Commanding Money

Personal finance will always be a readiness issue. If you’re a commander, leader in your unit, or otherwise interested in helping your troops with personal finance, what is the best way to integrate personal finance topics into your leadership style?

Not everyone will feel comfortable discussing personal finance topics at a commander’s call or other venue. For others, it may be harder to shut up about it. If you want to incorporate personal financial readiness into your leadership plan, there’s no need to reinvent the wheel. This article has easy-to-implement ideas you can put into action today. The important thing is to realize that taking care of your troops will always mean helping them take care of their money.

This list is not exhaustive, but you can use these topics for commander’s calls, newsletters, lunch ‘n learns, or any other format that suits your unit’s needs.

  1. Save Club—You’ve heard of Fight Club, right? Why not start a Save Club in your unit to gather troops who have a savings goal and who might benefit from mutual support, shared ideas, and resources? This would be a great project to delegate to an informal leader in the unit so that troops don’t feel like the brass is peeking into their wallets.
  1. E-Fund check-in – Similar to Save Club, having group accountability for creating and maintaining an emergency fund has immense benefits for troops. The ability to maintain cash prevents excess credit card use and payday loan use and relieves family stress. Troops with good emergency funds don’t worry about things like government shutdowns, deployments, and deductibles.
  1. Decoding your LES—Because you’re a geezer, you’ve read your LES a billion times. Younger troops probably still have questions about the things they’re seeing. Bringing in someone from the Finance Office or your installation’s Personal Financial Counselor/Manager would be a bonus. Reviewing the LES can highlight issues such as mismatches in tax withholding and SGLI/FSGLI coverage before they become a problem.
  1. Compound returns/interest demo – As Albert Einstein said, compound interest is the 8th wonder of the world. Those who understand it, earn it. Those who don’t, pay it. While your troops probably don’t want to use this formula P [(1 + i)n – 1], there are countless apps and calculators that you can use to demonstrate the value of consistently investing at least a little bit each month and then leaving it alone until retirement. There are really only two reasons why all of us aren’t millionaires. The first is understanding compound returns. The second is making the person in the mirror behave to get the returns.
  1. Tax Basics: the W-2 form – If your installation has a volunteer tax center, integrating its coordinator would be great for this session. If not, there are plenty of military tax experts who would happily give academics on military tax topics. The W-2 form helps us understand how much our pay is taxable. Our troops also need to understand when these forms arrive and what to do with them when filing tax returns. You would be surprised how many troops don’t know what to do with their tax forms. These troops are vulnerable to scams and other financial misfortunes.
  1. Depreciation basics: Cars—A new car typically loses 20% of its value as soon as it drives off the lot. For young families who are just starting to try to build wealth, a $10K-$20K loss of net worth is a really stiff headwind on the wealth-building mission. Most cars continue to lose as much as 10% of value each year. Diving into this topic might help troops replace new car fever, which kills net worth, with productive investment fever, which actually builds wealth.
  1. Real estate basics – Many troops get bitten by the real estate bug or at least hear about how awesome real estate investing can be. Real estate can indeed be a sound investment. It’s also true that it can create a lot of additional responsibilities for already-taxed troops.


New real estate investors often make flawed assumptions about the following:

  1. Transaction costs can be as much as 8% of the sale. This often erases any gains unless the property has been owned for 5 years or more.
  2. Depreciation recapture—Investors like to hear that they can exclude up to $500,000 of gain if they’ve lived in the home for two of the last five years. They also need to know that they’ll always pay tax on depreciation if they’ve rented the house out.
  3. 2:00 am toilets, trash, and tenants – Land-lording is a lot of work and stress. Even if you use a property manager, you must manage the manager. You also need to set aside another emergency fund for your rental expenses.
  1. Credit cards – Points and perks are great, but we spend an average of 23% more than we would otherwise if we swipe plastic. We don’t get wealthy by accumulating points and perks, we become wealthy by saving and investing. Consider teaching your troops to view credit cards as “convenience cards.” Good card hygiene can include paying off cards more frequently than monthly. Only use cards when you already have cash set aside and only for big purchases. Carrying a credit card balance should be viewed as an emergency. Finally, getting help from the 1st Sergeant or other leader is a sign of money maturity.
  1. Importance of working with your spouse—Money fights devour marriages. It’s rare that couples naturally agree on spending and managing money. Figuring out how to integrate spending and saving into their marriage is hard but necessary work. This is not a one-and-done effort but a lifelong requirement.
  2. Basic investing wisdom – Investing is opinion and taxes are fact. My opinion is that military members should steer clear of anything that smells like “get rich quick.” Most military investors should practice the following investing basics:
    1. Always get the TSP match by investing 5% minimum.
    2. Most people should use diversified index funds rather than single stocks, active funds, commodities, or digital assets as their primary wealth generation tool.
    3. Investing out of your pay every month, called dollar cost averaging, is a great way to put “buy low, sell high” into action.
    4. Don’t take financial advice from anyone who sells financial products like insurance. Whole Life Insurance, Index Universal Life Insurance, and Annuities are wildly inappropriate for most young families, but disreputable firms routinely sell these products to military families.
  1. Target percentages for budgets – Since most of us receive little formal personal finance education, we often don’t have basic rules of thumb for how much is reasonable to spend on our needs and wants. Common targets and ranges for budgets are below. The debate about whether these numbers should be from gross pay or net pay is interesting, actually using numbers to guide decisions is relevant.
    1. Saving: 15%-20%
    2. Rent/Mortgage: 25%
    3. Transportation (car payment, maintenance, insurance, fuel): 15%
    4. Utilities: 5%-10%
    5. Groceries: 10%-15%
    6. Dining out: 5%-10%
    7. Clothing: 3%-5%
    8. Misc shopping: 5%-10%
    9. Gifts: 1%-3%
    10. Travel: 5%-10%

Encouraging troops to be relentlessly frugal where they don’t find joy allows them to spend more lavishly where it truly enhances their lives, so spending prioritization matters—a lot.

  1. Why we save for retirement – The combination of social security and a military pension is not enough to live on for most people. We do not live in a country with strong social safety nets. You are responsible for taking care of your needs until the day you die. Not the government, not your kids, just you. The only realistic way to do this is to consistently invest as close to 15-20% of your income as you can for as many years as you can.

Cleared to rejoin

Hopefully, this list gives you some ideas on how you can lead with money. It’s okay if you aren’t flawless with money because none of us are. The military is unique because we all know what each other makes so money shouldn’t be so taboo. You lead with the mission, with values, with fitness, with judgment…it’s time to start leading with money.

Fights on!

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