Seeking a Financial Coach? Here’s What Military Families Should Know

Seeking a Financial Coach
Military families who partner with a financial coach are more prepared for their financial future. (Stock photo)

Military families have been hit just as hard as their civilian counterparts over the last year. While active-duty service members didn't see a reduction in pay, many military spouses did, as did National Guard and Reservists. Heading into 2021, the slight pay raise was welcome but then negated as the payroll tax deferment repayment kicked in at the same time.

However, it's not all bad news for military families looking to take a step forward financially this year. The First Command Financial Behaviors Index, released Tuesday, March 16, reveals middle-class military families are taking their pay increase and looking to improve their household finances. The group of families this index studied includes commissioned officers and senior NCOs in pay grades E-5 and above with household incomes of at least $50,000.

"Many military families are turning to financial advisers for help,’’ said Mark Steffe, president and chief executive officer of First Command. “Our survey results consistently reveal that military families who work with a financial coach feel more secure with their finances and confident in the future than their do-it-yourself colleagues."

Here are some things to look for when searching for a financial coach.

Someone Who Can Help You Set Goals

For most military families, the first financial goal is to pay off debt. After that, the goals vary depending on stage of life and future plans. According to the index, 46% of military families are adding to their savings and Thrift Savings Plans (TSP) this year and 42% are paying down debt.

Those two groups of military families have different goals and will need help in creating a path to reach them. A good financial coach can help you find the right option for you now and adjust it as the military and life add more layers of confusion and change onto it.

Someone Who Can Help You Stay on Track

Steffe said one of the most important things after getting out of debt is to make sure you don't get back into debt. "You feel this relief from, ‘OK, we've got all this paid off,’’’ Steffe said. “And then suddenly, since you're not making those interest payments or paying down that debt, you've got this money you didn't feel like you had before. And then now, the new TV, a new car, a new house, vacation, those sorts of things start to become more attractive again."

A financial coach can help you stay on track. First Command reports that during the fourth quarter of 2020, "military families with a financial adviser contributed more to savings and retirement accounts than their do-it-yourself counterparts. They ended the year with average savings and retirement holdings of $191,158, or about $84,000 more than those without an adviser."

Additionally, families who work with a financial coach or adviser are more prepared for emergencies. The index said 62% of families have three or more months of savings to fall back on, compared with 54% of families who are doing it alone.

Someone Who Asks the Hard Questions

Despite your spreadsheets and preparedness, you're probably forgetting something. And you want that financial coach to point that out. For example, what is your plan for life insurance when your service member retires or transitions? Do you plan to stay in the house you currently live in forever? Are you planning to pay for your children to go to college?

A good financial coach will help you figure out the answers. You may be looking at using the GI Bill for your children, but do you know exactly how it works? It's helpful to figure that out before taking your high schooler on college trips.

Someone Who Understands the Military and Post-Military Life

There's really no substitution for "getting" the military lifestyle. We see that in all areas of life, that instant connection when you meet another military spouse. At the very least, a military-connected financial coach means you don't have to explain all the little details. They have experienced some of the things you'll go through, and you can benefit from those experiences.

No matter who you choose as your financial adviser or coach, do the research first. Make sure they fit what you're looking for, both in their credentials and methods. You want someone who will help you reach your values and plans, not someone who will push you in a different direction.

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