New Officer’s Personal Finance Guide

You are about to step into a job where you lead people, manage risk, and make decisions with real consequences. Your money is no different. The habits you build in your first three years as an officer will follow you—good or bad—for decades.

This guide is written for brand-new officers who want:

• Clear, plain-English explanations instead of jargon.
• Specific steps you can take this week, not vague advice.
• Concrete numbers, examples, and checklists.
• A layout you can read on your phone or download as a PDF and keep in a binder.

Think of this as your financial in-processing packet. You would never show up to a new unit without reading the orders. Treat your money the same way.

How to use this guide:

• Read Sections 2–5 before or within your first month on active duty.
• Use Sections 6–9 when you’re making specific decisions (investing, debt, car, housing).
• Treat Section 10 and the appendices as your long-term reference and checklist.

Set up your basic infrastructure

Before you show up at your first unit, knock out these tasks:

• Open a primary checking account at a bank or credit union you actually like using.
  • Make sure they support mobile deposit, easy transfers, and have ATMs near your base.
• Open a separate high-yield savings account for your emergency fund.
  • Keep this at a different bank or as a clearly labeled savings account so you are less tempted to spend it.
• Decide where your pay will go.
  • Plan to direct deposit your paycheck into your checking account.
  • Plan an automatic transfer each month into your savings (even if it is $100 at first).

Get ready for myPay and your Leave and Earnings Statement

Your Leave and Earnings Statement (LES) is your financial mission report. You view it through myPay or your service’s online pay system.

Before you commission:

• Make sure you have your myPay (or service equivalent) account set up and your login secure.
• Bookmark the official pay system on your personal device.
• Plan a recurring calendar event each month: “Review LES.”

As soon as your first LES is available, you will:

• Confirm your direct deposit information is correct.
• Confirm your Basic Allowance for Housing (BAH) and Basic Allowance for Subsistence (BAS) are correct.
• Check that your Thrift Savings Plan (TSP) contribution percentage is what you meant to elect.

Reduce the drag of pre-service debt

If you are coming in with student loans, car loans, or credit card debt from before active duty:

• Gather all your loan documents and account logins.
• Make a list of your debts: creditor, balance, interest rate, minimum payment.
• Once on active duty, contact each lender and ask how to request Servicemembers Civil Relief Act (SCRA) benefits, which can cap interest rates on eligible pre-service debts at 6% while you are serving.

The more of this you do before you are buried in in-processing, the easier everything else becomes.

You will get paid twice a month. But you need to understand what you’re being paid and why before you let your lifestyle expand to fill it.

The three pillars of your income

As a new officer, your pay comes in three main pieces:

• Base pay: Your core, taxable salary tied to rank and years of service.
• Basic Allowance for Housing (BAH): Non-taxable allowance for housing off base, based on ZIP code, rank, and dependency status.
• Basic Allowance for Subsistence (BAS): Non-taxable allowance intended to cover your food.

For 2025:

• An O-1 (Second Lieutenant/Ensign) with less than 2 years of service earns about $3,998 per month in base pay.
• An O-2 with less than 2 years of service earns about $4,606 per month.
• An O-3 with less than 2 years of service earns about $5,332 per month.

Most military pay, including officers, received a 4.5% raise for 2025 over 2024 levels.

BAH and BAS numbers are published annually. BAH varies dramatically by location: a high-cost coastal city will pay significantly more than a rural area.

Why your LES matters more than a paystub

Your Leave and Earnings Statement (LES) shows:

• What you earned this period and year-to-date.
• What was deducted (taxes, Social Security, Medicare, Servicemembers’ Group Life Insurance).
• What you allocated (TSP contributions and other allotments).
• Your leave balance: days of leave earned and used.

Each month, run through this quick LES checklist:

• Does my Pay Entry Base Date look correct? This affects your pay column on the chart.
• Does my BAH reflect my actual duty station and dependent status?
• Is my TSP contribution percentage still what I intended?
• Are there any new deductions or allotments I do not recognize?

