CEC | Personal You: Living on a Beginning Teacher’s Salary

Personal You: Living on a Beginning Teacher’s Salary

One of the most difficult things for anyone beginning a new career is living on an entry-level salary. It’s all about cash flow—and having enough cash to flow until the end of the month can be very challenging.

You can help manage your finances by developing a budget. A budget gives you the ability to understand if you can meet all of your expense needs. It also helps you avoid taking on too much debt, which prevents you from having financial problems. In the end, it gives you a clearer perspective in regards to your ability to save money after you pay your bills.

Establishing Your Financial Goals
But before you can develop a budget, you must establish your financial goals. What are they and how soon do you want to reach them? Do you want to pay off all of those pesky student loans? Do you want to purchase a new car? Do you want to save up for a down payment on your first home? Do you have credit card debt you need to pay off? Do you want to take a dream vacation or travel the world to explore new places and cultures? Do you want to pay your CEC membership dues and attend the Annual Convention and Expo?
Answers to these questions and many more regarding your personal circumstances will help you determine your personal financial goals.

Creating a Budget
Once you’re comfortable with the goals you’ve established for yourself, there are three stages to completing a budget.

Determine your income: How much money do you bring in on a monthly basis? What is your paycheck amount? How often do you get paid? What income do you have coming in from other sources (i.e., part-time work, contract work, alimony, child support, inheritance, monetary gifts)?

Break down your expenses, spending habits, and current/future debt: What are your expenses on a monthly basis? How much do you spend on discretionary items? What work-related items do you spend money on (i.e., classroom supplies, CEC membership dues, certification classes)?
What if your expenses exceed your income? You will need to cut back on your expenses and/or increase your income. Take a close look at your expenses to see where you can reduce your spending. Consider supplementing your primary job with a part-time position, consulting, freelance work, etc.

Develop a savings strategy: After your expenses, what is left over? Based on your financial and life goals, are you saving enough money to accomplish your goals?

The question is . . . do you have a savings strategy in place that will accomplish your goals in the time frames that you’ve established?

Building an Emergency Fund
Having a savings strategy in place is not only important for meeting your financial and life goals; it also helps you gain some additional financial security for yourself and your family. A great way to do this is to develop an emergency fund. An emergency fund is a slush fund that you put aside to handle those unexpected large expenses that could otherwise break your budget and drain your bank account, even cause you to go into debt. Examples would be the loss of a job or a severe illness. The emergency fund should be large enough to cover the expenses you would incur over a three-to-six month period. The fund will help you temporarily supplement your income.

Strategies for Affording the CEC Convention
Attending CEC’s annual convention is one of the most valuable things you can do for professional development – but it’s also expensive. If going to the CEC Convention and Expo is one of your financial goals, you need to list it in your budget along with your other goals. You will need to do a little homework to determine the total cost for airfare, hotels, meals, and event registration. Distribute this cost over the number of months leading up to the convention. This will allow you to plan wisely by putting away savings on a monthly basis. You want to comfortably meet your goal, rather then place last-minute expenses on your credit card and incur debt due to lack of planning.

A Word about Student Loans
If you are a new teacher, you most likely have student loans you have to pay back, so student loans would be an expense item in your budget. You may qualify for a tax break; there is a good chance that you can take a deduction for up to $2500 a year to offset interest payments that you make on student loans. For 2007, the amount was reduced for joint taxpayers with a modified adjusted gross income between $115,000 and $145,000 and for single taxpayers with a modified adjusted gross income between $55,000 and $70,000. For more detailed information, please review the IRS Publication 970 (2007), “Tax Benefits for Education.” Check out the 2008 version when it is published.

Budgeting for Life
There is no doubt that beginning a life-fulfilling career in education can have its challenges. Establishing your short-term and long-term financial goals will help you develop a realistic budget and saving strategy. Putting an emergency fund in place helps create a safety net to assist with surprise expenses. A budget is not meant to confine you but to make you aware of the inflow and outflow of your money so you can more confidently take financial responsibility of your life. This gives you more time to focus on your successful career as a teacher.

It was David McCullough, author and twice winner of the Pulitzer Prize, who stated: “Real success is finding your lifework in the work that you love.”

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