Mastering Your Finances for Life After Service

Making the transition from military to civilian life isn't just about finding the right job – it's about making sure your finances are ready for the shift too. The safety net of military benefits and allowances has supported you well, but civilian life brings new financial responsibilities and considerations.
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We sat down with Iain Ross, a veteran with a 37-year military career behind him. Iain transitioned to civilian life in 2020 and has since navigated roles at Barclays, Deloitte, and Credit Suisse, and he’s about to start at American Express. Drawing from both his military career and financial sector experience, Iain shares crucial insights on preparing your finances for civilian life.

Get reading if you want to master your finances👇

(Key takeaways at the bottom)

From 37 Years of Service to Financial Sector Success

[Annabel] Before we dive into your financial advice, could you tell us a bit about your journey?

[Iain] "I left the military in 2020 after a 37-year career. I did the full 24 years and then went on to variable engagement, completing two VENG engagements. I was primarily employed in aviation as a pilot, though I spent considerable time in operations management and planning roles at Wattisham.

Post-military, I joined the Barclays Military Talent Scheme, working in their private bank as a risk and controls manager. Since then, I've worked with Deloitte as a management consultant, Credit Suisse during their UBS merger, and I'm about to start a new role with American Express."

First Steps: Securing Your Housing

The biggest financial consideration when leaving the military? Housing. After years of subsidised accommodation, the reality of civilian housing costs can be jarring. Here's what Iain suggests:

[Iain] "Get on the property ladder as soon as you can. What you don't want is to leave the military with no established accommodation and dive into the rental market. Even if you buy somewhere you won't live in immediately, having that foot on the ladder is crucial."

Timing Your Property Purchase

The ideal time to buy depends on your circumstances. If you're planning a full career, aim to buy by age 35

There are plenty of schemes in the military that help you purchase a property and most of those work on a five or six year period before leaving the military. Having an existing mortgage makes getting future mortgages easier - so it’s a good idea to take advantage of these, even if you don’t want to live in it immediately and could rent it out. 

It might sound obvious - but be honest on mortgage applications about your remaining service time. 

[Iain] "When you look at mortgage applications, they don't technically ask you when your contract ends or how long you've got left in the army. What they normally do though, they throw in a statement that you're supposed to answer truthfully. The statement is normally along the lines of 'Are there any circumstances in the near future that could change your financial position?'

If you've only got a year left in the army, you might think, 'Well, that's a year away, I might change my mind, I might get variable engagement.' But you should answer that honestly and say 'Actually, yes, I've only got a year left in the army.'

Think about footballers - they get paid lots of money, but they find it difficult to get a mortgage because their careers are very short. So lenders are reluctant to lend them money. If you're in your last two to three years of the military, arranging a mortgage can be quite difficult."

If You're Leaving Soon

For those who haven't secured property and are approaching their exit:

[Iain] "Search around the high street, see if there are any mortgage lenders or banks who have a pretty good military covenant attached to them. While there aren't specific products for military post-termination, like discounted mortgages with no deposit, some banks offer beneficial products through their military covenant."

Renting Considerations

If buying isn't immediately possible, then consider renting initially to maintain flexibility. A few tips from Iain: 

• Factor in that rental costs are typically much higher than subsidised military accommodation and be prepared for high rental deposits. 
• Consider location carefully - living closer to work could save on commuting costs.
• Remember the Future Accommodation Model changes when you leave so don't let subsidised costs make you too comfortable.
• Check for break clauses in the lease to maintain flexibility if your plans change.
• Understand property maintenance responsibilities, as they may differ from military housing.
• Build a positive rental history to support future credit and mortgage applications.
• Account for utilities and council tax, which aren’t typically covered like in military housing.

Building Your Financial Safety Net

The Power of Saving Early

[Iain] "If you've got into the habit of saving, that's great because then you've hopefully built up a little bit of money. You do get a termination grant - I think off the top of my head, it's just over £11,000. But I would suggest you start slowly and build up. Just £50 a month, and before you know it at the end of the year you're at £600. It does add up quite quickly."

While some suggest saving 10% of your income, Iain emphasises finding what works for you: "If you over-save, you end up running short and you dip into your savings. So the habit of saving and not touching it doesn't start.”

One strategy Iain uses personally is earmarking additional income specifically for savings. He suggests applying this same principle to promotions: "If you get a big promotion, instead of thinking 'right, I can now go and get myself a BMW,' put the money to one side that you didn't have before. Find what you and your family can live on comfortably, and anything above and beyond that really needs to be put into savings."

Get Your Emergency Fund Set Up 

[Iain] "I’d recommend having about two to three months' worth of income saved up at any point. I can vouch for this because I was made redundant this year and spent time with no income. Fortunately, because I'd saved up about three months' worth of income, I was able to continue living at the same kind of pace until I got my new job."

The Lifetime ISA: Your Secret Weapon

One of Iain's top recommendations is the Lifetime ISA:

[Iain] "The absolute golden rule here is to get yourself a lifetime ISA as quickly as you can. For the money you save, the government will give you 25% back. If you save £12,000, they'll give you £4,000 as well. It's a great way to build up a house deposit quickly."