A quick example: New O-1 in a high-cost city

Imagine you are an O-1 with:

• Base pay: ~$4,000/month
• BAH (with dependents) in a high-cost area: say $2,400/month (illustrative)
• BAS: ~$300/month (officer subsistence rate)

On paper, your total monthly entitlements are around $6,700. But:

• Only base pay is fully taxable.
• BAH and BAS are non-taxable, making your after-tax take-home power stronger than a civilian with the same salary.

Knowing this helps you:

• Avoid over-committing to rent or a mortgage.
• Decide how much you can reasonably save and invest without feeling deprived.

A budget is not about restriction. It is about telling your money what to do before it disappears.

Start with what actually matters

Think of your budget in three buckets:

• Must-pay: housing, utilities, groceries, insurance, minimum loan payments.
• Good-for-future-you: savings, investing, extra debt payments.
• Nice-to-have: restaurants, travel, subscriptions, hobbies, upgraded car.

Many officers use a simple starting framework:

• 50% of take-home pay to must-pay needs.
• 30% to nice-to-have spending.
• 20% to saving and debt payoff.

If you are aggressive and want to build wealth early, push your “good-for-future-you” bucket closer to 25–30%.

Sample new-officer budget

Assume:

• Net monthly pay (after tax, SGLI, and 5% TSP): $5,000 (illustrative).

How much is enough?

Break it into phases:

• Phase 1 – Starter fund:
  • Target: $1,000–$2,000 as quickly as possible.
  • Goal: stop using credit cards for unexpected small hits (car repair, last-minute flight).
• Phase 2 – Full emergency fund:
  • Target: 3–6 months of essential expenses.
  • Essential = housing, food, utilities, minimum debt, insurance, and necessary transportation.

If your essentials add up to $3,000/month, your long-term target is $9,000–$18,000.

If that sounds impossible right now, do not get stuck. Focus on Phase 1 first, then increase your monthly savings after each promotion or pay raise.

Where to store it

Good places for an emergency fund:

• A high-yield savings account (commonly online banks).
• A dedicated savings account at your main bank, clearly labeled “Emergency Fund Only.”

Avoid:

• Stock market investments for this purpose (too volatile for emergencies).
• Locking it all in long-term certificates of deposit if penalties make it hard to access.

Your Thrift Savings Plan (TSP) is one of your most powerful tools. Used well, it can make your future self very grateful you wore the rank early on.

Why TSP matters so much

Under the Blended Retirement System (BRS):

• After about 60 days of service, the Department of Defense automatically contributes 1% of your basic pay to your TSP, whether you contribute or not.
• After two years of service, the government will match your contributions up to an additional 4%, for a total possible 5% of your basic pay going into TSP if you contribute at least 5%.

So if you contribute 5%, you get another 5% (1% automatic + 4% match) working for you. If you contribute less than 5%, you are leaving part of that match behind.

The individual contribution limit (the most you can contribute from your own pay) for 2025 is $23,500 across Traditional TSP and Roth TSP combined.

Roth vs Traditional: choosing your lane

You have two tax “flavors” inside TSP:

• Traditional TSP:
  • Contributions go in before tax, reducing your taxable income now.
  • You pay income tax when you withdraw in retirement.
• Roth TSP:
  • Contributions are made after tax.
  • Qualified withdrawals in retirement are tax-free.

Many younger officers, whose current tax rate is relatively low, lean toward Roth TSP early in their career, accepting the small hit now to potentially never pay tax on that growth again. That said, the “best” answer depends on your long-term plans and tax outlook.

Special opportunity: Combat Zone Tax Exclusion (CZTE)

If you serve in a Combat Zone Tax Exclusion (CZTE) area, your basic pay becomes federal income tax-free for that period (up to certain caps), and you may be able to contribute more to TSP under the higher annual additions limit (up to $70,000 in 2025 from all sources).

Deployments are a rare chance to:

• Keep your expenses low.
• Enjoy tax-advantaged income.
• Push a much higher percentage of your pay into TSP.

