Maintaining Financial Confidence in a Crisis

It’s true that the pandemic has lasted much longer and has been far more damaging than any of us ever expected – both in economic and human terms. On top of that, the onslaught of bad news has contributed to a rise in depression, feelings of isolation and financial uncertainty.

But maintaining perspective is important. After all, this is not our first rodeo when it comes to crises that disrupt financial markets. In recent history alone, our country has weathered the global financial crisis of 2007-2008, the aftermath of 9/11, the 2000 dot-com bubble burst and the wake of the 1987 market collapse. Lessons learned from these events continue to be relevant today: Remain calm, concentrate on what you can control and, if at all possible, stay the course.

Pandemic stress remains high.

Employment stability and comprehensive benefits have helped to buffer some of the pandemic’s financial effects on service members. However, the latest results from the First Command Financial Behaviors Index® reveal that nine out of 10 survey respondents are concerned about the pandemic  and roughly half are worried about its financial impact.

Military families exhibit behaviors that contribute to financial confidence.

Despite these ongoing concerns, career military families are continuing to save for and feel confident in their financial futures. Many of these families are maintaining monthly contributions to savings and retirement accounts, and those positive behaviors are contributing to strong levels of financial confidence.

January 2021 survey results reveal that 52 percent of career military families (commissioned officers and senior NCOs in pay grades E-5 and above with household incomes of at least $50,000) feel extremely or very financially secure month to month. That’s actually up slightly from 46 percent in January 2020, before the pandemic reached the U.S. Seventy-three percent of military families feel extremely or very confident in their ability to retire comfortably. That compares to 63 percent the previous year. “One year into the pandemic military families are maintaining their hope and optimism by continuing to invest for the long term,” said First Command President/CEO Mark Steffe. “These positive behaviors are helping them weather the uncertainty of today and feel greater confidence in their financial futures.”

Working with a professional can give you an edge.

The trend is particularly notable among those who partner with a financial coach. During the fourth quarter of 2020, military families with a financial advisor contributed more to retirement and long-term savings accounts than their do-it-yourself counterparts – $1,714 per month versus $906. They also put more dollars into short-term savings – $667 per month versus $483. Military families who work with a financial advisor ended the year with average savings and retirement holdings of $191,158. That’s about $84,000 more than those without an advisor.

These higher savings amounts align with greater levels of financial confidence. The January 2021 survey reveals that 79 percent of military families with an advisor feel extremely or very confident that their financial situation will improve in the next year. That compares to just 40 percent of families without an advisor. And 78 percent of families with a financial coach report feeling extremely or very confident in their ability to retire comfortably, compared to only 41 percent of military families without one.

Notably, military families who work with a financial advisor are more prepared for emergency expenses, including those related to the virus. The Index reveals that 62 percent report having three months or more of savings to fall back on to cover monthly household expenses. That compares to 54 percent of military families without an advisor. And looking ahead, military families who work with an advisor are more likely than their DIY counterparts to say they intend to increase their monthly contributions to savings and investments.

“Military families who partner with a financial coach are better prepared for the pandemic and feeling more confident in their financial future than their do-it-yourself colleagues,” Steffe said. “Working with a financial advisor can help reinforce the value of saving for today and increase feelings of security and confidence for tomorrow.”

To support our efforts to help military families get financially squared away, First Command offers complimentary financial planning for active-duty service members and their families. Get started today.