You don’t need a big paycheck to build a big bright future. Even if you’re starting as an E-1 with little left over after bills, you can set yourself up for financial freedom. It’s not about where you start. It’s about the consistent steps you take from there.
In this episode, I’m sharing a roadmap to go from E-1 to financial success. I’m talking about avoiding money traps, budgeting like it’s your personal mission, and setting the foundation for wealth—all around military life.
Building Wealth on an E-1 Budget (Episode 325)
The inspiration for this episode is from a recent discussion I had with some fellow veterans and financial professionals. We discussed the money challenges service members face and how everyone is trying to help. It reminded me of being an E-1 and just starting out. I wasn’t perfect with money, even though I’d been taught to spend less than I make and save. Like most 19-year-olds, I didn’t always listen to the advice I was given.
I spent too much on a car, going out to eat, partying, clothes, and just a plethora of stupid stuff. I blew a lot of money, but the one thing I did do was get a $100 savings bond every month. All thanks to my Dad’s advice.
It wasn’t much, but I am proud to say that I did not cash them all in early. I still have some to show for it. That’s why this topic hits home for me. Because I’ve been there, and know that when you’re young and enlisted, you can build something amazing from the ground up. It’s just the beginning.
You do not have to be perfect with money or have the perfect plan, you just have to take small, consistent steps to help build your future financial freedom.
Know Where You’re Financially at
First, a reality check and assessment of your current situation are needed. Too often, when you’re young and busy living life, you forget to pay attention to your money. Again I know because I’ve been there and I didn’t pay attention. As an E-1 in 2025, you’re probably bringing in about $2,000 a month in base pay. If you’re in the barracks or dorms, you are not paying for food, rent, or utilities, so your base pay will only be reduced by taxes and a few basics. Maybe a car payment and cell phone in there, too. Check your LES, also known as your Leave and Earnings Statement, to understand your pay and deductions. It’s your financial intel. Know what’s coming in: base pay, maybe Base Allowance for Subsistence (BAS) if you’re off-base, and what’s going out. Do you have any allotments?
This isn’t about feeling like you don’t have enough. It’s about taking control. You’re not just an E-1. You’re in charge of your money and financial future. Shifting your mindset to having awareness and control of your money is where financial freedom starts.
Related content: How to Read an LES
Avoid Common Traps
Part of reaching your goals means avoiding traps that can slow you down or take you off the course of reaching them. We’ve all heard the common traps: a $40K jacked-up truck or a Dodge Charger with 15% interest, weekend partying, or buying things to impress others. I get it after basic, you want to treat yourself or need a car. But be mindful of the math. A $500 car payment eats a quarter of your pay. Just like that, you’ve taken away a good chunk of your hard-earned pay.
Instead of splurging on an expensive car on an impulse. Take time to think over big purchases. The military has lots of policies you have to follow. Create your own policies that benefit you like a 48-hour policy. You have to wait two days before buying anything big. Or have the policy of only going out every other weekend. If you avoid the trap of overspending and lifestyle creep early, you will be ahead of the game.
Budget Like You Love It!
Think of budgeting as your personal action plan. You don’t need to get fancy unless you want to. A notebook and pencil work just fine. You can also use Google Sheets or apps. Whichever you prefer. You need the information from your assessment. How much are you earning, and how much are you currently spending?
Then, apply and adjust your spending with a rule of thumb for your budget. Something like 50/20/30. Fifty percent of your income will get spent on needs—like food and phone—20% for savings and investing, and 30% for wants, like fun or travel. For $2,000 in basic pay, that’s $1,000 for needs, $400 for savings, and $600 for wants. If you want to save and invest more. You can make it 50/30/20. Dorm and barrack life keeps needs low, so take advantage of that to build up a cash reserve and your long-term savings.
Build Your Financial Foundation
Working toward financial freedom means getting started with saving and investing. The perfect place to start is with an emergency fund. Set the goal of setting aside $500 in a savings account as your “financial fallback position.” It’s money that is there when you need it so you don’t have to go into great card debt. Then, focus on your Thrift Savings Plan (TSP). Make sure to continue contributing 5% to get free matching contributions. As you make rank and more money, increase your TSP contributions over time.
Avoid Debt
At the end of the month, when money is in short supply, it can be tempting to put a night out or put some new clothes on a credit card, but don’t. Avoiding debt is key to building wealth. You want to put that money in your TSP or IRA instead of making debt payments to others. If you can avoid debt, you will be light year ahead.
Other Ways to Build Financial Freedom
Some other ways to work on you financial future while enlisted:
- Get a side hustle to build up your savings and investments or, if you need to, pay off debt.
- Don’t try to keep up with others. Just because everyone else got the new Iphone doesn’t mean you have to.
- Don’t be afraid to say, that’s not in my budget or that’s not part of my financial plan. Remember, you are in charge of your money. You have to have polices you stick with.
- Avoid the “I deserve it game.” It can be tempting to think after basic or a deployment that you deserve to do some big spending but don’t get in the habit. Yes, reward yourself but it can be a weekend trip, not a Ford Raptor.
Wrapping Up Building Wealth on an E-1 Budget
Financial freedom isn’t about how much money you make. It’s about the decisions you make. Knowing your financial picture, avoiding traps, budgeting in a way that works for you, and building a strong financial foundation. Remember you don’t have to be perfect. Just take one step at a time and be consistent. Go today and check your LES, start your budget or set up automated savings. Just get started.
MILMO Show Sponsor
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