What to invest in inside TSP

Inside TSP you can choose:

• G Fund: Government securities, very stable, low risk, low growth.
• F, C, S, I Funds: Index funds for bonds, U.S. large companies, U.S. small companies, and international stocks.
• L Funds (“Lifecycle Funds”): Pre-mixed combinations that automatically shift more conservative as you approach a target retirement year.

General educational patterns:

• Long time horizon (20+ years): mostly stock funds (C, S, I or an appropriate L Fund) for growth.
• Closer to retirement: more G and F Fund for stability.

If you do not want to think about the exact mix, using a Lifecycle Fund with a target retirement year (for example, L 2055 for a younger officer) can be a simple, reasonable starting point.

Use your legal protections: Servicemembers Civil Relief Act

The Servicemembers Civil Relief Act (SCRA) gives you special protections as you enter active duty.

For eligible pre-service debts (loans taken before you started active duty):

• You can request that your interest rate be capped at 6% while you serve, including for credit cards, car loans, and many student loans.
• You generally need to provide written notice and a copy of your orders to each lender.

Some lenders offer benefits beyond what SCRA requires, so it is worth asking even if you are not sure.

Avoid common traps outside the gate

You will see:

• Car lots advertising “E-1 and up approved!” or “No credit, no problem.”
• Furniture and electronics stores offering “no payments for 12 months” with fine print about retroactive interest.
• High-interest credit cards pitched as “great ways to build credit.”

These often come with Annual Percentage Rates over 20%, meaning:

• A $5,000 balance can cost you thousands more in interest if you only make minimum payments.

Basic rules:

• Keep credit card balances paid in full each month whenever possible.
• Be wary of car loans longer than 60 months or payments that feel barely affordable; you are likely to regret them later.
• Never sign a loan or dealership contract in a rush—walk away if you feel pressured.

Make a plan and attack your balances

If you already have debt:

1. List all debts with balance, interest rate, and minimum payment.
2. Keep paying at least the minimum on all to protect your credit.
3. Choose a payoff strategy:
   • Avalanche method: put all extra money toward the highest interest rate first (faster and cheaper overall).
   • Snowball method: put all extra money toward the smallest balance first to build momentum.

As you pay off one debt, immediately roll that freed cash into the next one, like stacking elements of a formation to build mass.

Servicemembers’ Group Life Insurance (SGLI)

Most active-duty servicemembers are automatically enrolled in Servicemembers’ Group Life Insurance (SGLI).

Key points:

• Maximum coverage: $500,000 of term life insurance.
• Typical cost: about $25 per month for the full $500,000 plus about $1 per month for Traumatic Injury Protection (TSGLI), for a total near $26 per month.
• Premiums are automatically taken from your pay unless you opt out or reduce coverage.

For most new officers, keeping the full SGLI makes sense. It is relatively cheap and provides serious protection for your family.

Family Servicemembers’ Group Life Insurance (FSGLI)

FSGLI (Family SGLI) extends coverage to your family:

• Spouses can be covered up to $100,000 (not more than your SGLI amount).
• Each dependent child is automatically covered for $10,000 at no cost.

Spouse premiums vary by age and coverage level, but even relatively high amounts tend to be affordable for young families.

If you are married or planning to get married, log into your personnel system or SGLI Online Enrollment System and ensure:

• Your spouse is covered at the desired level.
• Your beneficiaries are correctly listed and up to date.

Other key insurance you should consider

Beyond SGLI and FSGLI:

• Renters insurance:
  • Protects your belongings from theft, fire, or other damage.
  • Includes liability coverage if someone is injured in your home.
  • Look for loss-of-use coverage, which helps with temporary housing costs if your rental becomes uninhabitable.
• Auto insurance:
  • Maintain adequate liability limits; state minimums are often too low.
  • Consider comprehensive and collision depending on your car’s value and your savings.
• Disability insurance:
  • The military provides some coverage if you are injured or disabled, but it may not fully replace your income long term.
  • Learn what your benefits would be in a worst-case scenario and decide if additional private coverage makes sense.

