6 Steps To Establishing A Spending and Savings Plan for Veterans and Transitioning Military Personnel

The finances of transitioning military personnel, veterans, and their families are unique because not only must you account for regular everyday life expenses, but also plan for ever-changing circumstances like job transitions, relocation, and fluctuating income.

That’s why it’s essential to create a Spending and Savings Plan, aka "budget," that helps you see a clear view of your finances at any given time. Your spending and savings plan will also help you to understand where you can save, plan for upcoming life events, set financial goals, and feel more in control and empowered on your journey to financial stability.

Here are six steps to help you create a Spending and Savings Plan that you can stick to AND takes military veteran life into account.

Preparation

Before you begin, you will want to gather all sources of income by getting a month’s worth of earnings statements or paycheck stubs for any significant others with whom you share finances. Consider additional income outside of work, too, like child support, alimony, or recurring payments that you receive in third-party payment apps like PayPal due to a second job or income.

You’ll also need to gather at least 3 months of bank statements, but preferably 6 – 12 months. Lastly, you’ll want to have the Spending & Savings Plan Tool handy.

Step 1: Determining Your Monthly Net Income

Start by reviewing the income documents you gathered and write down ALL your income. Remember to include additional income sources like child support, alimony, etc. As you’re writing down this income, use the amount you receive after taxes.

Two important things to note here:

If you or your significant other’s income fluctuates, refer to the last 3-6 months of income documents to get a baseline or minimum income brought in and use that figure. Keep in mind that you do NOT want to use an average here, instead use the minimum income amount.

If you or the person you share finances with has direct payments coming out of your pay for things like retirement pay or savings, then add those back into your income. Don’t worry! You’ll account for them in expenses, as well, to balance everything out.

Step 2: Determine Your Monthly Expenses

Now that you’ve determined your income, it’s time to review your bank statements and make note of your recurring expenses. We suggest looking at 3-6 months of expenses to understand what you truly spend.

Again, be sure to account for expenses like child support and alimony. Also include any other expenses coming directly out of your paycheck, like contributions to a retirement plan or allotments. Remember when you added those back into your income? It’s time to balance that by accounting for it in your expenses.

Be sure to not try to go off what’s in your head, here. Look at those 3-6 months of bank statements to get a clear view of your expenses. Chances are you might find charges that you’d forgotten about, especially those pesky subscription services! To be especially thorough, review 12 months of statements as you may find annual subscriptions and more.

For expenses that fluctuate (like your electric or gas bill), we recommend rounding to the highest reasonable bill amount from the past year.

Step 3: Filling Out Your Spending and Savings Plan

Ready to get a really clear view of your finances? This is where you do it. You’ve taken note and written down income and expenses, but by transferring that information to your Spending and Savings Plan document, you’ll have a clear idea of what you spend on gas, dining out, groceries, entertainment, etc.

You can access our Spending and Savings Tool by registering for our complimentary workshop. This tool is already categorized with the primary household categories and additional categories for things we like to call "adulting" (like life insurance) to break your expenses down even further.

Step 4: Assess Your Financial Landscape

Let's be honest. Talking or thinking about money can make many of us feel anxious, overwhelmed, or a myriad of other emotions. It's okay to feel all those things, process it, and then let go of any negative emotions.

Here’s why: at this moment, you are taking steps to create a custom financial plan for yourself and taking control of your finances. That’s something to be celebrated!

Now, take time to ask yourself questions about your financial landscape. For instance, do your expenses exceed your income? If they do, what are ways you can fill in the gap? Maybe you can slim your grocery budget or still treat yourself to your favorite latte but limit the number of times a week you do so.

Look at some of the perks of being a veteran that can help save money, like utilizing VA benefits or discounts offered by businesses to veterans. Remember, reducing does not mean cutting out completely. Even the smaller amounts you save count.

Step 5: Implement Your Plan

Now is the fun part: ACTION! What steps will you take to ensure you stick to your plan? It could involve setting up different accounts, or even some lifestyle changes like utilizing a cash envelope system, or choosing one weekend as “free entertainment” only.

The goal here is to do what you feel comfortable with for you and your family, which allows you to save in a realistic, sustainable way.

Step 6: Be Consistent

Transitioning military personnel and veterans have busy lives, and sometimes it can be hard to be consistent with everything this life throws our way. However, setting time to review your Spending and Savings Plan is vital to the financial side of things like job transitions, relocation, and some of the other financial commitments that come with civilian life. Have a 'Money Date" or scheduled financial wellness check-in and invite any significant others with whom you make financial decisions. Yes, this means even if it is over Facetime!

Do these check-ins monthly at a minimum, but weekly would be ideal — especially as you start out to ensure you’re staying on track, making changes in real-time, and just overall easing into a new way of saving successfully, reducing your debt, and getting on a path to building wealth.