A Pilot’s Guide to Building a Strong Financial Foundation

Pilots are now being paid more than ever in the history of aviation. Delta, United, and American Airlines have some of the best contracts they’ve had in a very long time. Even though pilots’ salaries have come a long way, making more money itself doesn’t guarantee you a solid financial foundation. Here are 4 things that Airline families should be focused on in order to build a good financial foundation:

1. Eliminate Debt

Your first priority is making sure that you eliminate all debt, starting with credit card debt, student loans, and car loans. Then, you can have cash flow to start building wealth going forward.

2. Live Beneath Your Guaranteed Pay

If your guaranteed pay is 70 or 75 hours, but you typically flying 80 or 90 hours, don’t count on these extra hours. There have been times such as now when extra work can be picked up easily. However, the opposite is also true, and we’ve seen times when there wasn’t any opportunity for extra hours. So, it’s better to always be prepared.

3. Build Cash Reserves

After you’ve eliminated your debt and have learned to live beneath your means, or as they say beneath your guaranteed, we recommend that you carry about six months of your living expenses in a high-yield savings account. A mishap of some sort can have you not flying, and it is always wise to have money set aside in case of emergency. For example, a broken arm, bad blood pressure, a lot of other things that can derail you from aviation. This fund can be built over time, since that’s obviously not something that would get done overnight.

4. Start Maxing Out Your 401(k) Early

At the regional airline level, a lot of the retirement plan savings options are not available. Nonetheless, you can begin to create the habit of putting aside into a 401(k) the $22,500 every year. Once you move to a bigger airline you can then do a rollover from that old 401(k) plan to your new 401(k) plan.

Building a strong foundation depends on creating healthy financial habits. So, beginning to build your 401(k) savings early is a great step in the right direction. Ultimately, a career in aviation has great rewards, but it also comes with a very busy lifestyle. It’s important to focus on your goals of building a strong financial foundation and work towards them, so you don’t get lost in the middle of the way. 

We have put together 401k allocations for most major airlines and have them available for free on our website. You can download those by clicking here.

Have more questions? Contact Us

Casey Smith
President, Wiser Wealth Management

Click here to schedule a consultation with one of our financial planners.

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