Key points about the Lifetime ISA:

• Must be started before your 40th birthday
• Can be used for property purchase or retirement at 60
• Both you and your partner can have one
• Start with what you can afford - even £25-50 per month adds up
• No bonus if withdrawn early for non-property purchases
• You can use it on a deposit for a house up to the value of £450,000 

Navigating the Tax Landscape

The tax implications of civilian life can be complex, especially when combining multiple income streams. Here's what you need to know:

Understanding Tax Bands and Personal Allowance

[Iain] "Tax is something you need to keep your finger on the pulse of if you feel that you are going to be earning more than six figures. And you might say 'I'm never going to earn that.' But you've already got a pension. So if your pension's anywhere between £20,000 and £40,000 a year, you're already pushing very close to the higher tax band straight away. If you weren't a higher tax band taxpayer before you left the military, you're certainly going to have some of your income going into that area."

Managing Multiple Income Sources

[Iain] "If you're in a contracting role, and a lot of people go into the defence contracting field, you might do three months with a contract on a very good wage, and then you might do three months with no work. The tax office will see what you earned last month and estimate your tax for the year. You may find you've paid too much tax - or worse, not enough because you didn't realise you'd crept over the threshold.

You might have a pension on one pay slip, a contract on another pay slip, and income from elsewhere. Between the three of them, you might have gone over the higher threshold or beyond £100,000 without realising it, and suddenly you haven't calculated what your tax bill would be for the year."

Tips for Managing Your Tax Affairs

• Regularly reviewing your total income from all sources
• Planning ahead for tax thresholds
• Considering pension contributions to manage tax liability
• Getting professional advice if managing multiple income streams
• Keeping clear records of all income sources

Understanding the True Cost of Civilian Life

Hidden Costs to Consider

Commuting Costs [Iain] "My commute costs are probably £5-600 a month. That's twice what rent would be if I was living in quarters."

1. Factor in train tickets or fuel costs
2. Consider car maintenance and insurance
3. Look into veteran rail cards for discounts

Healthcare and Dental

4. Private healthcare often comes with corporate jobs
5. Dental check-ups cost £35-55 per person
6. Family dental visits can quickly add up to £150+
7. Consider healthcare plans and insurance

Utilities and Bills

8. Gas and electricity can exceed £200 monthly
9. Review providers annually for the best deals
10. Budget for full household costs
11. Factor in council tax and water rates

Regular Financial Review

[Iain] "Every two years, review your mortgage, every year, review your car insurance, your fuel and energy providers. There are benefits to be had."

Maximising Your Value 

One of the most crucial aspects of financial success in civilian life is knowing your worth and negotiating accordingly.

Salary Negotiations

[Iain] "The level of salary you can demand outside in civilian street is a lot more than they may want you to believe in the military. Don't ever fall into the trap of letting them offer you less than what the job is worth based on the fact that you have a pension. If the job pays £65k a year, that's £65k a year - it shouldn't be £45k because you have a pension."

Common pitfalls to avoid:

• Don't mention your pension during negotiations
• Don't accept lower salaries due to your pension income
• Research market rates thoroughly
• Be prepared to negotiate hard

The Reality of Civilian Job Security

[Iain] "When I got made redundant, the notice came through at Christmas and I got three months' notice. It came out of the blue, it's no reflection on you as an individual. It's just a case of the company streamlining."

This highlights why:

• Emergency funds are crucial
• Networking should be ongoing
• Skills should be kept current
• Multiple income streams can be beneficial

Veterans' Benefits You Shouldn't Miss

There are several benefits available to veterans that can help manage costs:

Veterans Rail Card

1. 33% discount on rail travel
2. No peak/off-peak restrictions
3. Can be cheaper than season tickets for commuting
4. Three-year cards offer better value

Defence Discount Service

5. Significant savings on new vehicles
6. Average discounts of £7-8,000 per car through Motifinity
7. Requires Veterans ID card
8. Various other retail discounts are available

Healthcare and Housing Priority

9. NHS preference for veterans
10. Dental care consideration
11. Council housing priority
12. Look for the veteran checkbox on applications

Key Takeaways

1. Get on the Property Ladder Early: Don't wait until you're leaving. Buy as soon as you can, even if it's somewhere you won't live - it's harder to get a mortgage in your final years of service.
   
   
2. Build Multiple Safety Nets: Start a Lifetime ISA before 40, aim for three months of emergency savings, and don't wait for a crisis - Iain's redundancy experience shows why this matters.
   
   
3. Know Your Worth in Civvy Street: Don't let employers lowball you because of your pension. If a job pays £65k, that's what you should get - your pension is irrelevant to salary negotiations.
   
   
4. Factor in True Civilian Costs: The reality of commuting costs (£5-600 monthly), utilities (£200+ monthly), and healthcare can be shocking after subsidised military life. Budget for this before you leave.
   
   
5. Stay on Top of Your Taxes: With multiple income streams (pension, salary, contracts), you can easily hit higher tax bands. Keep track, especially if approaching £100k total income, when tax implications become complex.

And no matter where you are in your journey, take a moment to try our Career Recommendation Report. In just a few minutes, it maps out three career paths tailored to your skills and goals. Give it a try — it’s free! 

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