Budgeting
How to Budget Your BAH Effectively: A Military Family's Guide
The Basic Allowance for Housing (BAH) represents a significant portion of military compensation. Follow these strategies to maximize every dollar and build financial security.
Understanding BAH Components
Your BAH typically covers:
- 95-96% of median rent for your rank/location
- Average utility consumption costs
- Renter's insurance
The Military 50/30/20 Budget Rule
| Category | % of BAH | Example ($2,500 BAH) |
|---|---|---|
| Housing (Rent/Mortgage) | 50-60% | $1,250 - $1,500 |
| Utilities & Services | 20-30% | $500 - $750 |
| Savings/Emergency Fund | 10-20% | $250 - $500 |
3 Advanced Budgeting Strategies
1. The BAH Banking Method
Direct deposit your BAH into a separate account dedicated solely to housing expenses. This prevents "lifestyle creep" and ensures rent is always covered. Many credit unions offer special military accounts with:
- No monthly fees
- Early payday access
- Overdraft protection benefits
2. Utility Cost Reduction
Combat rising energy costs with:
- Energy audits (often free through base housing offices)
- Smart thermostats and usage monitoring
- Water-saving appliances
3. Rent vs Buy Analysis
Consider buying if:
- You'll be stationed 3+ years
- Local market trends favor buyers
- You can use VA loan benefits effectively
Special Situations
Overseas Housing Allowance (OHA)
Key differences from BAH:
- Based on actual rent receipts (you don't keep the difference)
- Includes separate utility reimbursement
- Adjusts with currency exchange rates
BAH During TDY
Remember:
- You continue receiving BAH at your permanent duty station rate
- Temporary Lodging Allowance (TLA) may apply for lodging costs