Table of Contents

• Stay nimble: Adapting Your Financial Plan Over Time 

• Take Full Advantage of Retirement Matching

• Be Educated About College Tuition

Last Monday was Memorial Day, and I was lucky enough to be able to catch up with an old friend who recently left the military.  

During our conversation, I was surprised to hear my friend emphasize how much military life helped prepare him for the civilian world. While he admitted that skills like rucking are a bit less useful outside the army, things like discipline, scheduling, and learning to operate effectively under pressure are arguably some of the most useful skills you can learn in life.

The conversation got me thinking: while the military can teach you a lot of skills, what about personal financial management? Are young enlistees offered any financial education, or are they expected to fend for themselves?

As it turns out, the military takes money more seriously than you might expect. Just ask the Marines – they’ve identified finance as one of the six functional areas of leadership development, on par with aspects like fighter and fitness. 

The military actually has pretty compelling reasons to care about service member’s finances. After all, if a soldier is broke or in debt, they’re far more susceptible to bribery (just ask “Fat Leonard”). In fact, the Department of Defense estimates that 80% of all security clearance revocations are due to poor personal finances. 

As a result, all branches of the US military have some form of financial training for service members. Today, we’re going to review a few of the important lessons we can learn from how the military practices financial management, including:

• Why learning about personal finance isn’t a “one and done” thing,

• Why it pays to be educated about college tuition,

• And why you definitely shouldn’t be leaving free money on the table.

Psst… If you’re a vet, check out these free financial resources for veterans. And thank you for your service! 

Know a vet? Forward them this email to pass these resources along!

⌛ Stay nimble: Adapting Your Financial Plan Over Time 

While new service members learn financial skills as part of their initial training, the military doesn’t treat financial management as a one-off affair. In fact, if you’re in the army, you’ll need to complete required financial training at a number of major life milestones, including marriage, birth/adoption, and transition to civilian life. 

This attitude reflects an important point that’s often left unsaid: most major life events are also major financial events. In the excitement that comes with a wedding or a change of job, though, it can be easy to forget the importance of updating your budget, saving habits, and overall financial goals.

Adapting your financial plan over time also highlights the importance of continuous learning about the evolution of investment opportunities. Building wealth today doesn’t look the way it did 10 or 20 years ago, with alternative investments continuing to take market share from traditional stocks and bonds.

But while alternatives can have attractive returns, there’s one little investment opportunity the military offers that features an instant 100% return – and which you might just have access to as well.

 💸 Take Full Advantage of Retirement Matching

The military has a somewhat unique retirement program known as the Blended Retirement System (BRS). As a civilian, you won’t be able to access this exact system, but it has some interesting features that can inform our own retirement planning.

One component of the BRS is the Thrift Savings Plan, which is effectively a government-run 401(k). Like a private sector 401(k), servicemembers can allocate a portion of their pre-tax paycheck to the investment account – which the government will match dollar for dollar, up to 3% of the servicemember’s paycheck. 

If you have access to a 401(k) through your company, odds are you also have access to a contribution matching program. Some estimates indicate that up to 85% of employers with a 401(k) program offer some sort of matching. 

With contribution matching being such a common feature, it’s easy to overlook just how beneficial it can be. Simply put, employer matching is basically the only way to instantly generate a 100% return on invested dollars. Where else are you going to find an investment opportunity like that?

Unfortunately, many 401(k) holders still fail to contribute up to their matching limit, often because it’s hard to see even more money deducted from their paycheck. But whether you’re in the military or in the private sector, the economics are clear – 401(k) contribution matching is essentially “free money,” and you definitely shouldn’t leave any on the table. 

🎓 Be Educated About College Tuition

For all the sacrifices service members make, they’re entitled to some generous financial benefits to help them transition back into the civilian world. One of these benefits is the famous GI Bill, first signed into law by FDR back in 1944.

The original GI Bill offered a range of benefits to vets returning from WW2, most notably academic stipends that effectively covered the entirety of tuition costs at any university. In the modern world, though, rising college costs have made the new GI bill somewhat less generous.

The new version promises to pay up to the tuition cost of a public undergraduate college in the state the veteran resides (although certain programs offer additional benefits beyond that). That’s a crucial distinction because in-state public schools are often significantly less expensive than private ones.

And when it comes to college, it’s not clear that you actually get what you pay for. Public schools like the University of Michigan or the University of North Carolina are some of the top ranked in the country, despite costing significantly less than private options for in-state students.

Know any veterans who used the GI Bill to pursue a college education? Forward them this newsletter and tell them to email us - we’d love to hear whether they think our country does enough to support the transition from military to civilian life.

With tuition costs seemingly set to rise endlessly, the military’s focus on public colleges can be a good tactic to keep education affordable. If you’re already out of school, this might seem like a moot point – but if you’re raising a family, who knows what tuition costs will be by the time your kids are ready for school?

By the way, if you’re thinking about creating an education savings plan for your family’s future, there’s another type of plan you shouldn’t overlook: an estate plan. Estate planning is a crucial part of securing your legacy and taking care of the next generation. 

And here’s the best part: we’re featuring a limited-time discount code for Trust & Will estate planning, exclusively for NWW subscribers. Check it out below!

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