Five Financial Fumbles Teachers Often Make (and How to Ace Your Finances Instead!)
Five largest financial mistakes made frequently by teachers, and how to avoid making them yourself.
By: Jeff Venables
Teaching is a calling, a noble profession that shapes the future. But sometimes, the dedication to students can come at the expense of personal financial well-being. If you’re a teacher, you’re likely juggling lesson plans, grading, and extracurriculars. Let’s shine a light on five common financial mistakes teachers make, and how to avoid them to secure a brighter financial future.
1. Neglecting Retirement Savings Beyond Pensions:
Many teachers rely heavily on their state or district pensions. While pensions offer stability, they might not be enough for a comfortable retirement.
- The Mistake: Solely depending on your pension without supplementing it with other retirement savings.
- The Solution:
- Maximize contributions to 403(b) or 457(b) plans. These plans often have tax advantages and can grow significantly over time.
- Consider a Roth IRA for tax-free withdrawals in retirement.
- Regularly review your retirement strategy with a 100% fiduciary financial planner.
- Start early, even small amounts add up due to compounding of growth.
2. Overlooking Student Loan Repayment Options:
Many teachers enter the profession with significant student loan debt.
- The Mistake: Paying the standard repayment amount without exploring other options.
- The Solution:
- Investigate Public Service Loan Forgiveness (PSLF). If you meet the requirements, your remaining balance could be forgiven after 10 years of qualifying payments.
- Explore income-driven repayment plans, which adjust your monthly payments based on your income and family size.
- Consolidate federal loans for easier management.
- Be aware of changes to the PSLF program, and keep meticulous records.
3. Failing to Budget and Track Expenses:
Teachers often focus on their students’ progress, but sometimes overlook their own financial progress.
- The Mistake: Not creating a budget or tracking spending.
- The Solution:
- Use budgeting apps or spreadsheets to track income and expenses.
- Identify areas where you can cut back.
- Set financial goals (e.g., saving for a down payment, paying off debt).
- Create a realistic budget, and review it monthly.
4. Underestimating the Importance of an Emergency Fund:
Life is unpredictable, and unexpected expenses can derail even the best-laid financial plans.
- The Mistake: Not having an emergency fund.
- The Solution:
- Aim to save three to six months’ worth of living expenses in a readily accessible savings account.
- Start small and gradually increase your savings.
- Automate savings transfers to make it easier.
- This fund is for true emergencies, such as medical bills, or job loss.
5. Not Taking Advantage of Teacher-Specific Discounts and Benefits:
Many businesses and organizations offer discounts and benefits specifically for teachers.
- The Mistake: Missing out on these opportunities.
- The Solution:
- Explore teacher discounts on everything from school supplies to travel.
- Check with your professional organizations for member benefits.
- Inquire about discounts at local businesses.
- Research online for teacher discount databases.
Empowering Your Financial Future:
Teaching is a rewarding profession, and it’s essential to prioritize your financial well-being. By avoiding these common mistakes and taking proactive steps, you can secure a stable and fulfilling financial future. Remember, financial literacy is a journey, not a destination. Take control of your finances, and you’ll be able to focus even more on what you do best: shaping the minds of tomorrow.
We provide teachers and other public employees with essential information and resources for navigating their personal finances, so they can maximize their careers and enjoy the perfect retirement.
