Disabled veterans often face financial uncertainty after they leave the service. First of all, they may struggle to get their disability benefits. The VA is notorious for making the process difficult, especially if a disabled vet is hoping to get full coverage from a 100% rating. Make sure to look at all the aspects of your financial situation in order to make financial decisions that make sense for your situation.
Don’t Go on a Spending Spree
Once people receive their disability benefits they may feel like they have just received a huge windfall and decide to spend the new money on a big-ticket item. However, this is not the intended purpose of your benefits and probably not a very good idea for your situation.
There are many factors that need to be taken into consideration when deciding how best to use the money from your disability benefits. A few things to contemplate are:
- Whether you are receiving a lump-sum payment or monthly payments;
- Whether your disability limits your ability to be gainfully employed;
- Whether your spouse will have to cut back on work to care for you;
- What your long-term goals are.
Lump-Sum or Monthly Payments?
Determining how to spend or save your benefits depends greatly on whether you will be receiving a lump-sum or monthly payments. When receiving monthly payments, there is a lot less concern about your spending getting out of control. As long as you don’t start building up credit card debt, you shouldn’t put yourself in too bad of a position if you get a little overexcited about your first payment, and go out and spend it on something unnecessary.
When receiving a lump sum payment, on the other hand, it’s important to be a lot more careful about what you do with the money from the start. If you quickly spend all or most of the money you receive in your payment, you could find yourself in a precarious financial position down the road. You may end up facing expenses that you no longer have any means to pay.
Veterans can also get back benefits the government may owe them for their service-connected disability. This is usually paid as a lump sum. If you receive back pay, you may have two lump-sum payments or a combination of a lump-sum and a monthly payment.
Can You Still Work?
When considering what to do with your money, you need to think about your earning potential moving forward. Your disability benefits may be crucial for helping you to get by if your injury prevents you from working. This could also be the case if your disability limits your earning capacity as it restricts you from working in the field in which you are most highly qualified.
Does Your Spouse Need to Care for You?
You will also need to consider other ways in which your family’s financial position may be hurt by your disability. If your spouse is no longer able to work because they have to care for you – or if they continue to work but have to hire a care worker to take care of you while they are away – you will need to factor those costs into your planning.
There are many other ways in which your disability may add extra financial burden onto your family, including medical and therapy costs. All of these things should be taken into consideration.
Another important thing to consider when deciding how to use the money that you receive for your disability is what your long-term goals are. If you have money beyond what you require for your monthly expenses, you need to decide if you want to spend on the short-term or save for the long-term.
There are many different long-term savings options available. You can put the money in a simple savings account or invest in the stock market. You can buy some property or invest in a business.
There are many different types of financial experts you can consult with to discuss your options. Together you can come up with a plan for how to make your financial means and your financial goals align. Deciding on a course of action that you feel comfortable with can be a huge relief when you are facing an uncertain future due to a disability.
This article is for information and educational purposes only and does not form a recommendation to invest or otherwise. The investments referred to in this article may not be suitable for all investors, and if in doubt, an investor should seek advice from a qualified investment adviser.