The world has changed a lot in the last 20 years. When my husband and I were newlyweds, one of the main things we had going for us (financially) was that he was in the military. Back then, being in the military meant financial security. You weren’t going to get rich, but it was a steady income and you could live pretty well if you didn’t do anything crazy.
This remained true for many years. Even smart financial advisors would say things like, “you don’t have to worry about job loss,” or “you don’t need as large an emergency fund.”
As the military continues with another cyclical reduction in force size, many soldiers, sailors, airmen and Marines are being told that their service is no longer required. Most people are aware that these reductions are happening, but some seem to be completely surprised.
How should you respond to this instability? First, you should take care of the basics of good financial planning:
1. Build an emergency fund. You probably want it to be a little larger than you may have thought adequate a few years ago.
2. Pay off debt. This is always a good idea, even more so when you don’t know what the future might hold.
3. Prepare yourself for the day when you are no longer employed by the military. Think about your plan B, plan C and plans X. Y, and Z. Consider whether you want to further your education, prepare to start a small business, or broaden your LinkedIn network. The time to lay this groundwork is now. It is time well spent, even if you end up remaining in the military until retirement.
Most importantly, be aware of the situation going on around you. All branches of the military are trimming their forces to some degree. Don’t think it can’t happen to you, because you won’t prepare and then you’ll be in bad shape if you are one of those selected to leave the military. Pay attention, read the news, and listen to the gossip around the coffee machine. This is important stuff: don’t ignore it.