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Facing the twin challenges of defense downsizing and continuing economic turmoil, men and women in uniform are preparing for another year of belt-tightening behaviors in 2013.
The First Command Financial Behaviors Index® reveals military families with household incomes of at least $50,000 are concerned about their finances – and they are responding with a meaningful commitment to frugal living. Spending less, saving more and paying down debt continue to be among the key money strategies on display in active-duty households. First Command has compiled popular strategies from recent Index surveys to produce a list of financially-themed aspirations for 2013. First Command’s top 10 New Year’s Resolutions for military families are:
1. Cut back on spending
2. Get out of debt
3. Increase savings
4. Use cash or debit more often instead of credit cards
5. Learn to budget responsibly
6. Improve your credit score
7. Live within your means
8. Shop more at discount stores and/or for discount brands
9. Keep track of financial activities
10. Be financially independent
Throughout the past year the Index has revealed widespread concerns in military households about the state of the economy and defense downsizing. Seven out of 10 survey respondents identified government cuts to military retirement benefits as their No. 1 financial concern, followed by the economy at 54 percent.
Sequestration is a uniquely personal issue for career servicemembers and their families. Two thirds of survey respondents have expressed concern about the possibility of involuntary separation from the military. An early forced exit from the armed forces is seen as a serious financial threat, with almost nine out of ten survey respondents hoping to qualify for a traditional military retirement by completing at least 20 years of service.
“Military families know that significant federal spending reductions are already well underway,” said Scott Spiker, CEO of First Command Financial Services, Inc. “They recognize that the coming reduction in force will be huge, affecting one-sixth of the military and impacting retirement pay. They see the base realignments and closures that are already in play. They know that promotion rates are being reduced, meaning that fewer by far will be promoted to the next level. They understand that many servicemembers will be facing an up-or-out situation. And of course they see the changes being made to military retirement benefits, such as TRICARE. The result is a diminished confidence within the career military.”
Notably, these concerns are lessened in military families who work with a financial planner. The Index reveals that these consumers feel more comfortable about their finances than those without a planner. They are more likely to feel extremely or very:
“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. “Our research and market experience tells us that families who work with a financial coach are more likely to spend less, save more and pay down debt in their pursuit of financial security. We expect to see a growing number of active-duty households put their trust in knowledgeable financial professionals in 2013 and beyond.”
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. www.firstcommand.com/research
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 Bank and First Command Financial Planning, assist American families in their efforts to build wealth, reduce debt and pursue their lifetime financial goals and dreams—focusing on consumer behavior as the first and most powerful determinant of results. Through knowledgeable advice and coaching of the financial behaviors conducive to success, First Command Financial Advisors have built trustworthy, lasting relationships with hundreds of thousands of client families since 1958.
First Command Financial Services, Inc., is the parent of First Command Financial Planning, Inc. (Member SIPC, FINRA), 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. 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.