Reintegrating into routine civilian life can be challenging for many veterans, especially regarding finances. Military veterans face several barriers to attaining financial well-being, such as difficulties in budgeting and making ends meet, financial security disruptions, limited knowledge, and poor judgment in money matters.
Their unique military experience affects their financial literacy. Because service members living on base have their basic needs met, they lack the opportunity to develop financial skills organically, giving them a culture shock when reentering civilian life.
Nonetheless, the government is working to bridge the gap to provide veterans with the help they need to catch up with their peers upon reintegration. Numerous programs and benefits are designed to assist veterans in achieving financial stability and growth.
Here, we learn more about personal finance and debt management, veteran loan and tax benefits, and other strategies to assist veterans in improving their finances and investments.
By understanding their financial resources, such as the VA loan program, debt consolidation, tax relief, or free counseling, veterans can enhance their quality of life, ease their burdens, and build a secure financial future.
How To Improve Veterans’ Finances: Tips and Resources
Even with the challenges veterans face, some programs can help them access financial resources and benefits that can help them turn things around.
Education and training benefits
Veterans can sharpen their financial education to improve their decision-making. The Post-9/11 GI Bill provides comprehensive educational benefits, including tuition coverage, housing allowances, and book stipends. These benefits enable veterans to pursue higher education and improve their employment prospects.
Utilize employment assistance programs
Various programs are designed to assist veterans in finding and retaining employment. For example, the VA's Vocational Rehabilitation and Employment (VR&E) program offers job training, resume development, and job placement services. In 2022, the VR&E program helped over 123,000 veterans, with a success rate of 70 percent in terms of employment placement.
Mortgage delinquency assistance
Those having difficulties making timely mortgage payments must approach their loan servicer immediately. Services can offer several options to avoid foreclosure.
Veterans can access the VA site for more information on how to deal with delinquency. Those in more serious financial trouble can approach or call VA Regional Loan Centers for financial counseling.
Access health care benefits
The VA offers comprehensive healthcare services to US veterans. These can significantly reduce out-of-pocket medical expenses and support physical and mental health issues.
Veterans must take advantage of available healthcare programs. The VA operates the most extensive integrated healthcare system in the US, with 1,321 facilities providing care, including 1,138 outpatient sites and 172 VA medical centers. Access has been provided to those enrolled in the program, which currently counts 9 million enrollees.
Seek financial counseling and support
Numerous organizations provide financial counseling and support tailored to veterans. These services help veterans create budgets, manage debt, and plan for the future.
For instance, the NFCC, or National Foundation for Credit Counseling, and other nonprofits collectively assist thousands of veterans annually.
Make an effort to reduce debt drastically
Veterans should prioritize paying off high-interest debt. They should focus on clearing personal loans, credit card debt, and other high-interest liabilities. Common debt-solving systems include the debt avalanche or debt snowball methods.
Manage credit scores
Good credit scores are the bedrock for accessing favorable terms on financial products and services, including loans. Veterans should regularly review their credit reports and dispute any errors immediately. They must also ensure timely bill payments to maintain a healthy credit score.
Catch up on financial education
It’s never too late to catch up on one’s financial know-how. Veterans can benefit from free financial counseling services offered by organizations like the National Foundation for Credit Counseling (NFCC).
With numerous online and offline resources, veterans can update themselves on the latest business ideas, economic trends, and financial news.
Make the most of VA Loans and other loan privileges
Veterans can access loan programs that can significantly improve their financial well-being, such as VA interest rate reduction refinance loans (IRRRLs), VA home loans, VA cash-out refinance loans, and VA small business loans.
Purchase a house using VA home loans
The VA home loan program ranks among the most valuable benefits available to veterans. It allows eligible US veterans to purchase a home with no down payment, competitive interest rates, and no private mortgage insurance (PMI). VA loans have lower denial rates, regardless of the borrower’s race or ethnicity.
To qualify, veterans must meet specific service requirements and obtain a VA Certificate of Eligibility (COE).
VA Interest Rate Reduction Refinance Loan (IRRRL)
The VA Streamline Refinance Loan, VA Streamline, or VA IRRRL, allows veterans to refinance an existing VA loan at a lower interest rate. This product can reduce monthly mortgage payments and save money over the life of the loan.
The name implies a simpler process than other refinancing options. They can help you switch from ARMs or adjustable-rate mortgages to fixed-rate mortgages, effectively changing repayment terms or lowering monthly interest rates.
VA cash-out refinance loan: access to fast cash
The VA cash-out refinance loan enables veterans to convert their existing home equity into cash. The cash can be used for several purposes, including debt consolidation, home improvements, or emergency financial needs. Veterans can refinance as much as 100 percent of their home's value, making it a flexible option for accessing funds.
VA small business loans
The Small Business Administration (SBA) enables veterans to access loan programs to start or expand a business. The SBA Veterans Advantage program offers reduced fees for certain SBA-guaranteed loans, making it easier for veterans to obtain financing for their business ventures.
SBA 7(a) loans allow veterans to borrow up to $5 million. Meanwhile, SBA express loans are capped at $500,000. Veterans must research the qualification requirements for each.
Use tax benefits for veterans
United States veterans can utilize several tax benefits, significantly enhancing their financial profile.
Disability compensation
Disability compensation from the VA is tax-free. Veterans who receive disability payments due to service-connected injuries or illnesses do not need to include them in their taxable income.
Retirement pay
Military retirement pay may be partially or fully tax-free if the veteran was injured or disabled in the line of duty. The tax-free portion depends on the percentage of disability and the nature of the retirement.
VA education tax benefits
Education benefits provided under the GI Bill are generally tax-free. These benefits include payments for tuition, books, and housing allowances.
Tax-free combat pay
Combat pay is tax-free and can be excluded from taxable income. Remember that generally, any form of military pay earned on combat zone deployment won't be subject to federal income tax. This benefit could translate to significant tax savings for veterans and their families.
Property tax exemptions or reductions
Many US states offer property tax exemptions or reductions for veterans, particularly those with service-connected disabilities. The exemption amount varies by state, so veterans should check with their local tax assessor's office for details.
Enhance financial well-being through investments
Investing is a powerful tool for compounding wealth and securing a financial future. After ensuring that their finances are stable, veterans can explore investments such as retirement accounts, including the Thrift Savings Plan, which is similar to 401(k)s but is offered to a member of the uniformed services.
They can also diversify their portfolios to manage risk and maximize returns. A mix of mutual funds, stocks, indexes, bonds, and real estate investments would be ideal. Portfolios must be tailored to each person's time horizon and risk tolerance.
Master Personal Finance for Successful Reintegration
Veterans can overcome life hurdles and stabilize their finances by leveraging available resources. Strategies like securing favorable loan terms, taking advantage of employment programs, utilizing tax benefits, securing education benefits, accessing comprehensive health care, and consulting financial counseling services improve financial standing.
After attaining financial security, veterans can explore investing in various instruments in a diversified portfolio to build asset protection and maximize long-term growth.
By addressing financial challenges head-on and utilizing the benefits and programs designed for their support, veterans can create financial stability and success in their post-military lives.
This article was written in cooperation with SearchEye.io