Some people like to call military members rich, but they don’t know the truth! In fact, it’s the complete opposite.
The military doesn’t get paid enough. A lot of military families are just trying to stay afloat and some are even struggling to pay off debt.
However, what it does provide is job security, a stable paycheck, and great benefits.
So why is it that people assume that you can make a lot of money in the military?
Military Money Myths
Myth #1: You get an enlistment bonus for joining the military.
Truth: Some recruits get this bonus, but not the majority. It is typically given to fill undermanned positions that you may have to qualify to be in.
Myth #2: They can buy a home, so they must have money.
Truth: Thanks to the VA loan, many military families can purchase a home and move in for little to no money down. It can actually be cheaper than renting an apartment in some cases.
Myth #3: Military pay increases per child.
Truth: BAH only increases for a single dependent. That dependent can be a child or a spouse, but it does not increase again for any additional.
Myth #4: Everything gets paid for by the military and the paychecks are “free money”.
Truth: Military members have bills to pay just like everyone else.
Myth #5: Military members do not pay taxes.
Truth: They pay taxes just like everyone else, even on the “enlistment bonus”. Service members do not have to pay taxes on any income earned while in a tax-free combat zone; however, there is a cap to this.
Myth #6: Their spouse doesn’t work, so they must have a lot of money.
Truth: Many military spouses do not work because it is hard to keep a job, much less a career, when moving around every few years. It recently took me 10 months to get a position that was not minimum wage. Those able to live on one income do so by budgeting their paychecks.
How much money do you make in the military?
Did I mention that the military doesn’t actually get paid enough?
A newly enlisted member only makes about $19,200 per year as of 2020, and that’s before taxes!
With the long hours worked, military members are actually making LESS than minimum wage sometimes.
If they rank up to an E-5 after about 4 years, then their pay goes up to about $34,600 per year (about $29,500 after taxes).
Of course, they do get tax-free BAH (Basic Allowance for Housing) in addition to that with varying amounts based on the affordability of the area. Adding that in, a military member will get an extra $10,000 (more or less) per year.
With the benefits received, military members who are smart with their money are able to live a comfortable life; however, they are far from rich.
Whoa! Is the military worth it then? It depends! Military life is certainly not for everyone.
Service members have to follow strict orders and rules. It’s not a regular job that you can quit at any time.
But by joining the military, you have a chance to set yourself up for future success. You can use it to get the job skills needed to get a higher-paying civilian position. By enlisting for a qualifying amount of time, you can also get your college education paid for.
However, there are many jobs where you can make more than a military member and far surpass that pay as well.
Careers that pay more than the military
These jobs pay at least $40,000 per year (about $19 per hour).
- Physical Therapy Assistant
- Surgical Technologist
- Automotive Technician
- HR Coordinator
- Sales Representative
- Air Conditioning Technician
- Repossession Investigator
- Marketing Representative
- IT Technician
(Some of these positions I found by searching on online job boards.)
How to get rich in the military
Whether you’re in the military or not, this is the secret to becoming rich:
- Save your money: (You can build up your savings account by just living on a smaller percentage of your income. I try to save at least 20% in my monthly budget.)
- Invest your money: (Use your money to make more money by investing it. There are safe investments with small returns and risker ones that have bigger returns.)
- Build your income: (Build more income by gaining job skills to level up and/or creating multiple streams of income.)
These savings tips are specific to military families:
- Try to save some of your BAH if you can find cheaper housing
- Take advantage of free/ cheap entertainment on base
Whether you have a lot of money or a little, the key is to live below your means.
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Yes, military members pay taxes based on their home of record (not the place they’re currently stationed). However, they can get their income tax-free if they are deployed in a combat area.
As of 2020, the lowest Warrant Officer (W-1) makes $3213.00/ month and up to $10540.20/ month as a W-5 with 40 years in the military. A Commissioned Officer (O-1) makes $3287.10/ month with a max of $16441.80/ month as an O-9 at 26 years of service.
There is no highest paying military branch. Service-members across all the branches receive the same basic pay for their rank; this includes the Army, Navy, Marine Corps, Air Force, Space Force and Coast Guard. However, it is easier to rank up and make more money in some branches based on your rate.
All branches of the military receive the same benefits. Such as education benefits (such as TA and the G.I. Bill), VA loan, healthcare (Tricare), dental, and retirement savings (TSP).
A typical military contract is 4 years; however, they range from 2 years to 6 years of service and up.