The Military Money Manual Podcast Build Wealth in the Military (2026 Update): TSP Limits, Pay Raises, & Avoid Military Money Mistakes #209
Is 2026 the year you finally take control of your military finances? With a 3.8% pay raise, new TSP contribution limits of $24,500, and proven strategies that helped one E-7 reach $600,000 in net worth by year 14, Spencer and Jamie break down exactly how to build wealth while serving, even if you're starting from scratch or recovering from financial setbacks.
In this episode, we provide a comprehensive 2026 financial reset for military families, covering everything from emergency funds and debt payoff to maxing tax-advantaged accounts and avoiding lifestyle creep. Perfect for anyone wanting to turn the new year into a fresh financial start.
Main Discussion PointsKnow Where You Are Before You Start
- Track your spending using apps like Monarch Money, YNAB, Rocket Money, or simple spreadsheet
- Face your financial reality- write down all debt and net worth even if it's negative
- Government shutdown proved why emergency funds matter: 3-6 months of expenses minimum
- Example: $500 car repair covered by emergency fund eliminated stress entirely
Unique Military Financial Advantages
- Tax-free income: BAH, BAS, COLA not subject to federal income tax or payroll taxes (7%+ savings)
- State tax residency: Change to tax-free state (Texas, Florida, etc.) when stationed there! Spouse can too under Military Spouse Residency Relief Act
- TSP match: 5% automatic match after 2 years for BRS members. Don't leave free money on table
- Healthcare and housing covered through Tricare and BAH/base housing
- Example: Saving $300/month by changing state residency adds up to thousands annually
2026 Numbers to Know
- TSP contribution limit: $24,500 (up from previous year)
- TSP annual additions limit: $72,000 (includes match and combat zone contributions)
- Roth IRA limit: $7,500 per person ($15,000 for married couples, even if spouse doesn't work)
- Military pay raise: 3.8% coming. Automate at least 1% of increase into TSP
- E6 with 8+ years gets roughly $150-180/month extra income from pay raise
Priority Order for Tax-Advantaged Accounts
- Contribute 5% to TSP (get full government match for BRS members)
- Max Roth IRA: $7,500 for you, $7,500 for spouse
- Go back and max TSP at $24,500
- Only then consider taxable brokerage accounts
Total to max everything: $49,500 for married couples
Don't stress if you can't max—contributing 10-20% is still excellent and beats average American 5% savings rate
Invest Simply Using LADS Method
- Low-cost, Automated, Diversified, Simple
- TSP Lifecycle 2075 fund: 60% US stocks, 40% international, minimal bonds—perfect set-it-and-forget-it option
- Alternative: 80% C Fund, 10% S Fund, 10% I Fund
- Don't performance chase because last year's winner often becomes next year's loser
- Boring is beautiful in investing. Let it compound for 20 years
Path to Military Millionaire Status
- E7 example: $500/month starting as E3, by age 45 = $1 million at 7% return
- Real example from Reddit: E7 with 14 years, $600,000 saved, contributing $20-25k/year
- In 10 years that E7 will have $1.2 million just from money already contributed (before new contributions)
- Add military pension: $30k/year plus $40k from 4% rule = $70k annual income in retirement
- Time is your biggest asset. US stock market doubles roughly every 7-10 years
Common Mistakes to Avoid in 2026
- Not contributing to TSP at all (minimum 5%, goal 15%+)
- TSP loans for non-emergencies...change behavior instead
- New car trap: 7-year car loans becoming standard, shooting yourself in financial foot
- Lifestyle creep: Give half of pay raise to savings, half to lifestyle improvements
- Waiting for "perfect time." Spoiler: there's never a perfect time. Start this weekend
Capture Free Money
- Review LES monthly for accuracy
- File paperwork for CZTE, hostile fire pay, family separation allowance
- Follow up with finance multiple times if needed. Don't give up on money you're owed
- Request corrected W2s if aircrew touching tax-free zones in Nov/Dec
- Spencer recovered $20,000+ over career by being persistent with finance
Take Action Now
- Schedule family money meeting. Make it a priority! Hire babysitter if needed, dedicate one hour
- Write down all debt on paper: credit cards, student loans, auto loans
- Acknowledge it's overwhelming but necessary to move forward
- Resources: Dave Ramsey's Total Money Makeover or Ramit Sethi's I Will Teach You to Be Rich
- Budgetting and tracking: Monarch Money, YNAB (You Need A Budget), Rocket Money, Every Dollar
- Credit card offers: Card Pointers Chrome plugin
- Free books: Libby app + MWR library on base
- Military Money Manual by Spencer Reese
- Selected as US Air Force Academy Class of 2023 graduating gift
- Dave Ramsey's Total Money Makeover
- Ramit Sethi's I Will Teach You to Be Rich and Money for Couples
- TSP match/max charts by rank
- The Money Guy Show: Financial Order of Operations
Spencer and Jamie offer one-on-one Military Money Mentor sessions. Get your personal military money and personal finance questions answered in a confidential coaching call. militarymoneymanual.com/mentor
Over 20,000 military servicemembers and military spouses have graduated from the 100% free course available at militarymoneymanual.com/umc3
In the Ultimate Military Credit Cards Course, you can learn how to apply for the most premium credit cards and get special military protections, such as waived annual fees, on elite cards like The Platinum Card® from American Express and the Chase Sapphire Reserve® Card.
Learn how active duty military, military spouses, and Guard and Reserves on 30+ day active orders can get your annual fees waived on premium credit cards in the Ultimate Military Credit Cards Course at militarymoneymanual.com/umc3
If you want to maximize your military paycheck, check out Spencer's 5 star rated book The Military Money Manual: A Practical Guide to Financial Freedom on Amazon or at shop.militarymoneymanual.com.
Want to be confident with your TSP investing? Check out the Confident TSP Investing course at militarymoneymanual.com/tsp to learn all about the Thrift Savings Plan and strategies for growing your wealth while in the military. Use promo code "podcast24" for $50 off. Plus, for every course sold, we'll donate one course to an E-4 or below- for FREE!
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