The Basic Allowance for Housing (BAH) is one of the most significant benefits available to service members, designed to offset the cost of housing when living off base. However, many service members overlook strategies to fully leverage their BAH to build long-term wealth. Here are five key tips to make the most of this benefit:

1. Choose Your Housing Wisely

While it may be tempting to rent a luxurious home that matches the full value of your BAH, consider finding more affordable housing and investing the difference. By saving even a portion of your BAH, you can start building an emergency fund, contribute to retirement accounts, or invest in real estate.

2. Understand Local BAH Rates

BAH rates vary based on your duty station and rank. Research your local rates and housing market before making any decisions. Websites like the Defense Travel Management Office (DTMO) can provide up-to-date rates and help you calculate your monthly housing allowance.

3. Consider Homeownership

If you plan to stay at a duty station for several years, using your BAH to purchase a home may be a smart financial move. With access to VA loans, you can often buy a home with no down payment and favorable interest rates. Over time, homeownership can build equity and serve as an investment for your future.

4. Beware of Hidden Costs

Whether renting or buying, be mindful of expenses that BAH doesn’t cover, such as utilities, maintenance, and homeowners’ association fees. Budgeting for these costs will prevent financial surprises and help you stay within your means.

5. Plan for PCS Moves

Permanent Change of Station (PCS) moves can disrupt your housing plans and financial goals. Consider how a future move may impact your decision to rent or buy. Renting with flexible lease terms or purchasing a property with good rental potential can mitigate PCS-related challenges.

By approaching your BAH strategically, you can enhance your financial stability and set yourself up for long-term success.