Teachers need financial planning as much as anybody. Maybe more. Especially when multiple income sources are involved, plus out of pocket classroom expenses. Budgeting and planning can get complicated.
Tenure provides the kind of stability other professionals often envy. But is it enough for retirement? What about every other goal or milestone? And how do you prioritize different financial strategies?
Here’s 7 tips for keeping your finances on track, practical lessons every teacher can use.
- Pay off your credit cards
The sooner you can tackle your card debt, the better. Follow a debt payoff strategy, like the Snowball method or the Avalanche method. Or use debt pay off services like Bright to do it all for you, making smart payments to help you get debt free faster while saving you money.
- Build and use savings funds
Stop using your cards as much as you can. Build up and use savings funds instead, targeted for different milestones, like summer break or holiday spending. Automate your savings, so you’re saving small amounts regularly. When you use targeted funds, your saving gets focused with extra purpose.
- Keep an emergency fund
Big unexpected expenses can be devastating. Many people turn to credit cards and end up with huge interest charges. Experts recommend an emergency fund that covers 3 to 6 months of expenses. That’s a lot, so take your time, saving small amounts regularly.
- Pay off your student loans
Try to avoid deferments. Stick to federal repayment guidelines – or try doing better. If you haven’t tried yet, check out teacher loan forgiveness programs. The Dept of Education outlines four of the most common ones for teachers.
- Make more from your talents
Weigh the value of another degree. You may get a bigger paycheck for years to come. Summer employment is always an option, too, including teaching and coaching.
- Save and budget with the 50/20/30 rule
Here’s a basic budget breakdown:
- 50% for essential needs
- 20% to savings
- 30% on wants and unexpected expenditures
The rule works for just about anybody, with any income. It’s a simple way to balance your savings goals with everyday spending. Use it to set your savings goals every month.
- Start investing more
Consider investing beyond your employer’s defined-benefit pension plan. You probably also have defined contribution retirement plan, such as a 403(b) or 457(b). But 40% of teachers are ineligible for Social Security benefits, according to one study. A Roth IRA is a popular option with balanced risk and access to your funds. New fintech services offer low or no-fee portfolio investing too.
Bright gets teachers
Bright studies your income and spending habits and moves funds and makes card payments when it makes sense for you.
Bright finds the fastest, smartest way to get you debt free, while boosting your credit score and building more savings.
It only takes 2 minutes. Just download the Bright app from the App Store or Google Play. Link your checking account and your cards, set a few goals and let Bright get to work!