Guide To Managing Your Money
The most difficult changes Service leavers need to adapt to on Civvy Street often concern money. There’s a great deal to think about, so here’s a quick starter guide to some of the stuff that you should look at…
Perhaps the most well-known discount scheme available to Military Service leavers is the Defence Discount Service. This provides online and high street discounts for Veterans and the wider Armed Forces Community.
The Defence Privilege Card can be used in shops, restaurants and venues to obtain Armed Forces discounts which could save you money on everything from a coffee in Starbucks through to flights from British Airways and plenty of other products and services from a wide variety of suppliers.
Other organisations choose to run Military discount schemes (with their own eligibility criteria). For instance, Transport for London (TfL) supply certain ex-Forces personnel with free or discounted travel in London via their Veterans Oyster photocard.
Search ‘veterans’ at: www.tfl.gov.uk
Armed Forces Covenant
The covenant is designed to help members of the Armed Forces community achieve the same access to government and commercial services and products as any other citizen.
Support is provided in a number of areas including: education and family wellbeing, having a home, starting a new career, access to healthcare, financial assistance and discounted services. Help manifests in different ways, such as special ‘Forces only’ schemes or products, etc.
Manage your money
While there are lots of initiatives run on behalf of the Forces Community it’s important to take responsibility for the literal management of your money Comparison websites make it relatively straightforward to find the right financial products to meet your needs – and that includes: bank accounts, insurance, credit cards and loans. Alternatively, you may opt to speak with a financial advisor to discuss either your holistic financial position or a part of it in detail, such as investments or mortgages, etc.
Work on your credit rating/score
Credit is a normalised part of a person’s financial health. Lots of us have mortgages, credit cards and loans that will be based on personalised checks by banks and other lenders. A variety of information is used to create a ‘credit score’ such as your previous and current financial activities.
Building a better score can give you access to a wider range of financial products and potentially better borrowing rates. Owning your own home or staying in the same address for at least a year is useful, as is getting on the electoral register (Visit: www.gov.uk/register-to-vote). Paying bills promptly and other evidence of financial stability will also help.
Thinking about today is a good start, but what about tomorrow? When you joined the Armed Forces you’ll have been automatically enrolled into the Armed Forces Pension Scheme – and you’ll get a pension when you reach the specified retirement age.
Pensions really are a crucially important part of your financial planning. The full State Pension is currently £168.60 per week – a figure that most people would say is much less than they’d hoped to live on during their retirement. The earlier that you can start to top-up your pension pot, the better – making this a financial priority.
Earnings over a certain level is taxable. If you decide to contribute to a personal pension scheme, you’ll qualify for tax relief. In other words some of that money, as well as the contributions, will go towards an income for you when you retire.
The law on workplace pensions has changed, making them ‘opt-out’ rather than ‘opt-in’. If you’re a UK-based employee aged between 22 and state pension age and you earn at least £10,000 per year, you will be automatically enrolled into your workplace pension scheme. Employers are also now obliged to pay into these schemes.
It’s always good news if your employer gives you access to a pension that they will also pay into. Generally, unless you have other serious financial priorities such as large debts to pay off, turning the opportunity down would be like rejecting a pay rise.
Funeral planning has become a growing trend in the UK. The thinking is that it’s a kind or responsible thing to do for your family, who may otherwise be left to pick up the bill for your ‘send-off’ either from your estate or out of their savings.
Funeral plans generally help you to pay for a funeral in advance, at today’s prices, either all at once, or more usually, in instalments. It’s well worth establishing what the payout will cover since it may only be cremation costs or a portion of burial costs – and not include a church service, etc
As a member of the Armed Forces you were covered by a ‘death-in-service’ benefit that would’ve paid out a lump sum had you passed away while Serving. Sometimes these are included in civvy employment remuneration packages. (Even so, if the benefit is not enough to cover your family’s needs you can top it up with a life insurance policy.)
Life insurance can pay your dependents a lump sum or regular payments if you pass away. So if you have a partner, or a family who depend on your income, it makes sense to have a policy to provide for them should anything happen to you.
There are different types of life insurance available such as for a specific term or for your whole life. Remember the policy will only pay out on death – and does not cover illness or even disability.
Lots of people miss out on their entitlement to various benefits simply because they don’t realise that they are eligible to claim. Again, online tools and calculators can summarise your (or your family’s) entitlement. You may be able to claim benefits such as: Child Benefit, Tax Credits, Jobseekers Allowance, Statutory Sick Pay, Armed Forces Independence Payment or Personal Independence Payment. (This list is non-exhaustive.)
Owing large amounts of money can become a cycle that can spiral out of control. Best advice is always to seek help as early as possible. There are different workable options to settle your finances – based on the amount of money you owe and the assets you have.
The starting point is to look at what you owe and formulate a plan. Perhaps you can speed up the resolution of your debts by finding cheaper borrowing methods (such as balance transfers or loan consolidation) which could save you interest charges and be used to bulk up repayments. The other essential is to cut the debt at its root, which is, for whatever reason, spending more than you can afford. Audit your income versus outgoings to see where you might be able to reduce your reliance on borrowing. Whatever your plan, look at the numbers (they never lie). Calculate how much your borrowing will cost you and how long you’ll be locked into the debt. Minimum credit card payments and payday lenders may not look so friendly once you’ve done your sums.
Even if things look dark, good quality, personalised, free advice from organisations like the Citizens Advice Bureau is available.
More money advice…
MoneyForce is the official MOD channel for money advice for UK Service personnel and Veterans.
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