Financial Literacy Tips for Military Veterans

Why is personal finance important for the Canadian Defence Community?

As a Canadian veteran, you’re likely no stranger to change and may be used to frequent relocation. But transitioning to civilian life may feel like your biggest challenge yet.

Aside from physically relocating, you must navigate you career ambitions as well as manage your current income and savings. If these things are not managed appropriately, you could find yourself in debt and dealing with financial stress, on top of the high levels of emotional stress you may already face.

Financial literacy for veterans is important because it can offer a playbook for how to navigate life after serving which can help make the transition into civilian life easier. Below we’ve compiled the top financial literacy tips for military veterans to get started on their new financial journey.

Tip #1: Create a budget

As a Canadian military veteran, you may be eligible to receive financial assistance and other benefits that can help as you make the transition back to civilian life and figure out your next move. Typically, this is a set amount of money you can use to cover your expenses month to month.

That’s why one of the top financial literacy tips for military veterans is to review your budget and make a financial plan. Here are some things to consider when you create a budget:

• How much money is coming in each month? This could be income from a part-time or full-time position or a side hustle, any veteran benefits you receive, or rental or property income.
• What are your fixed expenses each month? This could include mortgage or rental payments, insurance payments for your car or home, and health related expenses.
• What are your variable expenses that may change month-to-month? For example, your utility bills, gas bills, or medical costs might always be around the same amount each month.
• How do you want to allocate your money each month? For example, maybe you pay $2,000 for your mortgage or rent, $350 for a car payment, $500 groceries, $200 for entertainment, and $150 for gas.

Once you’ve answered these questions, create a budget that fits with where you’re currently at and where you want to be. This will help you build and maintain a solid financial plan. To start, review the available income you have each month. Then list out your predicted expenses and needs alongside how much money you want to set aside for each.

Try to account for your expenses, as well as for savings, debt repayment, and retirement. To maintain financial wellness, focus on spending less than you earn and having a surplus left over to create a financial buffer or an emergency fund.

For example, if your monthly income is $5,000, all your expenses, debt payments, and monthly saving efforts shouldn’t exceed that amount. An example budget might look like:

• Mortgage: $2,000
• Car payment: $350
• Groceries: $500
• Entertainment: $200
• Gas: $150
• Insurance for car, home, health: $450
• Clothing: $100
• Credit card or personal loan payment: $300
• Saving/emergency fund/retirement: $950

Tip #2: Put money aside for savings

Now that you have a better understanding of how to manage your money day-to-day, let’s explore how to manage it for tomorrow. Unexpected emergencies will inevitably arise such as car trouble, medical issues, and more. Having the money set aside can boost your financial wellness and ensure you’re prepared for whatever comes your way.

To start, focus on building an emergency savings account that can cover three to six months of expenses.

For example, if you don’t want to change your lifestyle and spend $5,000 per month, your goal may be to create an emergency fund that is around $15,000 to $30,000. If you paused your savings, entertainment and clothing during this time, your necessary expenses would fall to $3,750. So, this means you would now have a goal of creating an emergency fund for the basics that ranges from $11,250 to $22,500.

Savings can provide a much-needed buffer between you and an unexpected event, so you have more breathing room to avoid a financial crisis.

Tip #3: Use the right financial tools

Reviewing your finances and focusing on saving more is only the start of your financial literacy as a military veteran. It’s also important to use the right financial tools to support your daily life. Consider using the following financial tools to make managing your money easier:

• A chequing account for your income and everyday expenses.
• A savings account for emergencies or for a big expense like a vacation or mortgage.
• Accessing your credit report as well as your credit score.
• A credit card that fits your lifestyle — most banks offer specific credit cards for veterans with additional rewards like cash back and mortgage benefits.
• An investment/retirement account for the future.

These financial tools will help you manage your income, expenses, savings, investments, and credit. These are core aspects of financial literacy that cover your bases for managing finances today and preparing for tomorrow.

Tip #4: Plan for your financial future

As a veteran, you may have different financial situations and experiences compared to others who haven’t served in the armed forces. Because of this, it’s key that you learn how to manage money and plan for your future. Financial literacy for veterans means not just planning for what you’re dealing with now but exploring how you want to live later. That means preparing for retirement and investing.

A good place to start is to invest 10 to 20 per cent of your income towards your future. This may be through a Registered Retirement Savings Plan (RRSP) or another type of investing option. To get expert advice, consider reaching out to a vetted and trusted financial advisor who can help you learn more about investing and how to get started.

Tip #5: Get additional support

Financial literacy can be daunting, but you don’t have to manage it all on your own. The Government of Canada can help with your career transition and also offers a program where you may be eligible to receive up to $500 for financial advice. The program will connect you to a financial professional who can guide you along the way.

You can also find support at a financial institution, such as BMO, that works with the Canadian Defence Community to meet their financial needs. For example, at BMO you can save on bank fees, get approved for a no-fee rewards credit card, and may be eligible for mortgage discounts.

What advantages does BMO offer Canadian Defence Community members?

BMO is the official bank of the Canadian Defence Community and offers financial products specifically for members and veterans, including bank accounts and credit cards. As a partner of the Canadian Forces Morale and Welfare Services, BMO has banking products with additional benefits for veterans.

Currently, there is no fee for the BMO Performance Chequing Account for CDC members and veterans, which includes unlimited transactions and Interac e-transfer transactions. Plus, up to a $40 rebate applied to BMO cards with an annual fee, and up to five withdrawals at non-BMO ATMs at no additional cost. The account also includes identity theft protection services at no cost and a mobile app to bank on-the-go.

There’s also the BMO Support Our Troops Mastercard^®, which offers rewards and a way to support morale and welfare programs for the Canadian Defence Community with every purchase.

Final thoughts

These financial literacy tips for military veterans can help you get started with your financial journey. Starting over can be tough and managing this transition isn’t easy, but there are ways to get support and make sure your finances are covered. If you need additional support, explore BMO banking for the Canadian Defence Community online or get in touch with a BMO representative to learn more.