When I was in college, a professor that I very much respect gave me some really good money advice.
She said to me, “You’re going to be a teacher. That’s fantastic! I’m sure you’re going to live a really great life. But it wouldn’t hurt for you to become financially smart. Start now while you’re young.“
She recommended two books about financial literacy.
There I was, a 20-year old college student, standing there with my professor discussing finances.
That small moment, nearly two decades ago, has since shaped my financial life in a very positive way.
The Core of Money Advice
Being money smart is more than just saving money.
Financially fit means developing a healthy relationship with money.
This article shares 11 money advice tips that I believe every teacher should do consistently in order to cultivate healthy money habits.
[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.
1. Create Long and Short-Term Goals.
At the beginning of each year, say January, write financial goals.
Determine what are 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 for what you’re saving and investing.
2. Start or Increase Your Emergency Fund.
The next piece of money advice is to create an emergency fund, also known as a rainy day fund.
Dave Ramsey is known for talking repeatedly about having an emergency fund, and he has a good system to help you grow one.
How much to keep in your emergency fund varies person to person, but anywhere between 6 months and 2 years worth of salary feels safe.
Depending on credit cards is not the best idea, as doing so could lead to a vicious cycle of paying the minimal payment while while still owing an ever-increasing balance.
A rainy day fund is essential.
3. Check Your Credit Report Annually.
Check your credit report every year to make sure all of your information is accurate.
Because there is a lot of fraudulent activity that happens with credit cards, making this a yearly habit is extremely important.
Is all well with your bank and store accounts?
Are all transactions that are shown on the reports yours?
You can receive a free copy of your credit report from all 3 major credit reporting companies every 12 months.
4. File Your Taxes On Time.
When tax time rolls around, be prepared.
If you don’t have a complicated tax situation, you could possibly do your taxes yourself.
Whichever choice you make, file your taxes on time so that you avoid penalties and interest.
Keep one of those portable file boxes on hand to organize your tax paperwork. Doing this regularly throughout the year makes things go smoother when it’s time to file.
5. Keep those Business Receipts Organized.
If you have a small business or freelance for extra income, keep track of receipts, transactions, and business expenses.
Being a freelancer or small business owner has its perks, but you’ve got to keep good records of your income and expenses.
Keep your business accounts and expenses separate from your personal accounts.
Keeping all of that stuff organized during the year makes things flow easily during tax time, and your tax professional will be very happy indeed.
There are good accounting software/apps you can use to keep track of business transactions, or you can do so the old-fashioned way – by hand.
A Word About Estimated Taxes…
If you have a side hustle, you may need to pay estimated taxes quarterly to the IRS.
Since you don’t have an employer deducting taxes for social security and medicare when it comes to your side hustle, you may have to pay them yourself.
Disclaimer: Speak with a tax professional about your unique tax situation.
6. Save Well for Retirement.
Teaching is one of the few professions where pensions are still fairly common as a retirement vehicle.
While pensions are great to have, if possible, consider saving additional funds for retirement on your own.
Roth and Traditional IRAs are good investments to research.
Additionally, if you pay into social security, check your social security statement annually to make sure everything looks okay.
Disclaimer: Talk to your financial advisor about your unique financial situation.
7. Be Tax Knowledgeable.
Even if you don’t file your own taxes, know the basics at least.
For which credits and deductions are you eligible?
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.
Knowing what’s going on with your tax situation prevents you from paying too much or being scammed.
8. Buy Life Insurance.
Life insurance is really important to have, especially if you’re in a one-income household or have dependents that depend on your salary.
If you are a stay-at-home parent and don’t bring in any income or if your spouse earns substantially more, having life insurance is a very smart idea.
How will dependents support themselves in the absence of the primary income earner?
Would the other spouse be able to maintain the same standard of living?
9. Invest in Financial Education.
There are lots of great resources available to learn the basics of financial literacy.
Here are a list of books that I recommend…
- The 21-Day Financial Fast: Your Path to Financial Peace and Freedom ~ Michelle Singletary
- Spend Well, Live Rich (previously published as 7 Money Mantras for a Richer Life): How to Get What You Want with the Money You Have ~ Michelle Singletary
- The Millionaire Next Door: The Surprising Secrets of America’s Wealthy ~ Thomas J. Stanley
- I Will Teach You to Be Rich ~ Ramit Sethi
No time to read a book?
The Internet is full of wonderful personal finance blogs from hard-working folks like us who are doing their money thang like a pro!
Choose a few to read and get inspired to take action.
10. Shop Around for Car Insurance.
Without explanation, some car insurance companies, even if you have no accidents or traffic violations, still increase your rate – by A LOT.
Shop around for car insurance every year or two, and look for the best rate that still provides value.
You could be saving so much money each month.
11. Tackle Estate Planning.
If you’ve got plenty of valuable assets, I suggest speaking with a financial advisor about estate planning.
The last thing you want is your relatives fighting over who gets want upon your departure to the other side.
Wrapping Up: Money Advice for Teachers
These are the 11 pieces of money advice I believe every teacher needs to know.
Follow these steps, and you’ll be on your way to being financially fit.