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Servicemembers Tightening Family Budgets In Face Of Military Budget Cuts

As Pentagon officials seek to make the military budget cuts required under sequestration, career servicemembers are increasingly making cuts of their own.

Recent survey findings from the First Command Financial Behaviors Index reveal 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) have been intensifying their commitment to frugal living. In February almost half (46 percent) said they were preparing for sequestration by cutting back on everyday spending, up 7 points from January. Other frugal responses to sequestration cuts include:

  • Increasing savings (indicated by 37 percent of respondents, up 7 points from the previous month)
  • Decreasing the aggressiveness of investments (15 percent, up 6 points)
  • Moving investments to cash (10 percent, up 2 points)
  • Starting work with a financial planner (7 percent, up 2 points)

"This monthly uptick in frugality lends further support to our longer-term findings that military households are concerned about defense downsizing and are responding by making meaningful changes in their family finances," said Scott Spiker, CEO of First Command Financial Services, Inc. "Notably, these efforts are helping military families feel more optimistic about the months ahead. The Index reveals more than three quarters of military respondents are confident their own financial situation will improve in the next year and equally confident in their ability to retire comfortably. By making positive changes in their family finances our men and women in uniform are responding with confidence to an uncertain future."


The Index reveals that military families expect sequestration will affect their financial lives in a variety of ways. They anticipate defense downsizing will mean:

  • Reduced retirement benefits (40 percent)
  • Decreased discretionary income for non-essentials (39 percent)
  • Reduced personal expense benefits, such as housing, clothing and food (37 percent)
  • Increased responsibility for healthcare costs (36 percent)
  • Reduced likelihood to be promoted (28 percent)
  • Reduced education benefits (25 percent)
  • Increased likelihood of early separation or not serving to full retirement (19 percent)
  • Forced relocation due to Base Closure and Realignment (14 percent)
  • "Worried about their military careers and economic futures, men and women in uniform are taking positive steps to get squared away in their family finances," Spiker said. "As active-duty families continue to embrace frugal strategies, we expect to see increasing demand for financial coaching from knowledgeable financial professionals."