- Posted by LiSA
- On November 2, 2016
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- financial education and the military, LiSA Literacy Project, military families, Retired Veterans
Military Families deserve a financial education to supply them with the tools and knowledge to get on the path to financial freedom.
In a retrospective report, the Iraq and Afghanistan Veterans of America (IAVA) described life for military families:
“When service members enlist, their families enlist with them. Through two long wars, military families have braved challenges with the same resilience as their loved ones fighting overseas.”1
They’ve earned the respect and support of the American public. Military families deserve a financial education. It would help lessen the challenges they face daily and show appreciate for all they do.
In an April 27, 2016 survey found that “middle-class military families were slightly less financially knowledgeable than their civilian counterparts.”2
As First Command Services CEO, Scott Spiker, explained it, the survey underscores the need to strengthen service members’ financial knowledge. Unfortunately, financial literacy classes are not always readily available.
It Makes a Difference to be Different
Military and civilian families have much in common. They both have mortgages or rent to pay. There are groceries and other household items to buy. Bills and expenses must be covered.
But where the two groups differ, it’s significant.
Spiker, cited, in a ThinkAdvisor interview, three contributors to the financial education gap:3
- Continuous deployments of two of the longest wars in U.S. history
- Looming threat of sequestration4 to military benefits
- Lack of support services and resources to provide financial education for military families
The Lack of Financial Education Leads to Vulnerable Families
There are givens in military life. Moves will be frequent, making it difficult for spouses to find a new job in a new town. Military pay will tend to be low, especially for lower-ranking soldiers.
For service members or spouses without a financial education, making pay stretch to cover the families’ needs can be challenging. With a lack of understanding of how to manage their finances, they’re left in a vulnerable position.
A quick drive along the streets surrounding any of the country’s military bases, you likely see people ready to take advantage of service members and their families:
- A payday check-cashing operation
- Liquor store
- Title loan lender
- Rent-to-own store
- A pawnshop
These predatory lenders readily offer loans to military members and their families. They know the Defense Department allows commercial creditors to garnish up to 25% of a soldier’s wages.5
Financial Education Is Essential
Without a financial education, service members and their families often don’t see the downside to predatory loans. The problem could be alleviated through financial education.
They’d learn how to manage their personal finances. When they understand how much money is coming in and going out, they begin setting realistic goals. They can make the smart choices that will put them on a path to financial security.
They’re Taught to Prepare for Battle, but not Taught to Prepare a Budget
Author Marissa A. Cruz offered this analogy in her article, “Why Service Members Should Receive Financial Literacy Training”:6
“We teach service members how to shoot guns and roll Humvees, but not how to balance their budgets.”
In 2015, the U.S. House of Representatives passed a bill making financial literacy education mandatory for military service members. The bill, included in the National Defense Authorization Act for Fiscal Year 2016,6 was vetoed by President Barak Obama in fall 2015. The reason for the veto was the bill bypassed the Budget Control Act of 2011’s spending caps .7
An Answer to a Need
Politics aside, military families still need access to financial education. LiSA Initiative, a financial literacy resource created by First Financial Security, Inc., could fill the gap. LiSA offers its private-labeled curriculum – LiSA Literacy Project – free of charge through community outreach.
Created with the National Financial Educators Council (NFEC), the LiSA Literacy Project’s focus is money management skills. Participants take classes on how to save, budget, manage credit and reduce debt, understand loans, control income, and more.
The classes are taught by licensed Certified Financial Education Instructors (CFEI). Many of these CFEIs are veterans of the U.S. Armed Forces. They bring shared experiences and an understanding of the challenges facing military families to the classes they teach.
Many aspects of military life are out of the hands of families who live it every day. CFEI veterans know the importance of empowering military families to gain control of the one thing they can– their finances. Gaining a financial education would provide the with knowledge to take back control of their lives and futures.
1Moran Banai, Bryan Maxwell, John O’Neal and Matt Gallagher. “Unsung Heroes – Military Families After 10 Years of War”. December 2011. http://www.blueshieldcafoundation.org/sites/default/files/publications/downloadable/Unsung_Heroes.pdf
2“First Command Reports: Career Military Earning Low Marks in Financial Readiness.” First Command Bank press release. April 27, 2016. http://www.firstcommand.com/news/career-military-earning-low-marks-in-financial-readiness.htm
3 Danielle Andrus. “Financial Literacy Falling among Military Families.” ThinkAdvisor. March 2, 2015. http://www.thinkadvisor.com/2015/03/02/financial-literacy-falling-among-military-families
4 Sequestration refers to a package of automatic spending cuts that’s part of the Budget Control Act (BCA), passed in August 2011. The cuts, which are projected to total $1.2 trillion, begin in 2013 and will end in 2021, evenly divided over the nine-year period (Source: Suzy Khimm. “The sequester, explained.” The Washington Post. Sept. 14, 2012. https://www.washingtonpost.com/news/wonk/wp/2012/09/14/the-sequester-explained/).
The mandated cuts are directed at all federal agencies and include $500 million to the military. The sequester stretches across all four services of the military to include family programs. Only pay and the Department of Veterans Affairs have been exempted by President Obama (http://www.military.com/topics/sequestration).
5 Jason Hull. “Why Soldiers Need Financial Help.” Financial Planning. May 5, 2014. http://www.financial-planning.com/news/why-soldiers-need-financial-help
6 Marissa A. Cruz. “Why Service Members Should Receive Financial Literacy Training.” Task & Purpose. July 28, 2015. http://taskandpurpose.com/why-service-members-should-receive-financial-literacy-training/