According to the Department of Defense’s (DoD) Annual Report on financial literacy and preparedness, military servicemembers show slightly higher levels of financial well-being compared to the general population.
The report was released by the Consumer Financial Protection Bureau (CFPB), which created a test to measure financial well-being. Scores range from 0-100, with a higher score correlating to higher levels of financial well-being.
The average score was 61 for a servicemember on active duty and 60 for reserve members. The general population had the lowest share of higher scores at just 36%. Fifty percent of active servicemembers and 45% of reserve members scored higher than 61. The average score for the general population was 54.
The general population had the most individual scores in the bottom tier at 13%. Servicemembers combined to have just 10% score lower than 10.
“The higher levels of financial well-being exhibited by servicemembers may be explained by certain characteristics and benefits of military service,” the report states. “For example, the CFPB found in its research that U.S. adults with a stable month-to-month income had a higher score (56) than those whose income varies from month-to-month (50). Individuals with employer-provided health benefits had a higher score (56) than those without (51).”
Of course, this report does not imply that servicemembers do not have financial challenges. According to the survey, about one-third of servicemembers have less than one month of emergency savings, and 23% of junior enlisted servicemembers had no emergency funds.
The CFPB recently started its “Start Small, Save Up” initiative, after research found 40% of Americans could not cover a $400 emergency expense.
A 2018 National Association of REALTORS Research Group report entitled “Veterans & Active Military Home Buyers Profile” found that active-duty military make up 2% of all American homebuyers, with veterans accounting for 17%, and 81% non-military. The report also found that, while active-duty military homebuyers do have a lower median income than non-military buyers at $84,000, they have other advantages, including stable job security and no-down-payment financing options. A full 56% of active-duty homebuyers put no money down when purchasing a home, and 41% of veterans. For comparison’s sake, only 7% of non-military buyers are able to make use of no-down-payment financing options.
Among active-duty military who financed their home, 77% used a VA loan and 15% used a conventional loan. For veterans, 58% used a VA loan and 33% used a conventional loan.
Overall financial well being has been a topic of discussion in recent weeks after April’s job’s report showed the lowest unemployment rate (3.6%) since 1969.
April saw the addition of 263,000 jobs, which was the strongest month for job growth since January and the 103rd straight month of gains.
“Today’s report suggests that the labor market remains healthy, which should ease recession concerns and curb expectations of a Fed rate cut for the moment,” Doug Duncan, Fannie Mae’s Chief Economist, said. “We expect the Fed to remain patient given a solid labor market and little evidence of upside inflation risks.
Representatives from the mortgage servicing industry recently gathered for a charity golf tournament benefiting military servicemembers through Operation Homefront. To read the full details of that event, click here.