By Barbara O’Neill, Ph.D., CFP® and
Martie Gillen, Ph.D., MBA, AFC®, CFLE
Most military family permanent change of station (PCS) moves occur between May and September so personal financial managers are undoubtedly fielding many questions related to service members’ PCS orders.
PCS season is a great time to conduct a financial automation inventory; i.e., a review of automated deposits, bill payments, and payroll deductions. Address changes also need to be made on various financial accounts.
Below are three automation inventory strategies for Personal Financial Managers to share with service members:
1. Automated Payment Inventory
Ask service members to create a six-column table using a sheet of paper or an Excel spreadsheet, starting with a list of household expenses that are paid directly by debiting a credit card or bank account (Column 1). Examples include rent or mortgage payments, loan payments, credit card bills, utility payments, landline and cell phone bills, water and sewer bills, insurance premiums, and streaming services.
In Column 2, next to each item, indicate the account number (if any) for each automated expense (e.g., cell phone account number). In Column 3, list the customer service number and/or website address for each automated account. In Column 4, indicate the payment source (e.g., credit card) for each listed expense.
In Column 5, list the account number for the payment source (e.g., credit card, checking account), and in Column 6, list the customer service number and/or website for each automated payment source. Creating this table will help simplify moving-related notification processes such as stopping payments on discontinued expenses (e.g., rent) and changing contact information for continuing accounts (e.g., cell phone, streaming).
2. Automated Income Inventory
Military families also have automatic income, starting with direct deposit of a service member’s pay. A military spouse may also be paid in a similar fashion. Other sources of direct deposits are income from savings and investments (e.g., interest), government SSI payments, and tax refunds.
Like automated bill-pay, an itemized list of automated income sources is useful during transitions. For example, a PCS move may require closing an existing bank account and switching to another financial institution for direct deposits. A change of address for income sources will also be necessary (e.g., the IRS, using Form 8822).
3. Automated Payroll Deductions Inventory
A PCS move may involve a change in income (e.g., loss of a military spouse’s income or a raise in a service member’s pay) and/or living costs (e.g., housing, auto insurance). This may necessitate changes to payroll deductions such as income tax withholding and voluntary contributions to the thrift savings plan (TSP). For example, increased income and/or lower living costs may be an opportunity for additional tax-deferred retirement savings. If income is constrained, TSP contributions may need to decrease.
For additional information, review this OneOp webinar about military transitions.
Cover photo by cottonbro studio on Pexels.
