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How to Build an Emergency Fund on a Military Income

Sep 08, 2020 5 Min Read Rebecca Alwine

Key Takeaways

  • Financial stability requires financial preparedness.
  • Military families often face unexpected expenses.
  • Each time you encounter a life change, revisit how much you need in an emergency fund.


Bailey Cummins is a military spouse who lives with her enlisted husband away from an installation. She uses her income to build up and maintain their emergency fund, which they've tapped into for unexpected pet-related costs and last-minute moves.

An emergency fund can feel like an unachievable luxury for many military families, especially when 24% of military spouses are unemployed and 77% are under-employed, according to the 2019 Blue Star Families Military Life Survey  PDF opens in a new window.

Building an emergency fund is challenging, but it's not impossible. Once you've made it a financial goal, the best way to save is one step at a time and, sometimes, one dollar at a time.


Yes, you really need one

Kate Horrell, a military spouse who is a respected voice in military finance, says there are numerous reasons why military families need an emergency fund. It's especially true for relocating families and those transitioning from service.

“People underestimate their expenses," she said. “Everyone thinks they are going to be fine until they don't get paid." It's not uncommon for service members to experience errors with the Defense Finance & Accounting System (DFAS) at one point or another.

“There are times during a move where the government may owe you a lot of money," Horrell explained. “And you know they are going to reimburse you for it, but you don't know when, and you have to be able to live in the meantime." Those costs can add up fast. For one family, that meant spending money on temporary lodging while waiting for their new house to be ready. It'd be difficult to find that kind of money if you don't have an emergency fund dedicated to unexpected expenses.

There are other times, outside of military life, that you may find an emergency fund helpful. For example, it will cover expenses if you have to evacuate when a hurricane heads your way, as many families had to do in 2018, or when a loved one gets sick, and you require last-minute travel funds because you live across the country.



Emergency savings amid COVID-19

The COVID-19 pandemic has pulled back the curtain on how fragile financial security is for many Americans. However, individual efforts to set aside emergency savings have proven to be a valuable lifeline. According to Prudential’s 2020 Financial Wellness Census, 71% of respondents said they had money saved specifically for emergencies in 2019 (up from 61% in 2018). Among those who established a dedicated emergency account, the median balance rose from $5,800 in 2018 to $9,000 in 2019. By May 2020, 86% of Americans with emergency savings said that they still had emergency funds on hand.1


Yes, you can do it – here's how

In the military, compensation comes in a variety of forms. Every two weeks – or every month – you receive a paycheck. You're given a place to live or money to pay for a place to live. You receive a stipend for food or a meal card to eat at the dining facility. Enlisted service members receive an annual clothing allowance. Health insurance is a few dollars a month. Since the basics are generally covered, there should be something extra that you can put towards an emergency fund each month.

Every family is different — some may be able to save hundreds at a time, while others may only be able to save $10 a month. That still counts. Horrell strongly recommends making it a habit — no matter what you do, do it consistently.

One strategy is to base your budget on less money than you make. “Build your budget around the lowest increment you know your paycheck will be," she suggests. “If you know you'll receive $1,353 every paycheck, build it off of $1,300." Then put the rest away. Some months you may be putting away $200 and some months you may only put away a few dollars, but you're creating a habit.

Many families take a short-term approach to building up an emergency fund, like picking up temp work or selling things at a yard sale. One Coast Guard family, who found themselves in crushing consumer debt, did a combination of odd jobs to build an emergency fund quickly. “Wrapping Christmas presents, selling plasma, yard work, and babysitting were some of the ways we made extra money," they said.

Army spouse Jackie Toops stresses the importance of having an emergency fund, and how her family got there. “We tapped into our emergency fund when we moved from Germany back to the States because we realized that our house and new duty station would require some purchases," she said. “We were happy and relieved to have our emergency account, and then gradually paid it back and built our total back up over time."

It's clear that having an emergency fund is important for military families, and how overwhelming saving for it can seem. But it's worth it for the peace of mind that comes with knowing you have cash on hand to conquer an emergency.


What you can do next

Determine the minimum amount your family needs for an emergency fund. Create a savings plan, build the fund, and keep it in an account where the money will earn some interest but will still be readily available if you need it. Financial wellness tools can help you plan and execute on your financial goals.




Rebecca Alwine is an army wife and freelance writer. Her writing experience includes military family topics, research pieces, and guest blogging. Rebecca has been published in USAToday's Veteran Affairs Special Edition, Ms. Magazine and The Atlantic's City Lab.


1Prudential 2020 Financial Wellness Census

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