Financial Planning

Building an Emergency Fund on Military Pay: A Complete Guide

Coleman Marlatt
December 10, 2024
10 min read
Why Emergency Funds Matter for Military Families

Military life comes with unique financial challenges - PCS moves, deployment expenses, and potential changes in BAH rates. An emergency fund provides crucial financial security and peace of mind during unexpected situations.

How Much Should You Save?

Military-Specific Recommendations:

  • Single Military: 3-6 months of expenses
  • Military with Dependents: 6-9 months of expenses
  • Dual Military: 3-6 months (more stable income)
  • Geographic Bachelor: 6-12 months (higher expenses)
Building Your Fund: Step-by-Step

Step 1: Calculate Your Monthly Expenses

  • Housing (if you pay rent/mortgage)
  • Food and groceries
  • Transportation and fuel
  • Insurance premiums
  • Utilities and phone
  • Minimum debt payments
  • Childcare and family expenses

Step 2: Start Small

Begin with a goal of $1,000, then work toward one month of expenses.

Step 3: Automate Your Savings

Set up automatic transfers from your checking to savings account on payday.

Step 4: Use Military-Specific Opportunities

  • Save deployment pay and family separation allowance
  • Bank PCS travel reimbursements
  • Use tax-free combat pay periods to boost savings
Where to Keep Your Emergency Fund

Best Options:

  • High-yield savings accounts
  • Navy Federal or USAA savings
  • Money market accounts
  • Short-term CDs (laddered)

Avoid:

  • Stock market investments
  • Long-term CDs
  • Retirement accounts
  • Checking accounts (low interest)
Military-Specific Savings Strategies

Deployment Savings

Save 50-75% of deployment pay, including combat pay exclusion benefits and family separation allowance.

PCS Opportunities

Bank the difference between your actual moving expenses and reimbursements (if you move yourself).

BAH Changes

When BAH increases, save the difference rather than lifestyle inflation.

Promotion Pay Raises

Automatically save 50% of any pay increase from promotions.

Action Steps
  1. Calculate your monthly expenses today
  2. Open a high-yield savings account
  3. Set up automatic transfers for payday
  4. Start with $50-100 per month if that's all you can manage
  5. Increase contributions with pay raises and windfalls
  6. Keep your emergency fund separate from other savings goals
  7. Review and adjust your target amount annually