Navigating BAH Changes: A Military Family’s Guide to Budgeting

When BAH changes, a military housing budget goes up or down

For military families, the Basic Allowance for Housing (BAH) can be used towards on-base or off-base housing options. Every year, BAH rates are re-evaluated, and BAH changes take effect on January 1. Many military families make strategic budget adjustments for two different scenarios: when your BAH increases and when it decreases. 

Maximizing Budgets with BAH Increases 

When your BAH increases, you’ll receive a slightly higher amount on every paycheck throughout the year. If you aren’t going through a major transition like a PCS move or a deployment, that means more money for you to remain in the same house. Seize the opportunity to make the most of this favorable BAH change.  

Anticipate utility bill increases: 

Before you make plans for all the “extra cash” from your BAH increase, be prepared for increased utility bills. Compare your most recent bill to last year’s statements to see if inflation is slowly impacting your monthly payments. Adjust your budget to accommodate these BAH changes and general bills.  

Assess your household budget: 

Conduct a thorough review of your current budget, identifying areas where additional funds can be allocated wisely. Don’t have a household budget? Learn how to build a budget here. Focus on essential categories such as housing, utilities, groceries, transportation, and discretionary spending. 

Boost emergency savings: 

Use the BAH increase to grow your emergency savings. Establishing a financial cushion provides peace of mind and safeguards your family against unforeseen expenses (which are practically guaranteed in military life!) 

Tackle high-interest debt: 

Consider using the surplus income to pay down high-interest debt. Whether you have student loans, a car payment, a mortgage, or credit card bills, decide where you can make the most impact by paying a little extra on the principle each month. Paying ahead not only improves your credit score but also frees up more funds for future use. 

Strategic Budgeting When BAH Decreases 

Unfortunately, in some areas, BAH payments can decrease based on the evaluation of the local housing market. Families living on base are often shielded from rate changes, but off-base residents may face challenges. Here are key strategies to consider.

Negotiate rent adjustments: 

For off-base renters, engage with your landlord to discuss adjusting rent to align with the reduced BAH. While there is no requirement for landlords to match BAH rates, open communication may help you both reach an agreement. 

Explore mortgage refinancing: 

Homeowners can explore mortgage refinancing to secure a lower interest rate or extend the loan term. This strategic move helps offset the impact of BAH changes and makes housing expenses more manageable. 

Consider relocation: 

Is it possible to move on base or to a lower-cost neighborhood? If you move without PCS orders, you will have to pay all moving costs yourself. But if you anticipate another year or more at your duty station, it may be the best choice. While moving is a dramatic adjustment, it is sometimes necessary in areas with large BAH changes. 

Leverage SCRA protections: 

Look up the Servicemember Civil Relief Act (SCRA), which allows you to break a lease without penalties due to military orders. This option could be helpful if you already have PCS or deployment orders. 

Get Help Building a Budget for BAH Changes

Whenever BAH changes, whether it increases or decreases, constructing a family budget with adaptability is important. Prepare for potential BAH changes and other financial fluctuations, like inflation, by creating a flexible budget. Establishing a financial buffer helps your family navigate unexpected challenges while maintaining peace of mind and their current lifestyle. 

If you want help building your household budget or working through BAH changes, we invite you to the Budget Boot Camp—a free virtual program designed to empower military families to navigate financial challenges, including BAH changes. For one week in January, we will provide daily tips, tools, and interactive courses all designed to make your money work for you, no matter where you are on your financial journey.

Budget Boot Camp is free for service members, Veterans, and their spouses, so register here today! 

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About Our Partnership with TowneBank Mortgage

At GoVA, we’re proud to partner with a lender that delivers peace of mind to those who have served and continue to serve our county. Together, GoVA and TowneBank Mortgage are committed to helping our military service members achieve their dreams of homeownership, as well as providing them with valuable resources along the way. As experienced lenders, TowneBank Mortgage understands the need for a quick and easy mortgage process, especially during life’s transitional moments. Headquartered in Norfolk, just miles from the world’s largest naval base, TowneBank Mortgage has had the honor of helping thousands of military families through their VA loan offerings. Their team is knowledgeable about VA products and the local market, and in-house operations allow them to respond to questions and concerns in a timely manner. Together, we can get you to closing in 30 days or less. Trust TowneBank Mortgage and GoVA loans to get you home.

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