After showing more optimism about the economy in the first part of the year, the First Command Financial Behaviors Index found military families are once again concerned about the economy’s effect on their financial situation and as a result are ratcheting back their spending.
Almost 60% of middle-income military families said the economy was one of the financial issues that worried them most, according to First Command. That’s up from a record low of 49% in May.
The shutdown is clearly one issue weighing on servicemembers' minds. “Federal budget cuts are a particularly important issue in the military population,” Scott Spiker, CEO of First Command, told ThinkAdvisor in an email. “Half of families report feeling anxious about sequestration, and they have responded by cutting back on everyday spending. With the lessons of the economic downturn still fresh, our men and women in uniform are preparing for more fiscal uncertainty and getting their family finances squared away.”
First Command also surveys civilian families as part of the index. They did not report the same level of concern or impact as a result of government employee furloughs or spending cuts.
About 40% of military respondents said they were cutting back spending and a quarter are increasing their saving, which First Command noted appear to be helping their confidence. Although less than half of servicemembers said they were confident their financial situation would improve next year, it’s up seven points from 36% in January. Forty-five percent of respondents said they feel more secure in their month-to-month situation, a six-point increase. As for their chances of retiring securely, 42% said they were confident they would be comfortable in retirement, up 11 points.
Spiker noted advisors’ guidance is an important factor in servicemembers’ feelings of security. “Financial planners coach their clients to spend less, save more and adopt other positive behaviors that are critical to achieving both near- and long-term goals in the pursuit of financial security and feeling more confident about the future,” he said. “Looking ahead, we expect a growing number of military families to seek out the assistance of a trusted financial professional.”
More than half of servicemembers who are working with an advisor said they were confident about their retirement or that their financial situation would improve next year, compared with about a third of those without an advisor.
Check out Honoring Advisors Who Serve(d): July 4th, 2013 on ThinkAdvisor.