“We do not teach for the income, we teach for the outcome”… right? Isn’t that the popular saying for teachers? We aren’t in it for the money, we are in it for the difference we can make in children’s lives. Well, yes of course! But, we also need to take care of our own lives and that of our children and significant others. In this post, we will explore how to stretch a teacher’s salary.
Our 5 BEST ways to Stretch a Teacher’s Salary
- Paying yourself FIRST!
- Adjusting Withholding appropriately
- No Spend Weeks
- A well stocked snack drawer
- and… Make MORE money
Being a teacher isn’t easy. Especially if you teach in a state like Oklahoma or West Virginia, where there has been strikes in recent years for better pay and contracts. And don’t even get me started about teacher performance reviews! The pressure of being a teacher today is like nothing we’ve ever experienced in this profession {Update: 2020 made it worse!}. All eyes on us, blaming us and on top of it all, we have to always worry about ours and our student’s safety.
When life hands you lemons, you make some d*** lemonade! And teachers, listen up, if you aren’t trying to stretch a teacher’s salary out to be able to save, invest for retirement and build income producing assets. You are doing it wrong! I said it, and I mean it!
So, in between all this craziness and exhaustion. Open up a blog, a book or a podcast and get learning… oh wait, you already did! So, let’s get started then!
Ways to Stretch a Teacher’s Salary (My Secret)
To let you in on a secret, I don’t much care for the quote we started with.
“We do not teach for the income, we teach for the outcome”
Why? Because it’s damaging. Quotes like this, while partially true, can be used to keep us in low growth wages and underpay us for the value added to society.
BUT, you get summers OFF though! HA! (Collective laugh from teachers everywhere) Who gets summers off? There is professional development, curriculum development, room redesigning, summer school and the fact that we think about our students (past and future) all summer long and how we can do better for them. I don’t know of a teacher who truly gets summers off. And for some, summers off means no pay during that time.
- Read about the power of deferred pay as a teacher
Luckily for the Mrs. and I, I have the option to defer pay to receive at the start of the summer (In 2019 and 2020, the wife did as well thanks to a school social work position). I get the equivalent of 5 paychecks paid on June 30th (it’s since been lowered to 4 in 2019) to help me get through the summer. However, this means that I receive less pay throughout the year. Almost like a forced savings account with no interest. In the past, I opted for the full pay during the school year and just saved for the summer and worked in the summer as well. It was okay, money was tight, but we made due. This year, with our son being born, I went the safe route. I deferred my money, but I also, put in place these great ways to stretch a teacher’s salary.
How to stretch a teacher’s salary
For us, we have developed a few tricks and picked up a few from other bloggers to help us get through the lean months and make the school year more relaxed. Below are five ways to stretch a teacher’s salary.
1st Way to Stretch a Teacher’s Salary: Pay Yourself First
First, always pay yourself first. This is forced savings that ensures that you will have to live within your means. That is unless you are an absolute monster of a credit card addict. But for the majority of us reading this post, it’s going to force us to keep our standard of living lower. By doing this, we are creating a nice gap in what we earn and what we spend, and we are doing it before those midday takeout orders when your bagged lunch isn’t quite hacking it.
One of the most powerful ways to implement this strategy is through using pre-tax retirement accounts like a 401(k), 403(b), 457(b), or a Traditional IRA.
Paying yourself first into a pre-tax, qualified retirement account will allow you to stretch your dollars further and get more of your paycheck on your financial ledger and not on Uncle Sam’s or Sam’s Club’s.
