Service members need better and more frequent financial literacy training — to the tune of about $400 million over the next five years, a congressional commission has recommended.

"Existing financial literacy programs do not adequately educate service members and their families on financial matters," states the recently released final report of the Military Compensation and Retirement Modernization Commission.

In written testimony submitted to the House Armed Services Committee on Feb. 4, the commission noted that the services provide personal financial management training for their members according to their internal policies, but shortfalls in that training have created longstanding problems.

"Military personnel regularly make minimum payments, pay late fees, or pay over-the-limit charges on credit cards, and commonly borrow from nonbank financial institutions (e.g. pawn shops,)," the report said.

The commission unveiled 15 recommendations Jan. 29 in various areas of pay and compensation after 18 months of study.

As part of their recommendation to enhance financial literacy, commission members suggested DoD hire professional training firms and consider whether the trainers should be certified financial advisers.

Troops should receive financial training and counseling throughout their careers, according to the commission, at a minimum:

  • During initial training.
  • Upon arrival at the first duty station and upon arrival at each subsequent duty station for enlisted members in paygrades E-4 and below and officers in paygrades O-3 and below.
  • At the vesting point for a proposed new Thrift Savings Plan, when service members would take control of government matching contributions to their accounts.
  • On promotion dates for enlisted members up to paygrade E-5 and officers up to paygrade O-4.
  • At major life milestones such as marriage, divorce, birth of first child, disabling sickness or condition.
  • During leadership and pre- and post-deployment training.
  • At transition points, such as from active duty to reserve, separation and retirement.
  • Upon the service member's request.

The initial cost, according to the commission, would be about $85 million a year starting in fiscal 2016, dropping to about $75 million a year starting in 2019 — an estimated cost of $33 per service member.

But the commission noted that the financial training also could save DoD money in the long term, as well as improve life for troops and their families. DoD has estimated that the number of service members involuntarily separated for financial problems costs the military anywhere from $13 million to $137 million each year.

The commission report did not include data on the current costs of the services' financial education efforts. DoD doesn't track or centrally fund the services' budgets for financial education, said Pentagon spokesman Navy Lt. Cmdr. Nate Christensen.

Defense officials did not comment directly on the commission's recommendations, but noted that financial readiness is already an important priority for the department.

DoD "recognizes that personal financial readiness of service members and their families must be maintained to sustain mission readiness," Christensen said.

DoD provides a range of tools and services, including personal financial management counselors and Military OneSource, to help troops and their families "establish a clear picture of their financial situation, prioritize their financial goals, and identify appropriate strategies to attain them," Christensen said.

The services also have developed "comprehensive financial readiness programs" that begin at an entry level, are reinforced at the first duty station and progress throughout a service member's military career, he said.

According to commission and DoD documents, the Army requires mandatory training for those who abuse or misuse check-cashing privileges; and all junior enlisted members scheduled for their first permanent change-of-station move receive financial training and counseling. First-term and initial-term soldiers receive personal financial readiness training.

The Navy requires Navy and Marine Corps units to designate and train a command financial specialist (E-6 or above) who provides financial education, basic counseling and makes referrals to certified counselors.

The Air Force provides training for all personnel upon arrival at their first duty stations and before deployments.

DoD policy requires the services to provide one-on-one financial counseling. Each installation has at least one certified financial counselor, through civil service or contractors, and has developed programs to bring their counseling into military units.

One-on-one financial counseling services are also provided through Military OneSource.

DoD has various arrangements with other entities that provide financial education, such as military banks and credit unions on installations. And a program called Military Saves, a partnership with America Saves and DoD's Financial Readiness Campaign, encourages service members to save money, reduce debt, and build wealth.

Army Emergency Relief previously paid for an eight-hour session on personal financial management for all soldiers going through Advanced Individual Training, but stopped paying for in the fall of 2012 when the Army began to fund it, said AER spokesman Guy Shields.