Understanding Military Pay: A Parent's Guide to Your Child's Income
Your son/daughter taking the bold step to join the military is undoubtedly a decision that made you proud; we know we were when our son first broke the news to us. Adjusting to the new life that comes with having a service member in the family can be quite overwhelming though, especially for civilian parents with no prior experience with military life. One of the more complex challenges we had was managing the complexities of military pay and helping our son manage his new source of income.
In this article, we will try to share with you the basics of military pay and a few practical steps we found to be helpful.
Understanding the Basics of Military Pay
Military pay isn’t like your typical paycheck from a civilian job. This often comes as a shock to many new service members who expect a payment system much like what they had been used to in their civilian jobs. Military pay typically comes in different parts, the most important being base pay. This is essentially the main salary a service member earns, and it’s dependent on three factors:
Whether your child is enlisted or an officer.
Their rank.
Number of years they’ve served.
Every year this base pay increases to keep up with the rising cost of living and inflation.
Benefits That Boost Income
Along with the base pay, there are various financial benefits, special pay, and bonuses that service members are eligible for. These additional financial incentives can greatly boost your service member’s income and provide extra financial security. These include:
Allowances
Service members usually get two major allowances; Housing Allowance (BAH) and Food Allowance (BAS). The housing allowance would usually depend on the service member’s rank but would also depend on the size of the family and the location.
Special Bonuses
Combat Zone Pay: If your child works in a combat zone, they won’t pay federal income tax for that month.
Hardship Duty Pay: Extra money is given to service members stationed in tough conditions.
Special Skills Pay: Service members who speak certain languages or work in specialized roles, like aviation or diving, can earn additional income
Other Benefits and Compensations
Your new service member has even more benefits to look forward to now that they are receiving military pay. One of these perks is the retirement and education benefits. The Blended Retirement System (BRS) combines a 401(k)-style savings plan, called the Thrift Savings Plan (TSP), with a pension for those who serve 20 years or more.
Also, there’s the Post-9/11 GI Bill which covers college tuition, housing, books, and more. Service members can even transfer their GI Bill benefits to a spouse or child, creating opportunities for the whole family.
There are also other benefits like TRICARE which is a free/low-cost healthcare plan, life insurance, and access to affordable on-base services like groceries and childcare which further reduce living costs and provide financial security.
Helping Your Child Manage Their Finances
As a parent, you can help your child navigate their military income and benefits. Here are some tips on how to go about this:
Budget Together: Encourage your child to plan for expenses, including saving for the future.
Avoid Debt: Help them understand the importance of living within their means.
Take Advantage of Resources: Many military bases offer free financial counseling to help service members plan wisely.
Conclusion
Joining the military is more than just another job—it’s a commitment to serve our great nation. But this doesn’t mean your service member’s dedication goes uncompensated. While the base pay may initially seem modest, allowances, benefits, and bonuses make the total financial compensation for their service much more lucrative. By understanding the intricacies of military pay, you can better help your son/daughter manage their new source of income, wisely and set them up for long-term financial stability.
For more information on military pay, here are a few resources that might help.
Useful Resources
Defense Finance and Accounting Service (DFAS) - The official source for military pay information, including pay scales, allowances, and tax exemptions.
TRICARE - The military’s healthcare program, offering free or low-cost medical coverage.
Personal Financial Management Programs (PFMP) - The official source for free financial education and counseling.
