How to Make Money While in the Military

Navigating the unique financial landscape of military service often includes a desire to enhance personal financial standing. Building wealth and supplementing income provides greater financial security and flexibility for future goals or daily life. This involves understanding available avenues and specific regulations. A comprehensive financial strategy empowers informed decisions for long-term financial well-being.

Pursuing External Income Sources

Service members exploring opportunities to earn income outside military duties have several options, including part-time civilian jobs, freelancing (e.g., writing, graphic design, web development), or remote work. Starting a small business (e.g., e-commerce, dog walking, online coaching) also offers supplemental earnings. These external ventures contribute to financial goals when managed effectively alongside military responsibilities.

A crucial step involves understanding and adhering to Department of Defense (DoD) directives and service branch regulations regarding off-duty employment. Service members must obtain prior approval from their chain of command or supervisor before engaging in outside employment. This process prevents conflicts of interest, interference with military duties, mitigates security risks, and upholds ethical standards. Specific forms may be required.

The Uniform Code of Military Justice (UCMJ) sets standards of conduct. Article 133 applies to officers, mandating honorable behavior in all activities, including outside employment. Article 134 covers other conduct that might discredit the armed forces or be prejudicial to good order and discipline. Commanders can prohibit off-duty employment if it detracts from readiness, poses a security risk, or violates regulations. Full disclosure to the command is essential, as hiding an off-duty job can lead to disciplinary action.

Practical considerations include time management and balancing military responsibilities with external work without impacting career progression. Some service branches may mandate rest periods between military duty and outside employment for certain roles. All income earned from external sources must be reported to the IRS. Self-employed individuals typically report income and expenses on Schedule C (Form 1040) to calculate net earnings from the business.

Individuals earning over $400 in net self-employment income are generally subject to self-employment tax, which covers Social Security and Medicare contributions. This tax rate is 15.3% on net earnings. Since taxes are not withheld, individuals are usually required to pay estimated taxes quarterly using Form 1040-ES to avoid penalties. A deduction for one-half of the self-employment tax paid can be claimed on Form 1040, reducing adjusted gross income.

Growing Wealth Through Strategic Investing

Building long-term financial assets and generating passive income requires strategic investment planning. Military personnel have access to tools like the Thrift Savings Plan (TSP), a 401(k)-like retirement savings and investment plan. Its advantages include low administrative fees and various fund options: G Fund (Government Securities), F Fund (Fixed Income), C Fund (Common Stock), S Fund (Small Capitalization Stock), I Fund (International Stock), and Lifecycle (L) Funds. The G Fund offers stability, while C, S, and I Funds provide stock market exposure for growth.

Participants can choose between a Traditional TSP (pre-tax contributions, reducing current taxable income) and a Roth TSP, funded with after-tax contributions, allowing for tax-free withdrawals in retirement. The decision often depends on an individual’s expected tax bracket now versus in retirement. For 2025, the annual TSP contribution limit is $23,500. Service members should take full advantage of any matching contributions, as these are additional funds for retirement savings without personal cost.

Individual Retirement Accounts (IRAs) offer another avenue for retirement savings, complementing the TSP. Both Roth IRAs and Traditional IRAs provide tax advantages, with Roth IRAs offering tax-free growth and qualified withdrawals, while Traditional IRAs allow for tax-deductible contributions and tax-deferred growth. For 2024 and 2025, the maximum annual IRA contribution is $7,000 for those under age 50, with an additional $1,000 catch-up contribution for individuals age 50 and older. Eligibility to contribute to a Roth IRA is subject to income limitations, with Modified Adjusted Gross Income (MAGI) thresholds that may restrict contributions.

Beyond tax-advantaged retirement accounts, general brokerage accounts can facilitate broader investment opportunities. These accounts allow purchasing a wider range of assets, including individual stocks, bonds, mutual funds, and Exchange Traded Funds (ETFs), enabling diversification across various market sectors. While these accounts do not offer the same tax benefits as retirement accounts, they provide liquidity and flexibility for long-term wealth accumulation.

Real estate investing presents a significant opportunity for military members, who can leverage unique benefits like the VA loan program for “house hacking.” This strategy involves purchasing a multi-unit property (e.g., duplex, triplex, or fourplex) with a VA loan, living in one unit, and renting out the others. A key advantage of the VA loan is that it typically requires no down payment and does not necessitate private mortgage insurance (PMI). The service member must occupy one unit as their primary residence. While this approach can potentially offset or even cover mortgage payments with rental income, it requires careful consideration of property management responsibilities, especially during deployments or Permanent Change of Station (PCS) moves. Thorough research into local market conditions and property management options is advisable.