08 Jan 10 Financial Planning Tips for Teachers
At Appreciation Financial, we understand that as a teacher, your life can become very hectic with lesson plans, parent conferences, and much more. Your own needs, particularly financial ones, are often overlooked. Getting your personal finances in order can greatly reduce stress in your life and give you more availability in your free time to do things that you enjoy. With these 10 financial tips for teachers, you can be well on your way to securing your financial future.
1. Start Planning Early
When it comes to financial planning, earlier is always better. No matter what direction you choose to go in with your finances, starting as soon as you can make a real difference. Putting off financial planning will most likely cost you in the long run. By starting early, you will have a chance to plan fully and make informed decisions as you plan. Also, the earlier you start, the easier it can be to change course if changes need to be made down the road.
2. Claim Your Educator Tax Deductions
Educator tax deductions are your friend. According to the IRS, if you are an eligible educator, you can deduct up to $250 ($500 if married filing jointly and both spouses are eligible educators, but not more than $250 each) of unreimbursed trade or business expenses.
Qualified expenses are the amounts you paid or incurred for participation in professional development courses, books, supplies, computer equipment (including related software and services), other equipment, and supplementary materials that you use in the classroom. For courses in health or physical education, the expenses for supplies must be for athletic supplies. This deduction is for expenses paid or incurred during the tax year.
Eligible educators include kindergarten through grade 12 teachers, instructors, counselors, principals, or aides that work for at least 900 hours a school year in a school that provides elementary or secondary education as determined under state law. These hours must be worked during the given tax year.
3. Build An Emergency Fund
No matter how skilled you may be at planning for the future, unexpected expenses or emergencies will inevitably pop up each year. This is why it is so important to set up a fund that you do not touch except in the case of an emergency.
Building up an emergency fund can be hard if you are also paying down debt, but it is key when it comes to smart financial planning. You can automate payments into your emergency fund in a savings account. Even small amounts of savings add up. Try to have three to six months’ of living expenses in your emergency savings account at all times.
4. Track Your Expenses Monthly
It can be easy to charge everything to your credit cards—coffees, lunch runs, Friday afternoon fries from the drive-through, self-care shopping, and more. You can swipe over and over and not even realize how much you are spending on non-essential expenses each month. By tracking each individual expense monthly, you will be able to see what purchases are needed and what expenses could be spared each month. This will help you to budget from month to month and live financially wiser.
5. Open A Tax Sheltered Annuity To Increase Your Retirement Savings
Opening a tax-sheltered annuity can help you save money for retirement beyond the limits of your pension. According to the IRS, “A 403(b) plan (tax-sheltered annuity plan or TSA) is a retirement plan offered by public schools and certain charities. It’s similar to a 401(k) plan maintained by a for-profit entity.”
Just as with a 401(k) plan, a 403(b) plan lets employees defer some of their salary into individual accounts. The deferred salary is generally not subject to federal or state income tax until it is distributed.
Eligible employers include public schools, colleges, and universities. This plan allows for flexibility in contributions, but investment options are limited to those chosen by the employer, and the plan may have high administrative costs.
6. Pay Down Credit Card Debt
Paying down your credit card debt should be one of your top priorities. Carrying this debt can be crippling, so it should be the first to go. Pay off your card with the highest interest rate first and work your way down from there. When all of your cards are paid off, stay on top of your balance and payments by avoiding charging too much to your cards. Cut down on your purchases by purchasing things you need, rather than things you want.
7. Pay Off Student Loans
In addition to paying off your credit card debts, you should also prioritize paying off your student loans. Pay as much as you can towards this loan debt each month, more than the minimum payment if possible—this will give you more money to spend in the future once the student loan is paid off.
8. Choose Credit Cards Wisely
Try to avoid opening new cards unless you absolutely need to, and if you do open a new card, make sure you pay close attention to the interest rate. Note, whether you are opening a card with a fixed or variable interest rate, and if the rate seems reasonable. Fixed-rate cards are usually a smarter choice, even if the variables on the variable rate card seem low to begin with. If you are tempted by the rewards that come with certain cards, ask yourself if you will really use those rewards.
9. Use Teacher Discounts When Shopping
Teacher discounts are your friend! Use them wherever you can to save more money. Even a small amount saved adds up, and these savings can be used to pay off debts or put towards other necessities.
10. Look For Ways To Earn Money In The Summer
It can be hard to make those summer paychecks stretch. If your school offers summer school classes in the summer, try to sign up to teach those classes to earn some extra money in the months you would typically have off. Another way to earn some extra money in the summer is by offering tutoring services, test prep, or specialized lessons, such as music or language lessons, depending on the subjects you teach.
Need more financial tips for teachers? Give us a call
No matter where you live, we will help you make the most out of your money. At Appreciation Financial, we strive to help educators and public servants make their money work for them, instead of the other way around. With financial planning services ranging from getting out of debt to planning for retirement, our agents at Appreciation Financial have your back. Give us a call to schedule an appointment with our financial professionals today.
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