By J.J. Montanaro, CERTIFIED FINANCIAL PLANNER™

Go back in time with me. It’s May, 1984 (geez, just writing that makes my bones creak). With high school graduation looming large in my rearview mirror, I was pretty sure where I was headed next. At the time, I had narrowed down my college choices to the University of Colorado or Notre Dame, likely to be funded with an Air Force ROTC scholarship.

Then one afternoon, I ambled down to the mailbox and was surprised to find an invitation to attend the U.S. Military Academy. Apparently, someone had bowed out and my life went in a whole new direction. Welcome to my first of many encounters with the uncertainties of military life!

As unpredictable as the military can be, there is one certainty for those in uniform: It will end. No matter how dedicated you are to serving our country, you will eventually transition to the civilian world.

And, if you make the right decisions along the way, you can leave with a healthy stash of cash — a transition fund. The more money you have stashed away, the easier it will be to settle back into civilian life. This is true whether the transition happens on your terms or for reasons beyond your control.

There are a number of key things to consider as you ponder the state of your own transition fund.

1. It won’t grow overnight. When I say “healthy,” I’m talking about the equivalent of six to twelve months’ worth of expenses. That’s a lot of cash, and if you wait until you’re six months or even a year away from getting out to get started, you’ve got little hope of making it happen. So, if you’re planning to leave the military sooner or later, the time to get started is now.

2. It keeps you on track when you’re in between jobs. Cash is king. This is especially true if it takes you awhile to find a new career. It also helps to offset incidentals during your move or cover lost income while your spouse hunts for new employment, too. And if you’re using cash, you won’t be piling up double-digit interest expenses by carrying expensive credit card balances.

3. You can use it for important stuff. Need some new duds for job interviews? Your transition fund could help you replace that one suit that’s been gathering dust for the last five, 10 or 15 years. Speaking of jobs, remember that many employers will check your credit score as part of the hiring process. Cash on-hand will keep you from piling up debt which could lower your score.

4. You can use it, even if you don’t “need” it. Let’s say your transition is ideal. You move seamlessly from the military into the civilian workforce, your new employer kicks in to cover moving expenses and your spouse lands a dream job — all in the same week. That would be sweet, right? Even then, the cash might be handy as you acquire some new wheels to get to work, make a down payment or fix up your new home, take a blowout vacation or just keep it in place as an emergency fund, because the unexpected also happens on the civilian side of the fence.

If you haven’t already got one going, it’s never too early to start building your transition fund. Get it done, and you’ll have something that you and your family will certainly give thanks for.

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