Buying a car without getting trapped

Guidelines for a healthy car decision:

• Keep total car costs (payment, insurance, gas, maintenance) under 15% of your take-home pay.
• Consider buying reliable used instead of brand new. New cars lose a significant portion of their value in the first few years.
• If you need a car quickly, avoid dealerships that specifically target junior ranks with fast approvals and vague terms.

If your net pay is $5,000/month, try to keep all car-related costs under $750/month, and preferably less.

Renting vs buying as a new officer

Renting is not “throwing money away.” It is often the right move early when you:

• Expect to move within 3 years.
• Do not know the local housing market yet.
• Are building up your emergency fund and paying down debt.

Buying can make sense when:

• You expect to stay at least 3–5 years.
• You are comfortable with the financial responsibility of maintenance and repairs.
• You can cover housing costs without relying on roommates to make the mortgage payment.

Unlocking the VA home loan

The VA home loan, administered by the Department of Veterans Affairs, is one of your most powerful benefits.

Benefits include:

• Often no down payment required.
• No private mortgage insurance (PMI), which many civilian low-down-payment loans require.
• Competitive interest rates and limits on certain closing costs.
• Flexibility in qualifying with your Basic Allowance for Housing (BAH) counted as income.

You will need:

• A Certificate of Eligibility (COE) from VA.
• To live in the home as your primary residence.

With careful planning, you can use a VA loan to buy:

• A single-family house.
• A condo meeting VA standards.
• Up to a four-unit property, as long as you live in one unit yourself.

This can allow you to “house hack” in some markets—living in one unit while renting out the others to help cover the mortgage.

Year 0 to Year 1: Prepare and stabilize

• Set up checking and savings accounts before you commission.
• Get access to myPay and review your first LES line by line.
• Build a starter emergency fund of $1,000–$2,000.
• Contribute at least 5% of your basic pay to TSP to capture the full BRS match once you are eligible.
• Avoid large lifestyle upgrades (expensive car, luxury apartment) until your budget is tested for a few months.
• Make SCRA requests on eligible pre-service debts.

Years 2–3: Strengthen and simplify

• Grow your emergency fund toward 3–6 months of essential expenses.
• Attack high-interest debts aggressively (credit cards, personal loans).
• Consider increasing TSP contributions beyond 5% or opening a Roth Individual Retirement Account (IRA) if you are able (subject to IRS rules).
• Start tracking your net worth: assets (cash, TSP, investments) minus debts (loans, credit cards).
• Learn your next duty station’s cost of living early and plan your housing approach in advance.

Years 4–5: Expand and plan forward

• If you have stable finances, evaluate using a VA home loan at a duty station where you expect to stay 3+ years.
• Re-evaluate your insurance coverage (SGLI, FSGLI, renters, auto) and update beneficiaries.
• Consider meeting with a Military OneSource financial counselor or a fiduciary financial planner to stress-test your plan.
• Look at your estimated BRS pension and projected TSP balance to see what staying 20 years versus separating earlier might mean.

The goal is not perfection. The goal is a clear, steady trend toward more margin, less stress, and more options each year.

Officer base pay snapshots (2025)

Approximate base pay for officers with 2 years or less of service:

• O-1: $3,998.40 per month
• O-2: $4,606.80 per month
• O-3: $5,331.60 per month

Most military pay increased by 4.5% in 2025 compared to 2024.

TSP and BRS quick facts

• 2025 elective deferral limit (your contributions): $23,500.
• Annual additions limit (including contributions in a combat zone): up to $70,000 (2025).
• BRS automatic contribution: 1% of basic pay after 60 days of service.
• BRS matching: up to an additional 4% if you contribute at least 5%, for a total potential 5%.

Insurance highlights

• SGLI coverage: up to $500,000 in term life insurance, about $25/month, plus around $1/month for TSGLI.
• FSGLI: up to $100,000 for spouses, $10,000 per child (no cost for children).

