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.