Nearly half of Navy personnel have trouble managing their personal finances, costing the service an estimated $35 million a year in processing fees for bad checks, wage garnishes, and bankruptcies, a new report says.
The report, issued by the Military Family Institute, which is funded by the Defense Department, says poor personal financial management could be costing the Navy another $250 million a year in lost productivity as employees worry about their families' budget woes. Furthermore, 11 percent of sailors refuse to re-enlist and six percent of officers discontinue service due to financial problems, costing the Navy $50 million a year to recruit and train replacements, according to the report.
"Financial difficulties had more impact on operational readiness than housing, child care, health care or partner's job," the report says.
About 43 percent of Navy personnel say they have trouble paying monthly bills. Each year, the Navy processes 123,000 letters of indebtedness and enlisted personnel write 174,000 bad checks to commissaries and exchanges. In 1995, 35,000 Navy personnel had their wages garnished, while in 1996, 4,300 service members filed for bankruptcy.
But Dr. Raminder Luther, a business and finance professor at Marywood University in Scranton, Pa., one of the report's authors, said the Navy is not the only organization in which employees' money problems at home in an era of quick credit and fast cash are affecting their performance at work.
"It's not a Navy problem," Luther said. "It's probably the same in all the services and in the civilian population as a whole."
Luther applauded the Navy for addressing the issue of personal financial problems. She noted that the Navy has been running a personal financial management education program since 1990. But she said the program needs to be standardized and managed better.
"They lose track of who they are training," Luther said.
The Navy may also need to pay sailors more, but Luther said the average salary level for enlisted personnel is higher than the general population's average salary level.
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