Veterans: Are We Failing Them on Financial Education?

Financial literacy is a critical component of long-term success, but it’s often overlooked, particularly when we talk about financial education for veterans in the US. Are we truly equipping those who served with the tools they need to thrive financially?

Financial stability is more than just having a job; it’s about understanding how to manage your money effectively, plan for the future, and avoid financial pitfalls. For veterans, who often face unique challenges transitioning back to civilian life, this knowledge is particularly vital. As a financial advisor working near Fort Benning (soon to be Fort Moore!), I’ve seen firsthand how a lack of financial education can lead to significant difficulties.

1. Assessing Your Current Financial Situation

The first step toward financial well-being is understanding where you stand right now. This involves taking a hard look at your income, expenses, assets, and liabilities.

• Create a Budget: Start by tracking your income and expenses for at least a month. You can use a simple spreadsheet, a budgeting app like Mint, or the budget planner from the Consumer Financial Protection Bureau (CFPB).
• Calculate Your Net Worth: This is simply the difference between your assets (what you own) and your liabilities (what you owe). List everything you own – your home, car, investments, savings – and subtract everything you owe – mortgages, car loans, credit card debt, student loans.
• Review Your Credit Report: Get a free copy of your credit report from AnnualCreditReport.com. Check for any errors or inaccuracies that could be negatively impacting your credit score.

Pro Tip: Don’t be afraid to face the numbers. It can be uncomfortable, but knowledge is power. The sooner you understand your financial situation, the sooner you can start making positive changes.

2. Setting Financial Goals

Once you know where you stand, you can start setting financial goals. What do you want to achieve financially? Do you want to buy a home, pay off debt, save for retirement, or start a business?

• Make Your Goals SMART: Specific, Measurable, Achievable, Relevant, and Time-bound. For example, instead of saying “I want to save more money,” say “I want to save $500 per month for a down payment on a house within three years.”
• Prioritize Your Goals: Some goals are more important than others. Focus on the goals that will have the biggest impact on your financial well-being. For many veterans, this includes paying off high-interest debt and building an emergency fund.
• Write Down Your Goals: Putting your goals in writing makes them more real and increases your commitment to achieving them.

Common Mistake: Setting unrealistic goals. It’s better to start small and build momentum than to set yourself up for failure.

3. Creating a Debt Management Plan

Debt can be a major obstacle to financial stability. If you have debt, it’s important to create a plan to pay it off.

• List Your Debts: List all your debts, including the interest rate and minimum payment for each.
• Choose a Debt Repayment Strategy: Two common strategies are the debt snowball method (paying off the smallest debt first) and the debt avalanche method (paying off the debt with the highest interest rate first). The debt avalanche saves you more money on interest, but the snowball can provide quicker psychological wins.
• Consider Debt Consolidation: If you have multiple high-interest debts, you may be able to consolidate them into a single loan with a lower interest rate. This can simplify your payments and save you money. Look into the Department of Veterans Affairs (VA) home loan program. It can be used to refinance existing debt.
• Seek Credit Counseling: If you’re struggling to manage your debt, consider seeking help from a non-profit credit counseling agency. They can help you create a budget, negotiate with creditors, and develop a debt management plan.

Pro Tip: Automate your debt payments to avoid late fees and ensure you stay on track.

4. Building an Emergency Fund

An emergency fund is a savings account that you use to cover unexpected expenses, such as job loss, medical bills, or car repairs. Most financial advisors recommend having at least three to six months’ worth of living expenses in an emergency fund. If you are struggling with debt, an emergency fund is even more important.

• Start Small: Don’t try to build your emergency fund overnight. Start by saving a small amount each month, even if it’s just $25 or $50.
• Automate Your Savings: Set up automatic transfers from your checking account to your savings account each month.
• Keep Your Emergency Fund Accessible: Keep your emergency fund in a liquid account, such as a savings account or money market account, so you can access it quickly when you need it.

Common Mistake: Using your emergency fund for non-emergencies. It’s tempting to dip into your emergency fund for things you want, but resist the urge.

