First Command Reports: Career Military Allocating Annual Pay Raises to Savings and Debt

FORT WORTH, Texas–(BUSINESS WIRE)–America’s career military families are making frugal plans for this
year’s annual pay raise, with a focus on investing the new dollars in
their financial futures rather than bumping up household spending.

The latest results of the First Command Financial Behaviors Index®
reveal that many middle-class military families (commissioned officers
and senior NCOs in pay grades E-6 and above with household incomes of at
least $50,000) expect to put their 2.1 percent pay raise towards savings
and debt reduction. Service member families expect to use their pay
raises to:

  • Increase debt repayment (43 percent)
  • Increase the amount of money they put into savings and Thrift Savings
    Plan accounts (48 percent)

In contrast, significantly fewer survey respondents expect to spend the
new money. These families plan to use their raise to:

  • Increase household spending (26 percent)
  • Pay for a major purchase (23 percent)

The 2.1 percent raise, which was effective Jan. 1, is the largest
enacted since 2010 and reverses a recent trend of lawmakers setting
military pay raises below expected civilian wage growth. Pay raise caps
were approved in previous years as a way to keep personnel costs in
check as part of the budget sequester and defense downsizing.

The frugal approach that military families are taking with this year’s
pay raise aligns with their ongoing concerns over the impact of
sequestration on family finances. When March survey respondents were
asked how they are responding to military budget cuts, 41 percent said
they are increasing the amount there are saving and 36 percent said they
are cutting back on everyday spending. Both approaches have consistently
ranked as the top two actions identified in the monthly surveys.

“America’s career service members continue to focus on saving more and
cutting debt as their response to ongoing concerns over how
sequestration impacts their family finances,” said Scott Spiker,
chairman/CEO of First Command Financial Services, Inc. “The majority of
military families say they are anxious about cuts to defense spending
and expect to be financially impacted by them. Notably, one in four
career military families are asking financial advisors for help
responding to their sequestration-related concerns. Our survey results
consistently reveal that military families who work with a financial
advisor feel more secure with their finances and confident in the future
than their do-it-yourself colleagues. By using their pay raises to shore
up their household finances, military families are making smart choices
in their response to the uncertainties of military budget cuts and
defense downsizing.”

About the First Command Financial Behaviors Index®

Compiled by Sentient Decision Science, Inc., the First Command Financial
Behaviors Index® assesses trends among the American public’s
financial behaviors, attitudes and intentions through a monthly survey
of approximately 530 U.S. consumers aged 25 to 70 with annual household
incomes of at least $50,000. Results are reported quarterly. The margin
of error is +/- 4.3 percent with a 95 percent level of confidence. http://www.firstcommand.com/fbi/

About Sentient Decision Science, Inc.

Sentient Decision Science was commissioned by First Command to compile
the Financial Behaviors Index®. SDS is a behavioral science and
consumer psychology consulting firm with special vertical expertise
within the financial services industry. SDS specializes in advanced
research methods and statistical analysis of behavioral and attitudinal
data.

About First Command

First Command Financial Services and its subsidiaries, including First
Command Financial Planning and First Command Bank, coach our Nation’s
military families in their pursuit of financial security. Since 1958,
First Command Financial Advisors have been shaping positive financial
behaviors through face-to-face coaching with hundreds of thousands of
client families.

First Command Financial Services, Inc., is the parent of First
Command Financial Planning, Inc. (Member
SIPC,
FINRA),
First Command Advisory Services, Inc., First Command Insurance Services,
Inc. and First Command Bank. Financial planning services and investment
products, including securities, are offered by First Command Financial
Planning, Inc., a broker-dealer. Financial planning and investment
advisory services are offered by First Command Advisory Services, Inc.,
an investment adviser.
Insurance products and services are offered
by First Command Insurance Services, Inc., in all states except Montana,
where as required by law, insurance products and services are offered by
First Command Financial Services, Inc. (a separate Montana domestic
corporation). Banking products and services are offered by First Command
Bank. In certain states, as required by law, First Command Insurance
Services, Inc. does business as a separate domestic corporation.
Securities products are not FDIC insured, have no bank guarantee and may
lose value. A financial plan, by itself, cannot assure that retirement
or other financial goals will be met.
First Command Financial
Services, Inc. and its related entities are not affiliated with,
authorized to sell or represent on behalf of or otherwise endorsed by
any federal employee benefits programs referenced, by the U.S.
government, or the U.S. armed forces.

Contacts

First Command Financial Services, Inc.
Mark Leach, 817-569-2419
Media
Relations
msleach@firstcommand.com