Most discussions about financial literacy education focus on the high school level, with the belief that graduating seniors should be prepared for the financial independence and challenges that come with college, especially student loans. However, an increasing number of high school graduates are not immediately entering college. Therefore, it is important for any standalone Personal Financial Literacy (PFL) class in high school to cover topics like budgeting and being savvy consumers – more teens are entering the workforce straight out of high school. Another topic that should receive at least a few days of attention is the military. Service members, many of whom enter the military straight out of high school, face unique financial challenges.
Fortunately, the White House is promoting a new initiative, VSAFE, to help service members and veterans boost their financial literacy and combat financial scams. The U.S. Department of Education is included in the broad initiative to help veterans correctly and effectively use their post-service education benefits, like the G.I. Bill, to receive quality education and credentials and not fall prey to fraudulent institutions masquerading as legitimate colleges or certification programs. The VSAFE initiative comes on the heels of the Veterans Administration’s (VA) move to improve its own financial education and fraud awareness outreach.
Servicemembers and Vets Face Unique Financial Conditions
Last year, veterans were subject to over $400 million in financial fraud. Due to the complexities of frequent changes of address and access to benefits, service members and newly separated veterans are often targeted by scammers. Many may also be denied benefits laid out by law, such as reduced-interest loans. Due to the many military-related government agencies, benefits providers, nonprofits, and charities in the United States, it is easy for scammers to get personal information from service members and veterans by calling them and posing as a legitimate entity.
Service members must also be aware that states differ on how they tax income from the U.S. military. Whether currently serving or recently separated, one’s tax burden could be different based on state of residency. As a result, it is important for young people to know to look up their state’s income tax rules, including for special circumstances like military pay and veterans’ benefits. These are likely not told directly to all military members or vets, meaning they need to know to seek this information on their own.
Those Receiving Financial “Windfalls” Need to be Prepared
A financial windfall is a sudden increase in income or wealth, often as part of a one-time event. For military service members, this can come in the form of the G.I. Bill, which provides money for higher education. However, this money comes with requirements and stipulations, so veterans need to plan out their higher education path to maximize their benefits. Students in financial literacy classes should be given budgeting training to see how these decisions can be explored effectively. For example, there are differences in G.I. Bill compensation for in-person college attendance versus online classes and public colleges and universities versus private institutions.
Budgeting training is crucial for those who suddenly come into a large sum of money or financial benefits, as these amounts can dwindle quickly if not properly planned and managed.