Example: “Bare-bones” starting budget

Assume net pay $3,800 (after lower TSP contribution and all deductions) and a conservative lifestyle:

• Rent and utilities: $1,400
• Groceries: $350
• Transportation: $350
• Phone and internet: $130
• Insurance (auto, renters): $170
• Minimum debt payments: $200
• Starter emergency fund savings: $400
• Additional savings or TSP/IRA: $400
• Spending money (fun, travel, etc.): $400

This budget prioritizes building a safety buffer and beginning to invest while keeping space for a life you actually enjoy.

BAH (Basic Allowance for Housing)

Non-taxable allowance given to servicemembers who qualify to live off base, intended to cover average housing costs based on rank, dependency status, and duty station ZIP code.

BAS (Basic Allowance for Subsistence)

Non-taxable allowance to help cover the servicemember’s food costs. It is a flat monthly amount and does not change with the number of dependents.

BRS (Blended Retirement System)

The current military retirement system combining a smaller defined benefit pension with government contributions and matching into the Thrift Savings Plan.

LES (Leave and Earnings Statement)

Monthly document that summarizes a servicemember’s earnings, allowances, deductions, allotments, and leave balance.

PCS (Permanent Change of Station)

Official relocation of a servicemember and their family to a new duty station.

SGLI (Servicemembers’ Group Life Insurance)

Group term life insurance program for servicemembers, offering up to $500,000 in coverage at low cost.

FSGLI (Family Servicemembers’ Group Life Insurance)

Life insurance coverage for the spouses and children of servicemembers insured under SGLI.

SCRA (Servicemembers Civil Relief Act)

Federal law providing legal and financial protections for servicemembers, including an interest rate cap of 6% on certain pre-service debts while on active duty.

TSP (Thrift Savings Plan)

Retirement savings and investment plan similar to a 401(k) for federal employees and uniformed servicemembers, offering Traditional and Roth options and several index and lifecycle funds.

VA home loan

Mortgage loan program backed by the Department of Veterans Affairs, providing favorable terms such as no required down payment in many cases and no private mortgage insurance.

Use these sites as your “technical manuals” for money decisions:

• Defense Finance and Accounting Service (DFAS)
  Official pay tables, BAS information, myPay access, and LES information.
  Website: https://www.dfas.mil
• Military pay chart references
  Military pay overview and raise information: https://www.military.com/benefits/military-pay/charts
  Detailed pay charts and analysis: https://themilitarywallet.com/2025-military-pay-charts
• Thrift Savings Plan (TSP)
  Info on contribution limits, investment funds, and account management.
  Website: https://www.tsp.gov
• Department of Veterans Affairs (VA)
  VA home loans and Certificate of Eligibility: https://www.benefits.va.gov/homeloans
  GI Bill and education benefits: https://www.va.gov/education
  Life insurance (SGLI, FSGLI, and more): https://www.va.gov/life-insurance
• Military OneSource
  Free financial counseling, tax consultations, and educational resources for servicemembers and families.
  Website: https://www.militaryonesource.mil
• Office of Financial Readiness (FINRED)
  Department of Defense financial education hub with courses, worksheets, and planners.
  Website: https://finred.usalearning.gov
• Consumer Financial Protection Bureau (CFPB) - Servicemembers
  Information on SCRA, MLA, and other legal protections.
  Website: https://www.consumerfinance.gov/consumer-tools/servicemembers/

• Defense Finance and Accounting Service (DFAS). “2025 Basic Pay: Officers.” Official officer pay tables effective January 1, 2025.
• Military.com. “2025 Military Pay Charts.” Overview of 2025 pay raise and charts for all ranks.
• MilitaryPay.com. “2025 Military Pay Chart.” Detailed PDF pay chart by grade and years of service.
• Navy Cyberspace. “2025 Military Pay Chart 4.5+10% (All Pay Grades).” Discussion of 2025 military pay raise and legislation.
• The Military Wallet. “2025 Military Pay Charts.” Explanation of 2025 pay raise including 4.5% increase and structure.