Whether you are separating or retiring from military service, big changes lie ahead as you shift colors from your military uniform to business clothes.  The required Transition Assistance Program course (“TAP Class“) does reasonably okay preparing you for resume writing, job interviews, civilian attire, etc.  The military-sponsored course is intended to make you relevant and applicable to civilian world employment.  In many ways, TAP Class is a benefit because it translates your leadership skills, experience, training, and jargon into civilian counterparts that employers understand.  However, when it comes to the financial shell shock of your transition to wages and salary, TAP Class fails miserably.

A Mental Shift, and a Lifestyle Shift

Military Transition to CivilianOne of the first things you’ll notice once you’re “out” of the military is a bit of an identity crisis.  For the past however-many-years, your culture and your community have been rooted in a military lifestyle steeped in tradition.  Suddenly, you no longer belong to that crowd.  If you no longer have base privileges, your once daily surroundings are now forbidden and off-limits.  You no longer carry your authority on your shirt collar, shoulders, or sleeves.  You no longer wear your credentials and work history on your chest.  And the new crowd surrounding you doesn’t care about your war stories or sea stories. (Sure, they might find them interesting, but not relevant.  And certainly, they’ll think you embellish, because they can’t relate).

Suddenly, you’re a “has been”.  Yes, you’ve been amputated from your way of life, your identity, your brothers-and-sisters-in-arms, and your support structure.  It is a rude awakening that leaves an unexpected void.

Economic Insult to Injury

As a new civilian, your head will be spinning from the anticipated (yet sudden) change in daily routine and surroundings.  In addition to the cultural hit, your wallet will take a hit as well unless you’ve prepared for what’s next.  If you failed to prepare before accepting a wage-earning or salaried job, the rug may likely get ripped out from under you.

Get Out with Your Eyes Open: Civilian Expenses You Didn’t Pay in the Military

These are several lifestyle, household, and day-to-day expenses you’ll suddenly have to pay as a civilian.  Some will be altogether new to you, while some are simply higher than what you had to pay as a service member.  The list below is not all-inclusive, but it will get you thinking.

Income Taxes:

Military interview for civilian job

Your military income consists of a combination of pays and allowances.  Keep in mind, allowances are not taxable income.  Your civilian pay, however, is completely taxable. When you negotiate a civilian salary or wage, be sure to ask for more than what the military pays you.  Otherwise, after taxes, you’ll be taking a net pay cut.

Medical Insurance:

As a military member, your medical treatment is covered by Uncle Sam.  Even with a great benefits package in your civilian job, you’ll likely be paying for medical insurance as a payroll deduction.  Be sure to consider new payroll deductions into whatever pay you negotiate with your civilian employer.  If you have a family to protect, ensure the health care premiums don’t take away from your bottom-line take-home pay.


If you get a clothing allowance in the military, keep in mind that your employer isn’t likely to buy your dresses, suits and ties in the civilian world.  Not only that, but you can’t (shouldn’t) wear the exact same outfit every day as an employee (in most cases).  Having two or three sets of military uniforms that you rotate through during the week is pretty normal.  But as a civilian, you’ll likely need an entirely new work wardrobe of clothes.

Sales Tax:

If you’re used to shopping at the exchange (BX, PX, NEX) and commissary for your groceries, gas, housewares, etc, you enjoy tax-free shopping.  As a civilian, your daily cost-of-living goes up by at least the percentage of sales tax in your area.  So, Day One as a civilian, your purchases may suddenly cost 4%, 6%, 8% or more, right out the starting gate.  Plus, off-base prices tend to be higher than on-base prices. It’s “instant inflation”.  Figure out what you need to negotiate into your civilian pay to keep your lifestyle apples-to-apples with what you’re used to, once you’re out.

Meals at Work:

If you’re aboard ship or out in the field, the military feeds you. It’s not gourmet food, but it’s paid for (whether as Rations-in-Kind, Basic Allowance for Subsistence, etc).  Once you’re out of the military, your civilian meals are out-of-pocket.  Make sure you factor meals and incidentals into your new civilian paycheck.

Military Dad holding childHousing Costs:

If you live in the barracks, aboard ship, or in base housing, your housing costs are either non-existent or minimal.  When you’re no longer eligible for such living arrangements, you’ll be dealing with rent or mortgage payments, insurance, utilities, homeowner association fees, and more.  And your transportation costs from home to work will change once you take a civilian job.  Be sure to factor in gas prices, commute times, and so on as part of your transition.

The list goes on, but even with the considerations above, there’s a substantial disparity between a military family’s cost of living compared to a civilian’s household.

If you fail to plan accordingly when you transition from your military to civilian career, you might find yourself depending on credit cards and loans to maintain your quality-of-life standards.  Using credit as an extension of your income is a trap.  You must plan ahead to avoid it.

What If You’re Already There?

If red flags, alarms, and warning bells are going off, you’re not alone.  TAP Class didn’t prepare you for it.  And even if the topics were covered in a cursory fashion, it’s all just “academic theory” until your paycheck deficit becomes a reality to your lifestyle.  If you find yourself in a household economics downward spiral, act NOW, sooner than later.

As with any injury, if you’re financially “wounded”, you need to first “stop the bleeding”.  Take the time to improve your financial literacy on budgeting and cost-cutting.  Perhaps adding a reliable extra income stream will help shore up your household’s cash flow.  Learning some financial strategies on how to “do more with less” can keep your head above water as you chart your new financial course.  In any case, ignoring the problem will not make it go away.

If you need help righting your ship, consider a consultation with a PSG Certified Debt & Wealth Coach™ to explore options.  Taking The Financial Acumen Course® will add to your knowledge, skills, tools, and resources as well.

Your choices define your future. Make it a bright one!  Visit our Military Transitions page for more information and be sure to make good use of our Military-to-Civilian Transition Checklist!