How National Guard and Reserves members can financially prepare for active duty

Like their active-duty counterparts, members of the National Guard and Reserves serve because they love their country. It’s very common to see members of the National Guard or Reserves serving alongside their active-duty counterparts in worldwide operations.

When they are activated, National Guard and Reserve members face income changes. How much of a change depends on individual circumstances. For example, a non-commissioned officer who serves as a civilian CEO could face a large pay decrease when they’re activated. On the other hand, someone earning a modest income working for a nonprofit may get a pay increase when activated.

Regardless of your situation, taking these steps now can help prepare your budget for changes in the future.

1. Build a reserve fund.

You may already know the importance of an emergency fund. This is an account that stores three to six months' worth of essential living expenses. An emergency fund covers unexpected expenses, like home repairs or medical expenses.

A reserve fund, on the other hand, can help reduce financial stress caused by service to our country.

Since the average deployment can last between 6 and 12 months, setting aside up to a year’s worth of shortfall between your civilian pay and your military pay could help offset income challenges. For example, if you go from earning $10K per month as a civilian to earning $8K per month when activated, you have a $2K per month shortfall. This makes your reserve fund goal between $12K and $24K.

To further refine how much savings makes sense for you and your family, consider your typical deployment duration and "dwell period," or time between deployments.

Even if your deployment only lasts a month or two, having a reserve fund that can bridge the income gap can help reduce financial stress. Keeping these funds safe and readily available can help, too, since no-notice or short-notice deployments are possible. A good place to keep a reserve fund? Consider a savings account.

2. Make a reserve budget.

Once you're activated, it's time to adjust your budget. Make sure it reflects your new Reserve or National Guard income. Putting pencil to paper — or using a budgeting app — helps you know how to adjust your spending and saving to your new income.

If you're adjusting your income down, you may have less money to spend for things like vacation or dinners out. If you're receiving a bump in pay, consider budgeting the extra to pay down debt or increase your retirement savings.

3. Use auto payments to your advantage.

Set up automatic bill payments before you deploy. You'll find this beneficial for certain expenses like utilities, car payments, credit cards and mortgage. If you don't have someone staying behind to pay the bills, this ensures your bills are paid on time and helps keep your finances and credit stable.

If you can't set up automatic payments and you plan to give someone permission to conduct your finances on your behalf, make sure you choose a trustworthy person you can rely on. And think carefully before you assign someone as your power of attorney.

A good candidate is someone who’s organized and responsible when it comes to managing their own finances.

Your financial institution may have its own power of attorney form to complete. Taking care of all the paperwork before deployment orders drop can reduce stress and allow you to focus on other important aspects of preparing for deployment.

4. Know your benefits.

You could be entitled to protection under the Servicemembers Civil Relief Act, also called the SCRA. The SCRA provides extra protections for service members "if legal or financial transactions adversely affect their rights during military or uniformed service." SCRA protections begin on the date you enter active duty and terminates when your military service ends. In most cases, these benefits aren't mandatory or automatic; you have to request them.

Here are some examples of how SCRA benefits members of the National Guard and Reserves:

• For debts incurred prior to active duty, you may qualify for an interest rate cap for the duration of your active-duty period.
• Your landlord can't evict you without a court order unless your rent is higher than a certain amount, which is set each year.
• You can't be foreclosed on without a court order if the mortgage was taken out prior to military service. This protection applies a period of time while you’re serving and for one year after you complete your service.
• You can request postponement of proceedings if your military service prevents you from attending a scheduled court appearance. This includes divorce and child support hearings but not criminal proceedings.
• The owners of a self-storage facility can't sell your items for overdue rent without a court order. Like a mortgage, this applies to the period of active duty and for one year after.
• You can end a vehicle lease you signed before entering a period of active duty and that active-duty period continues for at least 180 days.
  

Additional benefits and protections are also available. To learn more, check with your local JAG office or the U.S. Department of Justice's SCRA website.

5. Meet with human resources.

Schedule an appointment to talk with the HR department of your civilian employer. During this meeting, discuss the status of your position during your deployment and what you can expect when you return. Make sure you and your family have health, vision, dental and life insurance during your deployment. Determine if your civilian employer or the military provides these insurance coverages while you're serving your military duty.

Members of the National Guard and Reserves should always notify their employers of their military status well in advance of being activated. It's important for civilian employers to understand that sometimes service members receive no-notice deployments as well.

6. Seek help when needed.

The military offers free legal and financial counseling, and emergency financial assistance to all military members in every branch of service. Take advantage of all resources available to you. Here are some commons ones to consider.

• Army Emergency Relief Opens in a New Window‍ ‍
• Air Force Aid Society Opens in a New Window‍ ‍
• Navy-Marine Corps Relief Society Opens in a New Window‍ ‍
• Coast Guard Mutual Assistance Opens in a New Window‍ ‍
• We Care for America, the National Guard Relief Fund Opens in a New Window‍ ‍

Remember that access to relief agency support may change based on status: Title 10 versus Title 32 versus State Active Duty for National Guard, or on and off orders for Reservists.

Balancing expectations from civilian employers, military job and family life often causes stress for members of the National Guard and Reserves. But having a financial plan in place ahead of time helps limit that stress and lets you focus on the priorities that are most important to you.