Savings questions for those in the military

[Bungle]

I have a niece going into the navy soon. Long story short even though she has had a job for years her family has taken advantage of her even to the point of stealing.So she is starting with nothing. She doesn't know a lot about budgeting and saving so I'm trying to help her figure it all out. Does the military have a 401k or savings type program she should get into? How often are they paid and what is a reasonable savings amount for someone just starting out? How much should she set aside for personal stuff and living expenses.

I want to help set her up something reasonable so she can achieve it. I know those are a lot of questions so any help would be appreciated.

 

[coastiewifern]

This is the voluntary military retirement program
https://www.tsp.gov/index.shtml
Oh and we get paid the 1st and 15th

 

[BubMunkeyBles]

Yep, the military has TSP, its not really a 401K though and it's really not that great (although they are talking about reforming the military retirement system away from the pension system and into a regular 401K type program). The government doesn't match it, but you're guaranteed a percentage rate earned on it (depending on which fund you put it in). We put in 8% of my DH's pay, but he has 15 years in and will be getting a retirement check of some kind (assuming all goes to plan).

Really the military will pay most of her expenses, especially starting out. For the Navy E-4 and below (unless married) tend to live on base in the baracks/dorms (not sure what they call them, my DH is Air Force). She will also have a meal card. If she was to live off base she would get allowances separate from her pay for housing and food. Her base pay (even starting out) is enough to cover everything else: car payment, small credit card, clothes, money for going and some for savings (depending on her financial status before going in). If you have any specific questions I can try to answer.

 

[BridgetBordeaux]

We retired about 10 years ago but this may still be the case...............

Most commands have a command financial specialist that can help young sailors keep their finances in order. The CFS provides "good to know" counseling and is often required to help sort out the finances of sailors that have gotten into legal/money trouble. Keeping all sailors in good financial condition is good for both unit readiness and morale. The most important advice I can give is NOT to listen to or follow the wisdom of another young sailor. Pursue guidance of a senior leader.

Payday occurs on the 1st and the 15th of each month via direct deposit.

BTW........I have heard consumer guy Clark Howard give a lot of praise to the military TSP.

 

[lost*in*cyberspace]

She also should seriously consider participating in the GI Bill. The amount you pay in is nothing compared to the benefits you receive:

http://www.gibill.va.gov/

 

[wide awake]

I second the GI bill. When my DH signed up in 1986 the $100/month for 12 months made a real dent in our cash flow...but very happy about it now! He retired about 18 months ago, is going to school full time...the GI bill sending approx $900/month when he takes 12 units or more, and prorated for fewer units. This is good for 36 months. We never did the TSP plan, I don't think it was in place when DH joined up, but he does have his pension. I too have heard...around the Hale Koa hot tub, that the pensions are going to be changed. Also that utilities are now charged in housing!!!
I also second the PP that said don't listen to young sailors, airmen, etc. DH and I know/knew so many people that didn't have a dime...of course they always had the latest electronic gadget and thought nothing of spending a fortune on drinking in bars, going out for dinner, etc... There is a lot of pressure to spend money foolishly...also a lot of talking about "how much money I can make when I get out"...that is a joke. Many could never earn outside what they earn in the military.
The military is a good living if you're careful w/ your spending and have your eye on the long term, not the short term. DH used to get very mad at me when I would veto nonessential spending...Now that he is retired and doesn't have to work ever again, and we have a relatively high standard of living...just returned this morning from the July 20 DCL Med cruise... those long ago tech toys have lost their glow.
Last...tell your niece to stay strong. It isn't her job to support her family. She needs to build her own future.

 

[sissy_ib]

The GI bill is now no cost for the member. New service members have the choice of the GI bill or a student loan payment plan. They will have her sign up for it in basic training.

Also make sure your niece sets up a new bank account that no one even knows about. I joined USAA right before I joined the Air Force and I really like them. I use them for my checking and savings accounts, my credit card, insurance. She can set up long term investment through them as well.

The TSP is not the same as a 401K but if and when she gets out of the military she can roll t over in to a civilian 401K. I don't have much in mine but it is a good feeling to know that at least I have been saving something for the past few years. She can put away up to 50% of her paycheck. (I put away no where near that!)

Like others said they will provide housing and food while living on base then provide a housing and sustenance allowance in her paycheck when she moves off base.

 

[Bell30012]

While all the other programs that the military has are great and your niece should take advantage of them, the best program that the military has for your future is the retirement plan. You serve 20 years and you receive 50% of your base rate for life. You serve 30 years and you get 75%. It is simple straight forward and one of the best retirements offered by anyone except the one that the POTUS gets.

Another very important thing to be considering is life after the military. I was US Army for 21 years. In the Army a Field Artillery Officer (13A) was a great job. In the civilian world? No so much. People would be very upset if I plied my craft. Your niece needs to think forward about her plans after she finishes serving. Take the right schools, the right classes and take advantage of everything offered.

 

[Bungle]

I want to thank you all for your advice. She really is such a smart and dedicated girl but has no guidance financially. I would really hate to see her not save anything. I looked up information on the tsp, gi bill, and usaa to go over with her. I know she plans on going to college (she will be the first on her side of the family) and wants to travel so she will need to put plenty in savings.

As much as I'm going to miss her I know she's on to better things.