At the end of last year, service members in the U.S. military were financially better off than they were before the pandemic.
Despite inflationary pressure and high interest rates, service members managed to grow their savings and maintain higher balances in their checking accounts over the past five years, according to the first-ever Military Financial Wellbeing Index released by USAA Federal Savings Bank.
During this period, service members increased their savings account balances by 19% and their checking account balances by nearly a quarter. In contrast, the average checking and savings balances among civilians have decreased by 12% and 10%, respectively, over the past two years.
A Stark Contrast
There is a stark contrast between military members and the average consumer regarding credit card debt. U.S. consumer credit card debt hit a record-high of $1.17 trillion in Q3, a 8.1% increase from the previous quarter.
Over the past five years, the average daily credit card balance among U. S. military members has declined by nearly a quarter. Roughly half of service members paid their credit card bills in full and on time last year, compared to 40% the year before. Additionally, the number of military members carrying a revolving balance has declined.
The USAA report also examined the differences in financial stability among younger populations. Gen Z service members have grown their savings and checking account balances by double digits over the past five years, while millennials have experienced more modest increases. However, millennial service members had credit card balances that were roughly a quarter lower than pre-pandemic, while Gen Z had balances that were only 11% lower over the same time.
One potential reason for the generational differences could be housing costs. Millennials are older and are more likely to be homebuyers, while Gen Z service members who are just beginning their military careers are more likely to live on base.
Eclipsing Counterparts
While there may be generational variations, younger service members have fared much better than their civilian counterparts. Gen Z service members had a 21% higher average checking account balance and 8% higher savings account balance than the average Gen Z consumer. This trend was similar with millennial service members, who eclipsed their civilian counterparts by double digits when it came to the average checking and savings account balances.
There are multiple reasons why the military community has improved its financial wellbeing, including steady employment throughout the pandemic, as well as pay and benefit increases.
Within the military, there is also more financial education, something that isn’t always available to Gen Z consumers, and a growing emphasis on financial readiness. Younger service members, especially those that are officers, are generally earning more than their civilian peers who are at the same point in their careers.
“This Index goes beyond sentiment to put a real number behind the optimism and the challenges that our military members share with us on a daily basis,” says Michael Moran, President (Interim), USAA Federal Savings Bank. “While it’s great to see service members in a better place than they were pre-pandemic, we can’t ignore the reversal in trends. With inflation continuing to pressure military households, we encourage service members to be vigilant with their personal finances and preserve some of these hard-earned gains.”