part 2 of an 8-part series
Financial stability can mean different things to different people. In part, the way you feel about money may affect your comfort level of financial stability. Your personal experiences will shape your thoughts on what you consider financially stable. This blog will focus on general benchmarks to help structure and focus goals to help you on your way to financial stability. This broad idea of financial stability will focus on three main parts, saving, credit/debt, and consumer protection.
1. Saving. Financial stability begins with knowing you can handle an unexpected expense with ease and not panic. Saving is the best way you can achieve this first (and arguably most important) goal. Unexpected expenses can range from a broken down car to a plane ticket home to visit an ill family member. A good rule of thumb is to start with $500 in a separate emergency or “rainy-day fund” account. It is important that you continue to add to this account regularly. It is good to start with a small goal of $500 and increase your goal over time, you should eventually set a goal to set aside 3-6 months of living expenses in this account. This amount would help you handle other bigger expenses like a PCS move, loss of spouse income, and transition out of the military. Simultaneously, you should also be saving for retirement. Even small amounts over time can really add up. The third part of this 8-part blog series will take a deeper dive into the importance of saving. The 4th part will discuss the Thrift Savings Plan, the military and government civilian tax-deferred retirement account.
2. Credit/Debt management. Another important component of financial stability is dealing with the delicate balance of maintaining and building good credit while not getting in over your head in debt. Most Americans have debt. In fact, the FINRA Foundation National Financial Capability Study Military Findings showed that 91% of military respondents reported having some type of debt. Having debt does not mean you are financially unstable. Those who handle debt well are most likely building good credit history and increasing their credit score. But not everyone is handling their debt well. Your debt to income ratio should be less than 43%. The first part in this 8-part blog series discussed Tips for Everyone to Maintain or Build Good Credit.
3. Consumer Protections. Protecting your assets, future investments and your personal information against scams, tricks, and traps is another important aspect of financial stability. Knowing your rights and consumer protections is a vital part keeping your finances in order. Servicemembers have some specific protections that are important to know about. One, is the Military Lending Act (MLA). The MLA offers protections against specific high-cost lending and caps the percentage rate and all fees to 36% APR. For more information click here. Second, is the Servicemembers Civil Relief Act (SCRA). The SCRA offers an array of protections and also and interest rate cap on qualified purchases. For more information on SCRA protections click here. Other agencies have military consumer protections as a major part of their outreach efforts and information. See the list below of those who work diligently to assure the military community knows their rights and protections.
Servicemember Consumer Protection Information
Council of Better Business Bureaus BBB Military Line – Consumer Education
Consumer Financial Protection Bureau – Office of Servicemember Affairs
Federal Trade Commission – Military Consumer Protection Day
FINRA Investor Education Foundation – Protect Your Money
Department of Justice – Military
Stay tuned for the next blog in our series: Pillars of Personal Financial Success: Committing to Routine Savings
By: Andia Dinesen, AFC ®
VP Communications and Operations
Association of Military Banks of America (AMBA)
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FAQs
The best military credit unions are PenFed Credit Union, Service Credit Union and Navy Federal Credit Union, which offer large ATM networks and few fees. Ashlyn Brooks is a financial journalist specializing in taxes, investing, retirement, finance news and banking products.
What bank is best for veterans? ›
Military members and veterans have many options for banking, not just military-focused banks such as USAA, Armed Forces Bank or First Citizens Bank. Credit unions frequently service military members, such as PenFed Credit Union, Navy Federal Credit Union and Service Credit Union.
Does Bank of America waive fees for the military? ›
Bank of America typically does not waive annual fees on its credit cards except for full-time military servicemembers. In some other cases, Bank of America will waive the annual fee on a credit card just for the first year as part of a promotional offer.
Is Bank of America a military-friendly bank? ›
We're here to help. We're on your side, ready with the financial services and resources you'll need while you serve and protect. We also want to be sure that you're aware of the laws that support you, including the federal Servicemembers Civil Relief Act (SCRA) and the benefits it offers.
What is the hardest credit union to get? ›
Progressive Credit Union - You must be recommended by another member. This might be the most unique credit union requirement, and it also seems to be the toughest.
Are military banks worth it? ›
The best military credit unions and banks, just like the best credit unions and banks for civilians, offer great rates and low fees. Things to look out for include bank accounts with no monthly fees, low interest rates on loans, and high interest rates on deposit accounts, like money market accounts.
Is USAA or Bank of America better? ›
Both Bank of America and USAA savings accounts feature low interest rates, although USAA's accounts have fewer fees. Both banks offer CDs, although you generally need to commit to a higher balance with Bank of America to earn competitive rates.
Is Navy Federal or USAA better? ›
Navy Federal is better for in-person banking, with 350 branches worldwide compared to just four financial centers operated by USAA. That said, USAA's network of over 100,000 preferred ATMs with up to $10 in refund per statement cycle for non-preferred network ATMs is larger than Navy Federal's 30,000+ fee-free ATMs.
Is USAA cheaper for veterans? ›
USAA has the cheapest car insurance for veterans and their families on average, according to NerdWallet's January 2024 minimum rates analysis. However, rates can vary drastically depending on location, credit history and car make and model. Always compare car insurance rates to find the cheapest company for you.
What Bank is for military only? ›
Here's a look at some notable banks and credit unions that specialize in military banking: USAA Federal Savings Bank. Navy Federal Credit Union. Pentagon Federal Credit Union.
Bank of America: The maximum daily withdrawal amount using an ATM is $1,000 and cannot exceed 60 bills in one transaction.
How to qualify for USAA bank account? ›
Who's eligible for USAA membership?
- Active Duty military.
- National Guard and Reservists.
- Veterans who have honorably served.
- Contracted ROTC Cadets and Midshipmen.
- Officer and Warrant Officer Candidates.
- Military spouses.
- Children of USAA members.
- Service Academy appointees.
Navy Federal is better for in-person banking, with 350 branches worldwide compared to just four financial centers operated by USAA. That said, USAA's network of over 100,000 preferred ATMs with up to $10 in refund per statement cycle for non-preferred network ATMs is larger than Navy Federal's 30,000+ fee-free ATMs.
What is the largest military credit union? ›
With more than 12 million members, Navy Federal is the largest federally insured credit union by total assets. But unlike the largest banks, it offers competitive rates on certificates.
What is the best interest rate for military members? ›
During periods of qualifying active duty military service, the interest rate on the eligible loan will not exceed 6%. If the interest rate is already below 6%, the loan will retain the lower interest rate.
What credit union is highest recommended? ›
Best Credit Unions of September 2024
- Members 1st Federal Credit Union: Best for Overdraft Protection.
- Connexus Credit Union: Best for Checking Accounts.
- Bethpage Federal Credit Union: Best for Savings Accounts.
- Lake Michigan Credit Union: Best for Interest Rates.
- Alliant Credit Union: Best for Digital Banking.
