Military service members were stronger financially at the end of 2023 than they were pre-pandemic even as inflationary pressures affected household finances, according to the first-ever Military Financial Wellbeing Index released by USAA Federal Savings Bank, the leading provider of financial services for the military community and their families.

The index reveals insights into the financial health of U.S. service members as measured by aggregated USAA bank account and product data from over 900,000 USAA members currently assigned to active duty, including active duty, reservists and the National Guard, between 2019 and 2023. showcases military members’ economic resilience and highlights selected generational and regional trends.

More money in the bank

Despite the challenges of inflation, service members have increased their savings and kept more in their checking accounts over the past five years.

• Between 2019 and 2023, service members saw an average increase of 19% in their savings balances and a 23% increase in checking balances.

• In 2023, the typical checking and savings balances saw year-over-year declines of 12% and 10%, respectively, compared to 2022, a potential sign of inflationary pressures.

Being resourceful with credit cards

Rising credit card debt weighed on average consumer in 2023, with credit card balances hitting record highs in third quarter per NY Fed data¹. In contrast, service members had lower balances and managed debt better at the end of 2023 compared to pre-pandemic.

• The average daily credit card balance for military members was 23% lower at the end of 2023 than in 2019.

• 50% of military members paid their credit card bills on time and in full by 2023 compared to 40% five years earlier.

• By 2023, 37% of military members had a revolving balance; In 2019, this figure was 45%.

A boost for Gen Z and Millennials

Gen Z and millennials had different fortunes when it came to savings and credit cards. While Gen Z service members saw bigger jumps in savings balances, they were also the group with the biggest return to pre-pandemic credit card trends. In contrast, millennials saw a smaller bump in their savings, but managed their credit more modestly.

• Between 2019 and 2023, Gen Z service members saw an 18% increase in savings account balances, compared to just 6% for millennials. Gen Z checking balances also increased by 18%.

• By 2023, millennial credit card balances remained 23% below their pre-pandemic average, compared to 11% for Gen Z.

• Millennial service members in this group also charged less for dining, entertainment and shopping than other generations.

Although the exact reasons for the difference are unclear, housing costs may play a factor. According to data from the National Association of Realtors, millennials are anywhere from five to seven times more likely to be a home buyer in 2024 than a Gen Zer². Likewise, younger service members are more likely to live on base earlier in their military careers.

Looking at average account balances, junior officers fared slightly better than their civilian counterparts. In 2023, Gen Z service members had a 21% higher average checking account balance and 8% higher savings account balance than the typical Gen Z civilian. This was also the case for millennial service members, who had 10% and 10% more on average in their checking and savings accounts, respectively, compared to millennial civilians.

Among the reasons behind the improvement in broader military economic well-being: stable employment rates among the military population throughout the pandemic and beyond, a growing emphasis on financial preparedness within the military, and pay and benefits increases. Junior officers, especially officers, may also earn more than early-career civilian peers.

The index also outlines areas to watch as inflationary pressures continue to increase for both the military community and civilians. Rising credit card expenses and lower savings rates can stress the economy.

• Expense hikes: For active duty service members, credit card spending increased between 2023 and 2019 across a few key items: food/pharmacy (32%), fuel (36%) and utilities (13%).

• Regional imbalances in savings…In 2023, service members living in regions known for lower costs of living had savings account balances below the national average—and well below peers in some higher-cost regions. For example, the average balance for active members in Fayetteville/Coastal Carolina and Norfolk/Newport News was 16% and 26% below the national average, respectively. In contrast, military members in Seattle had an average account balance that was 32% higher.

• …and credit management: Service members in Fayetteville/Coastal Carolina (41%) and Norfolk/Newport News (39%) were more likely to have a revolving credit card balance than the average active duty member nationally (37%). Conversely, revolving rates for members in Seattle (31%) and San Diego (33%) were below the national average.

That said, service members in low-cost regions had higher average checking balances in 2023 than the typical civilian in the same area. Active members in the Norfolk/Newport News region had 63% more in their checking accounts than non-active USAA members in the same area; in Fayetteville/Coastal Carolina and San Antonio, those numbers were 56% and 31%, respectively.

“The USAA Military Financial Wellbeing Index points to a military population that has taken meaningful steps to improve their financial health, even in some tough financial circumstances,” said Michael Moran, president (interim), USAA Federal Savings Bank. “This index goes beyond sentiment to put a real number behind the optimism and challenges our military members share with us on a daily basis. While it’s great to see service members in a better place than they were before the pandemic, we don’t ignore the reversing trends. With inflation continuing to squeeze military households, we encourage service members to be vigilant with their personal finances and preserve some of those hard-earned gains.”

Financial preparedness guidance

• If you have a credit card balance, consider consolidating high-interest debt and exploring balance transfer options for lower-interest cards or loans. Use rewards programs strategically to maximize your spending on important purchases.

• Continue to prioritize savings, even small amounts, to build a financial buffer against future financial uncertainties. Review your spending habits and identify where you can cut back on non-essential expenses.

• USAA members can take control of their financial lives with a personal Financial Readiness Dashboard which outlines suggested actions and tools to improve your financial health, is updated regularly to help you navigate any situational changes or challenges you may face.

Methodology

The Military Financial Wellbeing Index was derived from aggregated and anonymized USAA Bank member account and transaction data from over 900,000 currently assigned service members, including active duty, reservists and National Guard, who held one or more USAA Bank products between 2019 and 2023. Where comparisons were made with civilians, civilian data was derived from account and transaction data of approximately 3.4 million non-serving USAA members who held one or more USAA Bank products between 2019 and 2023. The index does not include any financial accounts or product data that members may have held with other financial institutions.

Within this index, ‘Gen Z’ refers to individuals aged 18-29. “Millennials” refers to people aged 30-39.