How to Transition From an Active Duty Military Budget to a Civilian Budget

Whether you are a civilian or active duty military, a household budget is essential to achieve financial success. In our house, if it's not on the budget, it doesn't get paid. Military service is hard work, but one of the many benefits is a lot of your living expenses may be paid for in terms of on-base housing, or cheap in terms of shopping at AAFES. When you transition from a military active duty household budget to a civilian household budget, the key is be thorough in accurately estimating all your new living costs.

When I retired after 20 years of Navy service I had to make a lot of changes to adjust from the world of being on active duty where everything was provided by the government, to a civilian budget where I needed to pay for everything myself. As a Chief Petty Officer, with a rank of E9, my pension was 50 percent of my active duty pay. With three kids, the $30,000 a year that amounted to didn't go very far, so careful budgeting was necessary to meet the challenge.

I knew I would earn more in the civilian workforce, but also knew there would be many more expenses without the financial luxury of living on a military base. At times, our housing costs and a salary with extra bonuses would easily cover all our expenses, leaving money to save for the future. Anticipating college costs in just a few years and other financial needs, I needed a job that at least doubled my Navy retirement income. I was an aviation electronics specialist, so I was optimistic about starting my new civilian career.

Another factor requiring much more income is that we planned to move to Los Angeles near our family, where home prices are very high. We also chose the area because it has at least a dozen colleges and universities, as well as potential for airport and manufacturing aviation jobs for me. But unlike during active duty, we needed to figure out our budget to know how much we could pay for housing. My kids, my wife and I needed a permanent home. On the positive side, we were relieved that we no longer have to move every two or three years, as we did during my Navy career.

For my last ten years of service, my family lived in Navy base housing. I was deployed twice during that time, and the support system for my wife and kids was excellent. In addition to low-cost housing, groceries and almost everything we needed were at reduced prices at on-base Exchange stores.

For all of us, the transition from Navy to civilian life required adjustments. In addition to fitting in with a new neighborhood, we faced the challenges of spending more money for almost everything. This would be offset somewhat by my higher civilian salary. During my final Navy year, my wife and oldest son took frequent trips to Los Angeles to explore the housing market. We calculated our income and secured pre-approved financing at a low interest rate through a program for military members. We budgeted carefully and made sure to spend no more than 25% of our monthly take-home pay on the mortgage payment.

To create a new family budget, we started from scratch and listed all our expenses. My wife and I had some credit card debt and she had some student loan debt as well. We made sure to include all the various utilities, food, clothes, we just brainstormed everything we could think of. I was shocked as to how much the totals were. Over time, we made adjustments, especially the first few months. We learned some amounts were too high, and others were too low. Eventually we found the right numbers and knew we were on our way to financial success.

One thing that really challenged us was realizing the salary I needed to earn in a civilian job, simply to meet our anticipated expenses. Even if offered a job with a lower salary, I simply could not afford to accept it, which was a scary thought for our family at that time.

Although things were difficult, we stuck to our budget. We made adjustments as necessary and made sure to include some entertainment and fun in there, which is very important. We budgeted for travel, cars for the kids, college savings, everything and anything and continue to use the same system today, as retirees.

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