Depending on your duty station, you or a family member may have the opportunity to live off-base. If that’s the case, you should be receiving BAH, or basic allowance for housing. This allowance helps pay rent, utilities and other necessities, and varies by location and grade.

Many servicemembers opt get a roommate or rent a cheap studio, and find themselves with money left over. It may seem like the perfect time to go shopping or to splurge, but you may find there are some more practical uses for it.

Consider one of these ways to use your leftover BAH to get ahead on your financial goals.

1. Save for a Future Expense

Imagine this scenario – you live with two roommates and you are saving an extra $200 per month. With that extra money, consider saving up for something you’ll need later. For example, say you want to go on vacation next summer. You know you’ll need to save at least $2,000. The money you’re saving can be put into a savings account to build up for the vacation!

Other ideas to put your extra BAH toward is a future down payment on a house, help buy an engagement ring, pay for a wedding or start a family.

Some financial institutions offer savings accounts with fixed terms that pay a higher interest rate, but still allow you to contribute more funds to the account. This way you won’t be tempted to spend the money before you need it, because it’s out of sight and doing more for your bottom line.

2.   Start an Emergency Fund

5 things to do with leftover BAH including starting an emergency fund and contributing to retirementYou’ve heard the term “rainy day fund.” Use your BAH to actually start one! Surprise expenses can include flying home for a funeral, fixing an unexpected repair on your car, or supporting a family member through a tough time. If you have an emergency fund, you won’t have to rely on credit cards or other expensive options to pay for unexpected expenses.


An emergency fund should have at least $1,000 to start; but if you’re starting from the ground up that’s okay! Set aside a small amount that you can reasonably afford each month. Over a few month period, gradually increase it to a level you’re comfortable maintaining. Eventually, you can work your way up to 3-6 months’ worth of expenses. You should keep your emergency fund in a checking or savings account. That way, its easily accessible when you really need it.


3.   Contribute to Your Retirement

A great way to spend your leftover housing allowance is by starting a retirement account. You can choose to contribute to a Thrift Savings Plan or start an IRA. By investing in your future early on, you’re ensuring a smoother road to retirement as you get older.

Try putting at least 10 percent of your salary toward your retirement account. If you can’t reach that benchmark, start with an amount you’re comfortable with and increase it every few months.

4.   Have an Experience

supporting img 5 things to do with leftover BAH two rainbow beach chairs on the beach tide rising having an experienceStudies show that experiences outrank physical items in terms of how much happiness they provide. If you’re thinking about buying a stereo system or new wardrobe, consider using the money on an experience instead.

These include vacations, classes, hobbies and more. You’ll develop unique skills, learn about interesting cultures and find out what you’re really passionate about. You might even be inspired to start a side business or take a hobby to the next level!

5. Support a Charitable Organization

One of the benefits of having extra money is being able to help other people. You can contribute to a favorite charity, give it to a family member’s college tuition or support your local community.

Giving to others is one of the best ways to make yourself happy. If you have the funds, why not give yourself the gift of giving to someone else?

The Sky’s The Limit

By setting up a habit of saving what’s left of your housing allowance, you’re in a much better place to do more with your money. Whether that’s saving for long-term goals, treating yourself to a long vacation or starting a college fund for your little brother, a little restraint in the short term can lead to surprising benefits down the road.