Deployment can be a challenging and stressful time, not just emotionally but also financially. As an active-duty military member, being deployed often means managing your money remotely, dealing with irregular income, and ensuring that your family’s finances are in order while you’re away. With a solid financial plan, however, you can take the stress out of your finances during deployment and focus on your mission.

In this guide, we’ll explore financial strategies for managing your income, saving for the future, and leveraging the benefits available to active-duty military personnel during deployment.

1. Set Up Automatic Payments and Budgeting Tools

While deployed, staying on top of your finances may be difficult. Setting up automatic payments for bills and using budgeting tools ensures that your financial obligations are met while you focus on your duties.

• Automate Your Bills: Ensure that critical expenses such as rent, utilities, and debt payments are set to autopay. This minimizes the risk of missed payments and late fees, especially if internet access is limited during deployment.
• Use a Budgeting App: A budgeting app, such as Mint or You Need a Budget (YNAB), allows you to monitor your spending and savings remotely. These tools help you track how much you're saving or spending, even while you're away, giving you peace of mind about your financial health.

2. Maximize Deployment Pay and Benefits

Being deployed often comes with special pay and allowances, including tax benefits and extra compensation for combat zones. Taking full advantage of these benefits can improve your financial position.

• Tax-Free Income: If you're deployed in a designated combat zone, your income is often tax-exempt. Use this opportunity to boost your savings or pay off debt faster, since you’re receiving tax-free income.
• Hazard Pay and Other Allowances: In addition to tax-free earnings, you may receive hazard pay, hardship duty pay, and other allowances during deployment. Consider directing these extra funds into savings or retirement accounts.
• Deployment Savings Deposit Program (SDP): The SDP allows service members to earn 10% interest annually on deposits of up to $10,000 during deployments in designated combat zones. This is a great option for maximizing your savings while earning a high return.

3. Build or Strengthen Your Emergency Fund

Deployments come with a variety of uncertainties, and building a robust emergency fund is essential for protecting your family’s financial stability while you’re away. An emergency fund ensures that unexpected expenses, such as home repairs or medical emergencies, are covered without resorting to debt.

• How Much to Save: Aim to set aside at least 3 to 6 months’ worth of living expenses. If your family depends on your income, having a fully funded emergency fund will provide them with financial security in your absence.
• Automate Savings: Consider setting up automatic transfers into your savings account each month to gradually build your emergency fund.

4. Maximize Retirement Contributions

While deployed, you can use the extra income or tax benefits to make significant contributions to your retirement accounts. This not only ensures your future financial security but also takes advantage of special military retirement programs.

• Contribute to Your Thrift Savings Plan (TSP): The TSP is a powerful tool for military personnel, especially if you're part of the Blended Retirement System (BRS). Aim to contribute the maximum allowable amount ($22,500 for 2024), or at least 5% of your pay to take advantage of government matching contributions under the BRS.
• Consider a Roth IRA: Since combat-zone pay is tax-free, it’s a great time to contribute to a Roth IRA, which grows tax-free. The combination of tax-free income and tax-free retirement withdrawals can be a significant advantage.
• SDP for Short-Term Savings: As mentioned earlier, the Deployment Savings Deposit Program (SDP) offers a 10% annual interest rate on deposits, providing an excellent opportunity for short-term savings.

5. Protect Your Family with Updated Insurance and Legal Documents

If you have dependents, ensuring that your family is financially secure while you’re deployed should be a top priority. Review and update your insurance policies and legal documents before deployment to avoid leaving any gaps in coverage.

• Update Your Life Insurance: Review your Servicemembers' Group Life Insurance (SGLI) coverage to make sure it meets your family's needs. Consider adding additional life insurance coverage if necessary, especially if you have a mortgage or dependents.
• Create or Update a Will: Make sure your will is up to date and reflects your current wishes. If you don’t already have a will, now is the time to create one. Many military bases offer free legal services to assist with estate planning.
• Establish a Power of Attorney: Designate a trusted person to handle your financial and legal matters while you’re deployed. A power of attorney ensures that someone can manage your finances, pay bills, or sell property on your behalf if needed.

6. Avoid Debt and Pay Off High-Interest Loans

Deployments often come with extra pay, making it a great time to tackle high-interest debt. Reducing or eliminating debt not only improves your financial situation but also provides peace of mind while you're away.

• Focus on High-Interest Debt: Prioritize paying off credit cards, personal loans, or other high-interest debt during deployment. The extra income from deployment pay can help accelerate debt repayment.
• Avoid Taking on New Debt: If possible, avoid taking out new loans or credit cards while deployed. Focus on building savings and paying down debt instead of increasing your financial obligations.

7. Use Military Benefits to Save on Taxes

Military personnel enjoy several tax advantages, especially during deployment. Understanding these benefits can help you minimize your tax liability and maximize savings.

• Combat Zone Tax Exclusion: As mentioned earlier, income earned in combat zones is generally tax-free. Make sure you understand which pay is excluded from taxes and use this opportunity to save more aggressively.
• Tax Deductions: In addition to tax-free combat pay, military members are eligible for tax deductions related to uniforms, moving expenses, and professional fees. Keep track of these expenses to claim deductions on your tax return.
• Contribute to Tax-Advantaged Accounts: If you're in a combat zone, consider using the extra pay to max out contributions to tax-advantaged accounts like the TSP or Roth IRA. This will further reduce your tax liability while securing your financial future.

8. Plan for Your Return

It’s important to plan ahead for when you return from deployment. Whether it’s reallocating your income, adjusting your savings strategy, or making major financial decisions, having a plan in place will ensure a smooth financial transition.

• Revisit Your Budget: After deployment, review your budget and adjust for any changes in income or expenses. If you've received bonuses or extra pay during deployment, determine how best to allocate those funds to align with your long-term financial goals.
• Reevaluate Savings and Debt: If you’ve used your deployment pay to pay off debt or save more aggressively, reevaluate your progress and determine what adjustments need to be made moving forward.
• Future Deployment Planning: Use the lessons learned from this deployment to prepare for any future deployments. Adjust your automatic payments, legal documents, or insurance policies as needed.

Take Control of Your Finances While Deployed

Managing your finances while deployed may seem daunting, but with the right strategies in place, you can ensure that your money works for you, even while you're away. From maximizing your deployment pay and retirement savings to protecting your family and avoiding debt, these tips will help you stay on top of your finances during deployment. If you need personalized financial guidance before your next deployment, schedule a consultation with us today.