Money and Kids on a Military Paycheck: What to Set Up Now and What to Teach

Most money advice about kids jumps straight to college funds. That matters, but it skips two things military families need to get right first: making sure your kids are actually protected if something happens to you, and raising them to handle money better than most adults do.

I've got a teenager and a toddler at home, so I'm working both ends of this at once: one kid is old enough to get a paycheck, the other is still figuring out what money even is.

Part 1: What to set up now

Your beneficiary forms beat your will

This one surprises people. If you die, your TSP and your SGLI don't follow your will. They follow the beneficiary forms on file.

For the TSP, the form is TSP-3. The TSP's own form says a will, a prenup, a separation agreement, or even a court order won't override it. If there's no valid form on file, the money goes by a fixed order: your spouse, then your children equally, then your parents, then your estate. That might be what you want. It might not, especially after a divorce, a remarriage, or a new baby.

For SGLI, you manage beneficiaries online through SOES in milConnect. Two things to know:

• Life events don't update it for you. Getting married, divorced, or having a kid changes nothing on that form until you change it.
• Naming a minor child directly can delay the money. If your child is still a minor when you die, VA has to pay a court-appointed guardian or a VA-appointed fiduciary instead, which takes time. VA suggests considering a trust, which has to exist before you name it.

Pull up both forms this week. It takes about ten minutes, and it's one of the most important ten minutes you'll spend on your family's finances.

A will still matters, for a different reason

Your beneficiary forms handle the TSP and SGLI. Your will is where you name who would raise your kids if you couldn't. Your installation's Legal Assistance Office can draft a will and a power of attorney for free (more on that in 6 Financial Goals Worth Setting in Your 30s).

Know what's already covering your kids

If you're covered by SGLI, your dependent children are automatically covered by Family SGLI for up to $10,000, at no cost. You can't turn it down, and you don't have to do anything to get it.

The catch: it ends 120 days after you separate, and it can't be converted into its own policy. If you're getting out, plan for that gap before it happens.

Education: the GI Bill first, then a 529

If you have six years in and agree to serve four more, you may be able to transfer your Post-9/11 GI Bill to your kids, but only while you're still serving. The full rules are in 6 Financial Goals Worth Setting in Your 30s. If a transfer isn't an option, a state 529 plan is the standard tax-advantaged way to save for school.

Part 2: What to teach them

They're learning from you whether you teach them or not

The Consumer Financial Protection Bureau's research on kids and money found that children pick up their money habits and sense of "normal" mostly by watching their parents and peers. It also says kids as young as five can be ready to learn about saving and spending.

So the most powerful lesson isn't a lecture. It's letting them see you make decisions. Say it out loud: "We're not buying that today because we're saving for the trip." "I'm checking the price per ounce." "That's going on the list for next payday."

Around 5 to 7: saving and spending are different things

Use two jars, or three: spend, save, and give. When they get money for a birthday or chores, they split it. The point isn't the amount. It's the idea that money has jobs, and that waiting for something is a choice.

School age: let them make small mistakes

Give a small, regular allowance and let them control it, including the bad calls. Blowing it all on something that breaks in a week teaches more at eight years old than it will at twenty-eight with a credit card.

Military life gives you built-in lessons too. Before a PCS, show them the moving budget: what the move costs, what the government covers, and what the family covers. Military kids already know how to handle a move. Let them see the money side of it too.

Teens: show them the real numbers

Walk them through your LES. Show them the gap between base pay and what actually hits the bank, and where the rest goes: taxes, TSP, insurance.

Get them earning. A part-time or summer job teaches money in a way a lecture can't: they feel what an hour of work is worth.

Open a custodial Roth IRA once they have a paycheck. A kid with earned income can put up to what they earned (capped at $7,500 for 2026) into a Roth IRA, and you're allowed to make that contribution for them. A teenager who contributes even a few hundred dollars a year has decades of tax-free growth ahead of them. It's also the easiest way to teach compound interest: let them watch their own account grow.

Part 3: You don't have to figure this out alone

Military OneSource offers free financial counseling to service members and eligible family members, in person, by phone, or by video. Call 800-342-9647. You get up to 12 sessions per issue per year, and building a family money plan is exactly the kind of thing they help with.

Your family money checklist

Take one evening this month and knock these out:

• Check your TSP beneficiary designation (Form TSP-3).
• Log into milConnect and review your SGLI beneficiaries in SOES.
• If a beneficiary is a minor, look into whether a trust makes sense.
• Get a will and power of attorney from Legal Assistance, and name a guardian.
• Note when Family SGLI would end if you're separating soon.
• If you have six-plus years in, look into the GI Bill transfer.
• Pick one money lesson that fits your kid's age and start it this week.

The bottom line

Protecting your kids is paperwork you do once and check after every big life change. Teaching them is something you do every day, mostly by example. Get the forms right, then let them watch you handle money the way you'd want them to.

Sources: TSP, Designating Beneficiaries; OPM, TSP order of precedence; VA, Naming beneficiaries; VA, Family SGLI; CFPB, youth financial capability; IRS, IRA contribution limits; Military OneSource, financial counseling.

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Disclaimer: I am not a financial advisor. The information provided here is for educational purposes only and should be verified independently. See the full Disclaimer.