Let’s assume you earn $50,000 and fall in the 22% tax bracket for federal taxes (filing single) with the last $9,875 of your income (your marginal tax rate isn’t that high- but we are going to focus just on the chunk being taxed at 22% right now– according to 2020 US Tax rates). Out of that $9,875, you are going to hand over $2,172.50 to Uncle Sam in the form of payroll tax withholding. Leaving you with only $7,702.50 that you get to take home (approximately). Now, let’s say you plan to put 10% of your pre-tax income into a qualified, pre-tax retirement account at work, so $10,000 is coming off the top of your yearly salary. Now, you are only going to have to pay federal income taxes on a salary of $40,000. But,
Here is where the money stretches! Because you dropped your taxable income by $10,000 and you were over the 12% tax bracket by $9,875, you’ve now saved having to pay that $2,172.50 to Uncle Sam! Instead, that $2,172.50 is in YOUR ACCOUNT! And its getting COMPOUND INTEREST! You’ve effectively added $2,172.50 to your net worth, increased the amount of compound interest you can earn, AND you’ve likely lowered your cost of living to make this “paying yourself first” work! A perfect trifecta!
2nd Way: Adjust your Withholding
How often have you got through tax season, and realized you overpaid on your federal income taxes and are getting a bigger refund than you planned? Do you like giving away interest-free loans to Uncle Sam in return for a small chunk of your own money given back to you later? (Yes- I did mention deferring your pay earlier, but that’s to cover a period of no income, not so you can go on a vacation or buy a new IPhone) There’s probably a good chance you’ve experienced this. Maybe you know you can adjust your withholding, and just haven’t made the necessary changes because you are afraid to underpay your income taxes and end up with a bill (oh no!).
- Kiplinger’s explains 10 things you should know about the new W-4
- Nerd Wallet’s Calculator, Tips and FAQs on 2020 Tax Withholding
But realistically, this is one of the easiest ways that you can stretch your salary a bit further. While it will not move mountains, the difference can be just enough to help you pay down debts quicker or invest to build wealth or sock more money away into your retirement accounts.
Ideally, this way is stacked together with the first way to stretch a teacher’s salary- paying yourself first with a pre-tax account. By lowering your overall taxable income, you will want to be sure that your withholding reflects this difference and that you won’t be overpaying. Otherwise, you could be leaving even more money on the table that would be better suited to in your retirement account.
The more you can stack up in your pre-tax retirement accounts the more you will benefit from compound interest!
By adjusting our withholding in 2019, my wife and I were able to get an extra $35 per week out of our paycheck. While $35 biweekly may not seem like much, imagine its power when compound interest is applied!
Let’s see what $70 per month at 7% compounding results in…
- In 5 years… $5,028.24 ($4,200 contribution)
- In 10 years… $12,163.41 ($8,400 contribution)
- In 20 years… $36,655.87 ($16,800 contribution)
- In 30 years… $85,974.31 ($25,200 contribution)
3rd Way: No Spend Weekends (or weeks!)
Third way to stretch a teacher’s salary is to participate in a no spend weekend, or even better, a no spend week!
This can help stretch the variable portion of your budget, where you spend on groceries, eating out, bars, golf, or Target! For teachers, this can be great to do the last week of June or in the week leading up to Fourth of July. My wife and I tried to do a no spend week before and after Fourth of July. We were pretty successful and because of that, we only spent 25% of our budgeted amount on groceries, gas and eating out. That saved us almost $500 that month.
Maybe you can implement a No-spend weekend or week each month or every other month. The power of finding things to do that cost nothing can be freeing and help you to realize how much of our income is eaten up by mindless consumer culture. If you can tackle 25% of your take out budget and permanently knock it off the budget tracker, you are not only going to free up income, but free up time.
It’s important to remember that everything we do involves time. Time is the most valuable asset we have in so many senses. Our money represents our time we’ve sold to earn it (until you start getting interest and dividends that are truly passive!). So, as you think about no-spend weekend think about the fact that you are saving some of that precious time you gave up for your money. And then, double down and find a nice activity that costs nothing to spend with the family on your no-spend weekend.
4th Way: The Snack Drawer
Now, hear me out. This isn’t your typical “latte factor” type suggestion, where by foregoing coffees you will become rich. No, this isn’t actually about getting more money in your account. This is about stretching the value of your dollar so that you can enjoy the midday pick me up that all teachers inevitably need- snacks!
