As we celebrate Military Consumer Month, it’s important to recognize that the sacrifices made by service members and their families extend beyond the battlefield. A recent study by the National Foundation for Credit Counseling (NFCC) reveals the unique financial challenges military households face. While their dedication is unwavering, their financial realities can be surprisingly strained. Here’s what you need to know:
Reliance on Savings
Unfortunately, NFCC’s study reveals that military households are more likely to report financial difficulties than civilian ones. Often, our bravest find themselves needing to dip into savings to cover daily expenses.
While this is an expected behavior under unique and unpredictable deployment situations, it can lead to long-term financial strain. The survey indicated an alarming trend of reliance on savings plans to cover basic necessities, highlighting the need for new financial strategies that can withstand the rigorous demands of a military lifestyle.
Credit Card Struggles
During Military Consumer Month, it’s important to shine a light on the debt burden carried by service members. NFCC’s report also illuminated a concerning trend of increased credit card usage for day-to-day payments among military households, with a higher likelihood than civilians of missing payments and transferring debts between cards.
In fact, 20% of military households reported having missed credit card payments, compared with just 8% of civilian ones. They were also more likely to transfer debt between cards, with 23% of military households reporting this behavior compared to 8% of non-military.
Reliance on plastic is a symptom of larger financial pressures—limited income, inflation and relocation expenses among them. Debt management services and general credit counseling can serve as powerful tools in mitigating these risks, ensuring that credit remains a valued tool, not a burden.
The Risks of Expensive Financial Solutions
In the wake of financial constraints, the study found that military households are turning to high-risk, high-priced financial services at a significantly higher rate than their civilian counterparts. From payday loans to prepaid debit cards, these products offer immediate solutions but often cause long-term problems. It’s important for service members to explore safer, traditional financial products to avoid debt traps and other financial pitfalls.
The Cryptocurrency Conundrum
The increased use of cryptocurrency among service members and spouses is a testament to the forward-thinking attitudes of military families. However, it’s also a troubling trend, since cryptocurrency is one of the most volatile asset classes, meaning its value fluctuates wildly. Surprisingly, 27% of service members and 28% of their spouses own cryptocurrency assets, compared to 11% of non-military citizens.
Investing in crypto isn’t all bad, as long as the investor is okay with the possibility of losing all of the money they invest. In other words, crypto holdings can’t replace the service member’s emergency savings or retirement plan. Awareness programs and educational resources tailored to the military community can debunk myths around cryptocurrency and help service members understand the risks involved.
The Need for Tailored Financial Education
Despite these challenges, a remarkable proportion of military personnel grade their financial knowledge highly—at an A or B. Unfortunately, the data paints a picture of financial behaviors that don’t align with this confidence. This perception gap suggests an acute need for financial education and more informed self-assessment. The willingness to learn and adapt is a profound strength, one that can be harnessed to change habits and improve financial well-being.
Empowering Military Families: It’s Time to Act!
The survey revealed one final piece of interesting information—service members and spouses are more open to professional financial guidance than the general population. An openness to counsel is a huge advantage and an entry point for deeper support. By providing accessible and tailored financial counseling services to our military community, we can arm them with strategies to conquer their financial challenges effectively.
While the financial challenges for military families are stark, so, too are the strengths and the willingness to overcome them. This Military Consumer Month, it’s our duty to honor our bravest by offering not just words of gratitude, but tangible support.
The NFCC understands the unique financial complexities faced by military families and stands ready to provide personalized guidance and resources. Call us today at (800) 388-2227 to access the tools and support you need to achieve financial stability and build a secure future.