Money Advice


5-Year Member
Jun 16, 2016
What are the wisest and most effective decisions to make concerning the money a cadet accrues while at West Point? Not really look for specific investment ideas but what has worked and hasn't worked for you, what might be unique about personal finances in military life, or largely unknown details about cadet finances.
Here's a place to start research. It's a non-profit focused on military financial health and does not promote products or services.

You won't get that much every month, though it will gradually increase. I am familiar with USNA, but I am sure USMA provides cadet guidance on the pay and automatic deductions, as well as provides financial management education.

The most important things, IMPO:
- Be clear about needs vs. wants. Your body NEEDS water, it WANTS Starbuck$$$. Your money should go toward budgeted needs first. Saving for short, mid, and long-term goals is also a NEED. After that, you can determine what is available for WANTS.
- Have a budget, know what comes in, where it goes. Your recurring expenses. Plenty of apps for that now.
- Be aware of impulse spending - why, when and how it happens.
- Understand how credit cards work, the grace period, what it really means when you carry a balance over to the next month.
- The earlier you start being responsible with your money, the better off you will be. You have 40-50 years to be in the salaried workplace, and you need to pay for yourself as you go AND have enough set aside for another 20-30 years of living expenses after that.
- Get a grip on the compounding power of starting early on long-term savings goals.

Good you are thinking about these things now.
Eat the food you don't have to pay of pocket for, aka the mess. Not American burrito haha
Join a credit union and have 2 accounts; one savings and one checking/debit card. Figure out how much you are willing to spend on pizza etc every week and save the rest of your take home pay.

Park some $$ in both accounts out of every pay; keep one account where you can't get to it with your ATM / debit card. Put a daily limit on your debit card so you don't give in to impulse [the bank can set this up if you ask.]

Better yet park that $$ in your hometown bank where you cant get to it unless in person.

I made it thru school on Ramen, mac 'n cheese, and occasional pizza. Eating out destroys your financial situation [and your health ;)]
2. I don't believe cadets are eligible to participate in the TSP, so I would recommend they open up a ROTH IRA with a low management fee index fund. They can only use taxable income for the ROTH, but even if they put in just a little bit it will help them down the road for retirement. My DD, a PFC, used part of her bonus money to max out a ROTH. Not bad for a 19 year old kid.
3. Use the sponsor. Many cadets don't bother with the sponsor, but they are good for a free, home-cooked meal now and then.
4. Yes, save and be frugal to an extent. But this is "college". Take advantage of those things the service academies offer for free, but also take advantage of those opportunities you may never have again. If you are at West Point and have never lived near NYC, take advantage of it. You may never live this close again. My brother, who was a midshipman at USNA in the 70's, was somehow able to finish a cruise in Italy one summer. He purchased a beat up, old motorcycle and spent the rest of the time he had off driving around Europe, staying at military bases and hostels. He then sold the motorcycle to a guy near an Air Force base somewhere and caught a MAC flight back to Dover, then hitchhiked back to Annapolis. This was back before email and cell phones. My parents had no idea where he was until some postcards started to arrive. Not for the faint at heart.
Very good points above. We told the USNA mids we sponsored over the years they could always ask us about anything, especially if they were messing up in some manner. Overspending was quite common. We told them to make notes on their phone about Starbucks, snacks, music/app downloads, etc., everything not a real need, and keep track for a week. They realized they were leaking money for non-essentials. It is certainly ok to have a snack - but budget X dollars a week for delivered pizza, and the like.
And the recommendation to eat the provided meals - look at it as necessary fuel and baseline nutrition. It's not home cooking, it's not your favorite franchise or hometown place, it's not your go-to stress-reducer bag of whatever from the cadet store, it's not necessarily relaxing, fun and social. Getting your basic calories from the free source, and treating yourself in a planned fashion steers a path between unnecessary spending and a monastic existence. Sharing pizza and laughs with classmates after a study session can be a bright spot.

