpose) is vital. But, like with anyone, creating those habits or finding that additional income after paying for every other expense in life can be difficult.
For those who struggle with finding enough to pay off debt or save, automatic savings or rounding savings are great options.
Automatic savings is when an amount of money is transferred directly from a checking account into a savings account. This can be set up directly with your bank or financial institution.
Rounding savings is when a rounded amount is transferred directly to your savings, investment, or loyalty account after you make a purchase. For example, if you buy a coffee for $3.50, that transaction will be rounded up to $4.00, and the additional $0.50 goes directly to the account you determined. Various companies offer this capability, such as the online brokerage Questrade.
Finally, savings can come from smart shopping practices. This means being mindful of how you’re spending and where. But it also means being aware and taking advantage of sales, and military discounts. Cashback rewards can also be significant to meeting savings goals. These are provided by card-linked programs (such as those that Olive supports), as well as credit and some debit cards.
Olive and financial wellness for veterans
Olive supports programs that help veterans access powerful card-linking features, helping them save money after every purchase. Veterans can link primary cards and start earning rewards to be put towards their savings and investing goals.
Learn more about how Olive works at Olive Financial Wellness.