5. Investing for the Future

Investing is a critical part of building long-term wealth. It allows your money to grow over time and helps you achieve your financial goals, such as retirement. Many vets are unsure about their options, but securing your finances after service is possible.

• Understand Your Risk Tolerance: Before you start investing, it’s important to understand your risk tolerance. How much risk are you willing to take with your investments?
• Diversify Your Investments: Don’t put all your eggs in one basket. Diversify your investments by investing in a variety of asset classes, such as stocks, bonds, and real estate.
• Consider a Retirement Account: Take advantage of tax-advantaged retirement accounts, such as 401(k)s and IRAs. The Thrift Savings Plan (TSP) is an excellent option for federal employees, including many veterans.
• Seek Professional Advice: If you’re not comfortable investing on your own, consider seeking help from a financial advisor.

Pro Tip: Start investing early, even if it’s just a small amount. The earlier you start, the more time your money has to grow.

I had a client last year, a veteran who served in Iraq, who came to me with significant credit card debt and no savings. He was working a steady job, but he had never learned how to budget or manage his money. We worked together to create a budget, develop a debt repayment plan, and start saving for retirement. Within a year, he had paid off a significant portion of his debt and started building an emergency fund. He told me that learning these skills had given him a sense of control over his life that he hadn’t felt since leaving the military.

Here’s what nobody tells you: financial education isn’t just about numbers; it’s about empowerment. It’s about giving veterans the tools they need to build a secure and fulfilling future. Thinking long term about your finances is key, and that includes home ownership. Vets can build wealth buying a home.

6. Avoiding Scams and Predatory Lending

Veterans are often targeted by scams and predatory lenders. These scams can take many forms, from fake investment opportunities to high-interest loans with hidden fees.

• Be Wary of Unsolicited Offers: Be cautious of unsolicited offers, especially those that promise quick riches or guaranteed returns.
• Do Your Research: Before you invest in anything or take out a loan, do your research. Check out the company or individual with the Better Business Bureau and other consumer protection agencies.
• Read the Fine Print: Always read the fine print before you sign anything. Make sure you understand the terms and conditions of the loan or investment.
• Never Give Out Personal Information: Never give out your Social Security number, bank account number, or other personal information to someone you don’t trust.
• Report Scams: If you think you’ve been scammed, report it to the Federal Trade Commission (FTC) and your state’s attorney general. The Georgia Department of Law’s Consumer Protection Division is a good place to start for local veterans.

Common Mistake: Feeling ashamed or embarrassed to ask for help. Scammers thrive on secrecy and isolation. If you’re unsure about something, talk to a trusted friend, family member, or financial advisor.

We ran into this exact issue at my previous firm. A veteran client was almost taken in by a fraudulent investment scheme promising high returns in a short period. Luckily, he decided to get a second opinion from us before investing, and we were able to identify the red flags and help him avoid a significant financial loss.

7. Utilizing Available Resources for Veterans

There are many resources available to help veterans with their finances. Many of these resources can help vets avoid financial errors, a money minefield for vets.

• The Department of Veterans Affairs (VA): The VA offers a variety of financial counseling and assistance programs, including home loan guarantees, education benefits, and disability compensation.
• Non-Profit Organizations: Many non-profit organizations offer financial literacy programs and counseling services to veterans. For example, the National Foundation for Credit Counseling (NFCC) provides free or low-cost credit counseling services.
• State and Local Resources: Many states and local communities offer financial assistance programs and resources for veterans. Contact your local veterans’ service organization for more information.

Pro Tip: Don’t be afraid to ask for help. There are many people who want to support veterans and help them achieve financial success.

Financial education is not a one-time event; it’s an ongoing process. The more you learn about money management, the better equipped you’ll be to make sound financial decisions and achieve your goals. By taking these steps, veterans can build a solid financial foundation and create a brighter future for themselves and their families.

Ultimately, financial education is about empowerment. It’s about giving veterans the knowledge and skills they need to take control of their finances and build a secure future. Start small, stay consistent, and don’t be afraid to ask for help.