Like many jobs, building wealth can be challenging for military personnel due to the frequent relocations and deployments. 

Establishing a solid financial foundation is always difficult while constantly moving around. Still, military members can use a few tactics to boost their financial safety no matter where their lives take them.

Smart Home Buying And Renting Tips

Strategic home buying or renting is one of the first ways military members can build wealth. Homeownership is one way to build equity. Many military members can take advantage of the VA Home Loan program, which features interest rates and favorable terms such as the option for no down payment or PMI. However, benefits may vary based on individual circumstances.

The program can make buying a home more attainable and affordable for military members, especially in markets where properties are neither becoming more expensive nor providing high returns. Military folk should factor in where they want to retire when buying because keeping the property longer increases the likelihood of appreciation.

If you are amongst those who aren’t looking to sell straight away, renting out a property once you have moved is an excellent way to generate a decent and steady income stream. 

Additionally, refinancing can be a valuable tool for reducing monthly payments or obtaining cash-out options, especially with favorable military interest rates, which can make home loans more affordable. Making changes with little impact on your wealth gives military members flexibility in their financial plans.

Military Savings Programs Are Utilized

The U.S. Military system has several unique saving programs to help service members quantify wealth over the years. One of the popular options is the Thrift Savings Plan (TSP).  

The TSP offers tax advantages similar to a 401(k), allowing contributions on a pre-tax or Roth basis. Some service members may also receive government matching contributions, which can enhance long-term savings potential. Readers are encouraged to explore their specific benefits.

Most traditional savings options typically offer lower return rates; therefore, the SDP and the TSP can provide military members with potentially higher interest on savings. However, service members, wherever they are stationed, can take a diversified approach to saving and investing through the SDP and the TSPg.

Financial Benefits And Tax Breaks

Furthermore, military personnel can take advantage of many financial benefits, such as income tax breaks and access to these other benefits, to help build wealth. For example, The Servicemembers Civil Relief Act (SCRA) provides protection that can reduce the rate of interest charged on some loans to a maximum of 6% while on active duty. 

This can be useful in managing debt or reducing monthly bills, potentially freeing up additional funds for savings or investments. Individual results may vary based on personal financial situations. When refinancing, military interest rates often remain lower than civilian options, which is a significant advantage for those looking to cut costs on home loans.

Tax exemptions for certain allowances, called housing and combat pay, are not part of taxable income. These exceptions decrease the tax bill, leaving more earnings in the family budget. By taking advantage of these benefits and tax breaks, military personnel may retain more income, allowing for potential investments in wealth-building assets.

Building a Portable Career or Side Business

Moving around frequently closes off career options, but a portable career or side business is one way military members can obtain financial stability. In recent years, remote work opportunities have expanded and created the option for military spouses and some service members to earn a paycheck that isn’t dependent upon their location. 

You can earn additional income by starting a side business, like freelancing or online retail. Trained as social workers, Signal Officers can use these options as valuable assets to upkeep military family income, especially during deployments or between duty stations.

Running a side business may provide tax advantages, including potential deductions for home office and travel expenses, depending on individual circumstances and adherence to IRS regulations. These ventures can bring in a substantial source of income that, over time, eases the burden of constantly moving and adds a crucial resource for military families in gaining financial independence. 

In the long term, portable careers and side businesses offer more skills development and networking opportunities that can go into a post-military career.

Explore Low Maintenance Assets

Another strategy that military members should pursue is investing in low-maintenance assets that do not need constant oversight. Military personnel who may not have the time or resources to manage more hands-on investment vehicles will be very pleased with real estate investment trusts (REITs), index funds, and mutual funds. 

These options may provide military members the opportunity to grow their wealth passively without the need for constant portfolio management. However, it’s essential to conduct thorough research and understand that all investments carry inherent risks.

REITs are a way for those interested in real estate but fearful of investing in rental properties because of frequent relocations. One of the reasons indexes and mutual funds are so attractive is that they garner diversified exposure to the stock market, enabling military members to enjoy stock market growth over time without trading in and out of nearly every stock regularly. 

Adopting this method allows military personnel to develop wealth consistently even when deployed or moved, and their availability to manage investments personally is limited.

Conclusion

Military personnel can explore various strategies to pursue financial security and potential wealth-building through smart housing choices, utilization of military savings programs, access to financial benefits, portable careers, and investments in low-maintenance assets. Individual outcomes will depend on personal circumstances and choices.

With resources like favorable military interest rates and tax exemptions, these strategies provide a robust foundation that enables military families to thrive financially, no matter where duty calls.

Disclaimer: This content is for informational purposes only and is not intended as financial advice, nor does it replace professional financial advice, investment advice, or any other type of advice. You should seek the advice of a qualified financial advisor or other professional before making any financial decisions.

Published by: Nelly Chavez