First Command News & Events
FOR IMMEDIATE RELEASE - May 23, 2013
Servicemembers Tightening Family Budgets In Face Of Military Budget Cuts, First Command Reports
First Command Financial Behaviors Index® reveals uptick in frugality among military families
FORT WORTH, Texas — As Pentagon officials seek to make the military budget cuts required under sequestration, career servicemembers are increasingly making cuts of their own.
Recent survey findings from the First Command Financial Behaviors Index® reveal that middle-class military families (senior NCOs and commissioned officers in pay grades E-6 and above with household incomes of at least $50,000) have been intensifying their commitment to frugal living. In February almost half (46 percent) said they were preparing for sequestration by cutting back on everyday spending, up 7 points from January. Other frugal responses to sequestration cuts include:
- Increasing savings (indicated by 37 percent of respondents, up 7 points from the previous month)
- Decreasing the aggressiveness of investments (15 percent, up 6 points)
- Moving investments to cash (10 percent, up 2 points)
- Starting work with a financial planner (7 percent, up 2 points)
“This monthly uptick in frugality lends further support to our longer-term findings that military households are concerned about defense downsizing and are responding by making meaningful changes in their family finances,” said Scott Spiker, CEO of First Command Financial Services, Inc. “Notably, these efforts are helping military families feel more optimistic about the months ahead. The Index reveals more than three quarters of military respondents are confident their own financial situation will improve in the next year and equally confident in their ability to retire comfortably. By making positive changes in their family finances our men and women in uniform are responding with confidence to an uncertain future.”
The Index reveals that military families expect sequestration will affect their financial lives in a variety of ways. They anticipate defense downsizing will mean:
- Reduced retirement benefits (40 percent)
- Decreased discretionary income for non-essentials (39 percent)
- Reduced personal expense benefits, such as housing, clothing and food (37 percent)
- Increased responsibility for healthcare costs (36 percent)
- Reduced likelihood to be promoted (28 percent)
- Reduced education benefits (25 percent)
- Increased likelihood of early separation or not serving to full retirement (19 percent)
- Forced relocation due to Base Closure and Realignment (14 percent)
“Worried about their military careers and economic futures, men and women in uniform are taking positive steps to get squared away in their family finances,” Spiker said. “As active-duty families continue to embrace frugal strategies, we expect to see increasing demand for financial coaching from knowledgeable financial professionals.”
About First Command Financial Behaviors Index®
Compiled by Sentient Decision Science, Inc., the First Command Financial Behaviors Index® assesses trends among the American public’s financial behaviors, attitudes and intentions through a monthly survey of approximately 530 U.S. consumers aged 25 to 70 with annual household incomes of at least $50,000. Results are reported quarterly. The margin of error is +/- 4.3 percent with a 95 percent level of confidence. Financial Behaviors Index
About Sentient Decision Science, Inc.
Sentient Decision Science was commissioned by First Command to compile the Financial Behaviors Index®. SDS is a behavioral science and consumer psychology consulting firm with special vertical expertise within the financial services industry. SDS specializes in advanced research methods and statistical analysis of behavioral and attitudinal data.
About First Command
First Command Financial Services and its subsidiaries, including First Command Bank and First Command Financial Planning, assist American families in their efforts to build wealth, reduce debt and pursue their lifetime financial goals and dreams—focusing on consumer behavior as the first and most powerful determinant of results. Through knowledgeable advice and coaching of the financial behaviors conducive to success, First Command Financial Advisors have built trustworthy, lasting relationships with hundreds of thousands of client families since 1958.
First Command Financial Services, Inc., is the parent of First Command Financial Planning, Inc. (Member SIPC, FINRA), First Command Insurance Services, Inc. and First Command Bank. Financial planning services and investment products, including securities, are offered by First Command Financial Planning, Inc. Insurance products and services are offered by First Command Insurance Services, Inc. in all states except Montana, where as required by law, insurance products and services are offered by First Command Financial Services, Inc. (a separate Montana domestic corporation). Banking products and services are offered by First Command Bank. In certain states, as required by law, First Command Insurance Services, Inc. does business as a separate domestic corporation. Securities products are not FDIC insured, have no bank guarantee and may lose value. A financial plan, by itself, cannot assure that retirement or other financial goals will be met.