It’s very easy to get carried away with spending when you’re hungry, tired, and emotionally drained. That $2.00 pack of candy in the vending machine and $2.50 can of soda looks SO good right around 1:30pm. I’ve been there, trust me! Maybe I’m still fighting that battle. But adding a well stocked snack drawer (or mini-fridge) with healthy, filling foods AND some unhealthy, indulgent snacks (because c’mon, we all need some chocolate!), and you will find those “little” spends happening less frequently. Then you’ll free up more of your “snack budget” to spend on your snack drawer. That way you will have more money to spend on more volume and substance, and not “settle” for the vending machine food.
See? I told you this wasn’t a “latte factor” suggestion! But, incase you were wondering….
If you applied the scenario above about the withholding of 7% returns, and averaged roughly $15/month saved on your budget…JUST KIDDING. You are a teacher! TREAT YO SELF! SELF-CARE! — Within reason of course! And not at Target! No, just no.
5th Way: Make More Money
Unfortunately, sometimes the best way is to take a second job or find ways to earn more at your school. For some, teaching an extra class, advising a club, coaching a sport, tutoring or proctoring events can net extra income each month. I’ve personally done all of the above and continue to coach basketball, mentor a student, and tutor privately on occasion. I’ve also signed up to proctor and grade tests in August. Together, this adds up to a decent amount extra each year.
So far, the best money choice I’ve made, has been getting a second job outside of education. I started bartending twice a week during the school year and now started serving for this upcoming school year. I worked so far a total of 40 days (about 200 hours) and made a little over $2,000 + about another $2,000 in cash tips (this amount is due to working quite a few slow shifts and I could have earned more).
When I moved to serving I earned quite a bit more each week in cash tips. The great thing about serving instead of bartending was that I can make as much in one shift as I would bar tending for 2-3 shifts. This really frees up more time for me or allows me to ramp up my income growth much faster. Servers where I work make about $35,000 working 25 hours a week year round.
Imagine adding a second job or a side hustle or business that you can do outside of teaching to add more income. The possibilities are endless! Saving is important, learning how to stretch our income as far as we can is too, but earning more can unlock so much more. If you have goals of wanting to pay off debt early, save for retirement or reach financial independence, you probably want to find a way to give your income a turbo charge. And let’s be honest- $10,000 more a year can be life changing!
Conclusion
Beyond the normal money advice of budget, reduce spending and increase your income, I hope that this post gives you a couple more ideas to stretch your teaching salary. Implement a few of these ideas and stack them together to see just how far you can stretch your salary. Because believe it or not, a teacher’s salary can be enough to reach your goals, even building wealth!
For Mrs. and I, the tips on how to stretch a teacher’s salary that I shared above have made a tremendous difference in our ability to survive and thrive on my teaching salary. For the first six months out of graduate school, the Mrs. only worked part time. We got married one month after she got a full time job at a daycare and six months later bought our first house. Fast forward another year or so and our son was born. We were able to do all of these at 25 years old and on a new teacher salary in New York State.
Recap of the ways to stretch a teacher’s salary:
- Pay Yourself First: Especially try to focus on pre-tax retirement accounts (if you aren’t trying to retire early- more later on this). This will take more money out of Uncle Sam’s hands and put it into yours.
- Adjust Withholding: Federal income tax withholding should be periodically re-adjusted so that you can be sure you aren’t leaving too much money in Uncle Sam’s hands. You don’t need that big refund you keep telling yourself that you do (even my wife loves it).
- No Spend Weekends: Plan a weekend or week in your budget and on your calendar periodically where you won’t spend ANY money. Outside of your usual automated expenses, of course! Make sure to plan something fun and exciting that costs you $0!
- The Snack Drawer: Avoid temptation to buy extra food during the work day. Whether its a vending machine, a coffee shop or going out for lunch, if you want to stretch your dollar, make some sacrifices. But, I’m not a savage, so make sure you have plenty of tasty (but healthy) treats on hand to curb those cravings. Buy in bulk if you can to save money.