Financial Advice for New Teachers (From a Teacher)
*I’m not a financial adviser and I don’t claim to be one. This is advice from someone who is a young teacher and simply information that I wish I had prior to making choices. Every choice is a lesson with an assessment. My hope is just to help folks learn! I also do not address retirement at all. Talk to some other folks about that.
Hey, You! You did it! You completed Student Teaching with your sanity and now you’ve signed a contract to start your first job as an educator. You’ve likely ignored all the “teachers don’t make a lot of money” arguments because “you love the kids.” I genuinely believe you. Your actions will match it and the countless hours you spend molding other people’s children will stand as your witness to a deep love and affection for the educational institution, more importantly, a deep love for the heart that beats in the chest of your student.
This is just some advice from a guy a few steps ahead of you; advice that I wish I would've heard prior to my first check.
Advice #1- Have a plan for your $32,000 salary.
A quick poll of the different school districts across the state of South Carolina shows that with a Bachelor’s degree and zero graduate credit hours, you will likely have a starting salary of at least $32k. If you make more, great!
You may already be acquainted with taxes and have it figured out, but if you’re anything like me, you want to know what you will bring home on payday.
Let’s assume that you are paid monthly.
Roughly 30% of your check will likely be deducted.
(FICA 6.18%, Medicare 1.4%, Federal 7.39%, State 5.48%, and Retirement 9%)
This means that you will bring home $22,400 or $1866.67.
You need a plan for this $1866.67. If this is your first job, this sounds like a lot of money, and truthfully it is a lot of money on a global scale. It’s important to keep in perspective that in America we make way more money than others are accustomed to.
Why are people complaining then?
They complain because teaching is an emotionally exhausting profession with quite a few challenges. After you’ve dealt with all the additional stressors, you don’t need finances to be one as well.
Advice #2 Suggestions for your plan
Your plan should take into consideration: charity, savings, housing, transportation, food, clothing and just general fun money.
Thinking about this before signing up for additional debt may be helpful. I suggest the following breakdown:
10% - Tithe/Charity
20% - Savings
45% - Utilities
25% - Personal Choice
10% - I know you are charitable daily. This portion of your pay allows you to give to a local body, like a church, for the further aiding of your community.
(Quick plug for a church: You need a place to be cared for. You need a place that pours into you and a place where you can be pointed to the hope of Jesus Christ. If you don’t have a church where you can cry and find community, keep looking and praying for one. It’s important that you aren’t serving children without being fed the body of Jesus Christ, simply because we have to be poured into, in order to pour into others. Give this money to the place that you belong to, the place where God feeds you and aid in the funds that feed the community.)
20% - This is a biblical principle I learned from Genesis through Joseph. ( “Let Pharaoh proceed to appoint overseers over the land and take one-fifth of the produce of the land of Egypt during the seven plentiful years. And let them gather all the food of these good years that are coming and store up grain under the authority of Pharaoh for food in the cities, and let them keep it. That food shall be a reserve for the land against the seven years of famine that are to occur in the land of Egypt, so that the land may not perish through the famine." - Genesis 41:34-36)
Joseph was sold by his brothers and ends up saving their butt when a Famine comes. Joseph goes from being in jail to working for the king, through his gift to interpret dreams. Joseph instructs the people to save ⅕ of their harvest, which ends up helping the entire kingdom survive during the famine.
I would have this amount automatically deducted from check and sent to a local Federal Credit Union as my emergency savings. If you can get used to this early on, you will stack away a nice safety egg. (Folks recommend 6 months of your expenses saved. This is easy if you keep your expenses low.)
45% - This is for your repeating monthly bills. Here is the challenge: Keep your bills within this amount. Your rent, cell phone, etc. I know this sounds hard with rent, but talk to your colleagues about roommates etc. If the car still runs, drive it. Unfortunately, you don’t make enough to buy a new car. (Yes, I made the mistake.) Let me clarify, you do make enough, but you need to be strategic. Save as much as you can for a vehicle. If you HAVE to have a new vehicle, consider leasing a Hyundai car or something where the payment is $125 or less. If you don’t have a family and can drive a small car, there are SO many compact vehicles that are affordable.
25% - This is to have fun with. Live a little. Go somewhere and relax. It doesn’t seem like a lot because it’s not, but if you live in these parameters for a bit, you will have a HUGE nest egg to sit on.
Advice #3 - You need a hustle
One of the many benefits of education is the schedule. During the summer and the breaks, you need to spend at least 20% of that time resting. Outside of that, you need a hustle. Find the number that you wish your 25% was, and make up the difference. This hustle will make things tremendously easier for you. Think about trades or something you can manage.
Advice #4 - No Debt
That’s it. Avoid it like the plague. I don’t care if you need stuff for your class, find another way. (Talk to your colleagues.) Debt on our salary can kill.
That’s all I have for now. I will fight for raises for us all, but until that happens, we have to manage what we have well. If you are already off track, that is ok, just get back on track.
Advice #5 - Remember this parable:
“"For it will be like a man going on a journey, who called his servants and entrusted to them his property. To one he gave five talents, to another two, to another one, to each according to his ability. Then he went away. He who had received the five talents went at once and traded with them, and he made five talents more. So also he who had the two talents made two talents more. But he who had received the one talent went and dug in the ground and hid his master's money. Now after a long time the master of those servants came and settled accounts with them. And he who had received the five talents came forward, bringing five talents more, saying, 'Master, you delivered to me five talents; here, I have made five talents more.' His master said to him, 'Well done, good and faithful servant. You have been faithful over a little; I will set you over much. Enter into the joy of your master.' And he also who had the two talents came forward, saying, 'Master, you delivered to me two talents; here, I have made two talents more.' His master said to him, 'Well done, good and faithful servant. You have been faithful over a little; I will set you over much. Enter into the joy of your master.' He also who had received the one talent came forward, saying, 'Master, I knew you to be a hard man, reaping where you did not sow, and gathering where you scattered no seed, so I was afraid, and I went and hid your talent in the ground. Here, you have what is yours.' But his master answered him, 'You wicked and slothful servant! You knew that I reap where I have not sown and gather where I scattered no seed? Then you ought to have invested my money with the bankers, and at my coming I should have received what was my own with interest. So take the talent from him and give it to him who has the ten talents. For to everyone who has will more be given, and he will have an abundance. But from the one who has not, even what he has will be taken away. And cast the worthless servant into the outer darkness. In that place there will be weeping and gnashing of teeth.'”
Matthew 25:14-30 ESV
Use your talents well!