FORT WORTH, Texas – Continuing anxiety over sequestration is prompting servicemembers and their families to improve their household finances in preparation for an uncertain financial future.
The First Command Financial Behaviors Index® reveals that middle-class military families (senior NCOs and commissioned officers in pay grades E-6 and above with household incomes of at least $50,000) put away an average of $2,926 per month into savings and retirement accounts during the second quarter, up 12 percent from the previous quarter. And they increased repayment of short-term debt to an average of $1,124 per month, up 4 percent from the previous quarter. These positive changes in financial behaviors helped push the Index ahead 12 points to a quarterly score of 113.
Servicemembers are finding new dollars to commit to savings and debt reduction through various belt-tightening behaviors. The Index reveals that 52 percent of military families increased their efforts to cut back on every day spending during the second quarter, up 10 points from the previous quarter.
This increased focus on spending less, saving more, and cutting debt comes at a time when many military families are expressing concerns over how the sequester cuts might affect their financial futures. In the April Index survey, three out of five military families indicated they were feeling anxious about sequestration.
Notably, these frugal behaviors are strongest among military families working with a financial planner. In the second quarter, those with a financial planner added an average of $3,740 per month in savings. In contrast, those without a planner saved an average of $2,270 per month.
Most servicemembers do not foresee a change in their savings or debt repayment behaviors in coming months regardless of whether or not they have a financial planner. This suggests those with a financial planner will continue to pursue these frugal behaviors more strongly than those without a financial planner.
“These findings underscore the value of working with a trusted financial professional,” said Scott Spiker, CEO of First Command Financial Services, Inc. “In this period of fiscal uncertainty, a high level of preparedness is critical to achieving both near- and long-term goals in the pursuit of financial security.”