Just be mindful.
A couple other general points.
1. If your DD/DS has a 529 plan, consider the pros/cons of using it for non-tuition education expenses at a service academy. You can search this forum for past threads.
2. Don't discount scholarships that can be used for non-tuition education expenses. A person who gets an appointment is probably competitive for some of the many scholarships out there.
Eat the food you don't have to pay of pocket for, aka the mess. Not American burrito haha
I agree DS and I were hanging in Grant Hall yesterday with a relative who's a cow. Not cheap in my opinion.
A couple other general points.
1. If your DD/DS has a 529 plan, consider the pros/cons of using it for non-tuition education expenses at a service academy. You can search this forum for past threads.
2. Don't discount scholarships that can be used for non-tuition education expenses. A person who gets an appointment is probably competitive for some of the many scholarships out there.
I agree many will say you are not eligible for scholarships. Not true AT ALL Tell them your going to WP and put them contact with the accounting dept. And the money goes there. You can just walk in to the dept and say CUT ME MY CHECK :) and bank it.
Son took a course in personal finance literacy at USMA as a Firstie - quickly needed it as a platoon leader counseling 19-year-old enlistees on how to file taxes and why not to pay 28% interest to a used car dealer. I also recommend the Boy Scouts Personal Management merit badge handbook, even for those who aren't scouts; it's a good basic exercise.
The cow loan was a turning point for many - $32,000 at 0.5% interest at the start of third year, intended to pay for class ring, uniforms, car, apartment deposit, the expenses of starting a career and a life. Some invested it, and others spent it on expensive cars (and then on gas and insurance). The changes underway in the military pension system, moving from 20-year pension to something more like a 401K with a matching system, make it all the more crucial to learn how to save.
Just learning the Time Value of money and what an impact starting to save at 25 makes versus waiting until age 35. The following is from the Vanguard website:

Make retirement your first priority, especially early on
It might seem backwards to worry about the last money you'll need before you think about meeting any other financial goals. But because compounding is so powerful, starting early gives you more flexibility later on in life.

Imagine you start saving at age 25 and dutifully put away $10,000 a year, including any matching contributions your employer offers. But at age 40, you need to stop saving for some reason.

Your friend starts saving at age 35 and saves the same $10,000 a year for the next 30 years, until you both retire.

At that point, all else equal, you'll have more money than your friend, despite having put away only half as much.

With time, you can invest less money but have more to spend in retirement

This hypothetical illustration assumes an annual 6% return. The illustration doesn't represent any particular investment, nor does it account for inflation.

Good advice above and I would like to commend cajunrouge2021 for asking an excellent question, one that I wish I had asked when I was that age (without the WP specifics, of course). It speaks very well of you as a future leader and would it greatly benefit all college students to ask something similar.
I will forever be grateful to Captain Merrill Peek, Supply Corps, USN, who got all us JOs in a room for his turn at monthly JO Pro Dev, showed us similar slides above, said Just DO This. He said we would appreciate him years after he was long gone, and I honor him for that by mentioning his name today. I started some things at age 20 for my long-term rain barrel, and I am astonished at the growth over the years, even if a particular year wasn't so good.
Honestly, all there is to spend money on other than the few expenses for school supplies is food and pass. What I did, and I'm by no means an expert, is I took out $75 and put $50 in a slow growth minimal involvement investment and $25 in savings. As you get payed more you will most likely want and can take pass more often so you'll spend more money on that kind of thing. If you just set out money to auto deposit it gets pretty simple. This is just what I did and it has worked for me so far.
One other point that has not been mentioned is state residency and state tax.

The military has different rules as far as residency for service members and their spouses. Also, some states exempt a military member from state income tax as long as they reside in state less than a certain amount of time.

I'm not sure how these apply to cadets, but they should be aware of these rules, especially as they graduate with their branch assignments and initial duty stations.