A college professor once shared this piece of financial advice for teachers with me…
“You’re going to be a teacher. That’s fantastic! I’m sure you’re going to live a really good life. But it wouldn’t hurt for you to become financially smart. Start now while you’re young.“
There isn’t much targeted financial advice for teachers available, so it’s greatly appreciated when others share what they know.
The importance of financial management for teachers cannot be overstated.
If teachers want to live comfortably, setting a budget and sticking to it long-term is the way to go.
Following you’ll find powerful pieces of financial advice for teachers according to a group of financial advisors, CPAs, and tax professionals who work closely with educators.
While this list isn’t exhaustive, it serves as a good foundation of financial advice for teachers so that they cultivate healthy money habits and prepare well for their financial futures.
[Disclaimer]: The information within this post does not serve as formal financial advice. Consult with your personal financial advisor to receive customized, targeted advice specific to your unique money situation.
Essential Financial Advice for Teachers
1. Know Your Financial Health.
Before you make any major money decisions, first conduct an audit of your finances to determine what’s coming in and going out.
This way, you’ll be able to better understand your current and future financial needs.
2. Make a Budget.
After becoming aware of your financial health, make a budget.
Contrary to conventional wisdom, a budget for teachers doesn’t have to include strict guidelines that keep you feeling deprived.
A general idea of what you spend and save in key categories is what you need to get started.
Stick to a schedule for documenting your income and expenses.
Allocate your income towards essential expenses, such as housing, food, and transportation, and set aside money for savings and discretionary spending.
Download this helpful teacher budget template to help you track your income and expenses.
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3. Create Long and Short-Term Goals.
The next piece of financial advice for teachers is to record money goals, preferably at the beginning of each year.
Determine your goals, and then create actionable steps to help you arrive at your targets.
It’s much easier to manage your money when you know exactly what you’re saving and investing.
Examples of short-term goals for teachers:
- I want to save for a beach vacation next summer.
- I need to put money aside for my child’s school expenses.
Examples of medium to long-term goals for teachers:
- I want to save for a house down payment.
- I would like to put money towards a Roth IRA.
4. Start or Increase Your Emergency Fund.
The next piece of financial advice for teachers is to create an emergency fund, also known as a rainy day fund.
The purpose of this fund is to cover unexpected expenses related to medical bills, major home repairs, or car issues.
Money expert Dave Ramsey talks often about the importance of emergency funds, and he has a good system to help you grow one.
How much to keep in an emergency fund varies from person to person, with an average amount of roughly six months of living expenses kept in an accessible bank account.
5. Check Your Credit Report Annually.
Check your credit report every year to make sure all of your information appears accurate.
Because of frequent fraudulent activity, making this a yearly habit is highly encouraged.
Obtain a free copy of your credit report from all 3 major credit reporting companies every 12 months.
6. File Your Taxes On Time.
Be prepared when tax time arrives, and file on time so that you avoid penalties and interest.
This is arguably one of the most important pieces of financial advice for teachers.
If you don’t have a complicated tax situation, consider doing your own taxes.
To stay organized, file paperwork in a portable file box so that the tax filing process is streamlined once it’s time to file.
Also, if you have business income, pay estimated taxes quarterly to the IRS.
Because you don’t have an employer deducting taxes for social security and Medicare from your side business income, you’ll have to do so yourself.
7. Keep Business Receipts Organized.
If you have a side hustle such as a Teachers Pay Teachers store or if you freelance, keep track of receipts, transactions, and business expenses.
Maintain separate business and personal accounts.
Use accounting software to keep track of business transactions, or do it the old-fashioned way – by hand.
8. Save Well for Retirement.
Even if you pay into a teacher pension, consider saving additional funds for retirement.
Research Roth IRAs, Traditional IRAs, 403(b) plans, and 457(b) plans. Take advantage of any employer-matching contributions, if applicable.
Additionally, if you pay into social security, review your social security statement annually to make sure everything looks okay.
9. Invest in Financial Education.
Purchase a few books to learn the basics of financial literacy.
Educate yourself on topics such as taxes, budgeting, debt, starting a business, interest, buying property, insurance, and investing.
Additionally, search online.
Quality resources, such as personal finance blogs authored by individuals who are actually living what they preach, abound.
Related Content: How to Start a Tutoring Business
10. Become Tax Knowledgeable.
Even if you don’t file your own taxes, know tax basics.
Educate yourself so that you have a general idea of your tax situation because tax professionals do sometimes make errors, but the consequences will be on you.
11. Be Strategic With Higher Education.
The majority of school teachers hold a bachelor’s degree, and many go after a master’s degree at some point in their careers.
While that’s a good goal to have, take time to reflect on what type of master’s degree will best serve you from a financial and fulfillment perspective.
12. Buy Life Insurance.
One piece of financial advice for teachers that is often neglected is the topic of life insurance.
If others depend on your salary, consider life insurance.
This way, your dependents will be able to sustain themselves financially in the absence of your salary.
13. Ask About Teacher Discounts.
It is said that teachers are more loyal to brands that offer them a teacher discount.
If you’re in that camp, you may want to shop around for places in your community that honor teachers by giving them discounted prices on some services and products.
This includes restaurants and retailers, so ask about any available discounts before making a purchase.
14. Shop Around for Car Insurance.
Without explanation, some car insurance companies, even if you have no accidents or traffic violations, increase your rate significantly each year.
Shop around for car insurance every year or two, and look for the best rate that still provides value.
Compare car insurance rates using getjerry.com.
15. Tackle Estate Planning.
If you’ve got plenty of valuable assets, speak with a financial advisor about estate planning.
Prevent relatives from debating ownership of your assets upon your departure to the other side.
The path to financial prosperity is an ongoing process, so routinely review your money goals and modify them if needed.
Implementing these key pieces of financial advice for teachers will have you on the path to reaching your money goals in a timely fashion.