Here is an DoD overview of the new 4 Pillars of Financial Readiness
Pillar I – Manage
“Manage Money” will focus on managing current income and expenses. The standards of behavior are: Set Goals and Earn, Spend, and Borrow Wisely
Financial Readiness Standards of Behavior
- Set Goals and Earn
- Know your income and benefits;
- Research and maintain insurance coverage;
- Develop personal financial goals;
- Be prepared for transitions during the Military Life Cycle; and,
- Plan and make decisions regarding Life Cycle touchpoints
Financial Readiness Standards of Behavior
- Spend
- Recordkeeping and Cash management;
- Develop a Spending Plan;
- Track spending (fixed, flexible, and periodic);
- Use low-cost Morale, Welfare, and Recreation programs; and,
- Comparison shop when selecting items
Financial Readiness Standards of Behavior
- Borrow
- Utilize low-cost loan products as an alternative to payday lending & predatory loans;
- Reduce debt; and,
- Maintain Good Credit (use appropriate credit and consider alternatives to credit use).
Pillar I “Manage Money” Financial Military Resources
- Military One Source
- My Training Hub financial courses
- Personal Financial Managers (PFMs)
- Personal Financial Counselors (PFCs)
- Financial Collaborators
- Financial Calculators
- Retirement Calculators
Pillar II – Save & Invest
“Save First & Then Invest” includes Life-Cycle Decisions & Retirement Plans. The standards of behavior are “Save & Invest”
Financial Readiness Standards of Behavior
- Establish routine savings (saving for emergencies, periodic expenses, short and long-term goals);
- Participate in the Thrift Savings Plan (TSP), Roth and Traditional and Savings Deposit Program (SDP) during deployment;
- Invest money in diversified funds;
- Invest in your goals (e.g. parenthood, deployment, car purchases, higher education, home-buying, and retirement planning).
- Save for significant life events throughout the military life-cycle such as: completion of technical training, first duty station, marriage, divorce, death in family, birth of child, first reenlistment, deployment, mid-career, transition, pre-retirement planning, and retirement
Pillar II “Save & Invest” Financial Military Resources
- Military Banks and Defense Credit Unions
- Military One Source
- PFMs
- PFCs
- Financial Collaborators
- Financial Calculators
- Retirement Calculators
- My Training Hub financial courses
- Morale, Welfare, and Recreation (MWR) programs
Pillar III – Protect
“Consumer Protection” includes consumer skills, prevention of scams, insurance, emergency savings, and planning for transitions.
Financial Readiness Standards of Behavior
- Set aside money for emergencies;
- Insurance (Health, Life; Auto; Home/Renters; and Long-term Care Options);
- Participate in the Service member’s Group Life Insurance and retain other appropriate insurance;
- Protect yourself from consumer fraud and misleading financial practices
- Be aware of consumer rights and obligations;
- Preserve and protect Security Clearances.
Pillar III “Consumer Protection” Financial Military Resources
- Use Credit Reporting Agencies (one free credit report from each agency: Equifax, Experian, and TransUnion)
- Services’ Relief and Aid Organizations
- Army Emergency Relief
- Navy-Marine Corps Relief Society
- Air Force Aid Society
- DoD Human Resources Retirement Planning Seminars/Transition GPS
- Military OneSource
- PFMs
- PFCs
- Financial Collaborators
- Financial Calculators
- Retirement Calculators
Pillar IV – Future Planning
“Future Planning” requires evaluation of financial planning and estate planning. It also includes decision-making throughout the Military Life-Cycle.
Financial Readiness Standards of Behavior
- Develop a Financial Plan that includes short, intermediate, and long term goals; cash flow and net worth statements; retirement planning reports; current investment portfolio analysis; insurance planning; and estate planning.
- Develop an Estate Plan to distribute funds to family members or charities of choice.
- Identify Legal Plans (Will, Living Will, Trust, Power of Attorney)
- Review Insurance (link to Consumer Protection Pillar)
Pillar IV “Future Planning” Military Resources
- Military OneSource
- PFMs
- PFCs
- Financial Collaborators
- Financial Calculators
- Retirement Calculators