Emergency Savings for Life in the Military

Written by Dan Mahoney, a Project Sanctuary volunteer and a First Command financial advisor who provides face-to-face coaching in Valdosta, GA. Dan helps military families shape positive financial behaviors. He joined First Command after a 21-year career in the United States Air Force. There, he attained the rank of senior master sergeant and served as an aircraft maintainer supporting the F-111 Aardvark and F-15E Strike Eagle during both peacetime and wartime. You can connect with Dan on Facebook.

Type “emergency savings” into Google, and you’ll find hundreds of articles on the subject that all promote the same general message: you should save and maintain roughly 6 months’ worth of income for unexpected expenses. By doing so, you’ll be better prepared to weather a home or car repair, a medical bill or maybe even a job loss without having to dip into your investments or live on credit.

For all the uncertainty associated with life in the military, unexpected expenses – and the financial instability that comes with them – may actually be less likely. Historically, job security in the military is greater and the comprehensive coverage provided to service members protects them from unexpected medical bills. That means you may not need to park as much money in your emergency savings account as your civilian counterparts – which could give you a head start on investing for the goals that are important to you.

How much, then, should you keep in your emergency savings?

Before you can answer this question, you first need to identify what qualifies as an emergency. When you start to see a large amount of money in your savings account, it’s tempting to spend it. But if the expense occurs regularly (like your car payment) or can be planned for in advance (like vacation), that expense is not an emergency.

For expenses that are emergencies, a reasonable savings objective is one or two months’ of income. Before you set that as your goal, however, take a look at your life situation and factor in anything that could add additional risk. If you own a house or have a large family, emergency expenses might end up costing you a little more, and having an extra month or two of income in reserve could lower your risk of using credit. In some situations, even for military service members, it may be appropriate to set aside that full six months of income. For instance, if your family relies heavily on a civilian spouse’s income or you will soon separate from the military, you are more susceptible to the financial risks than those outside of the military force.

Once you decide on your emergency savings goal, figure out how much money you can allot to the goal each month, and set up an automatic deduction from your paycheck. And when you hit your goal, don’t stop saving altogether. By continually replenishing your account, you’ll be better prepared when you inevitably have to dip into it.

This article has been published previously in First Command publications. 

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