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Financial Mastery for the Career Teacher

Guest post by: Gene Siciliano

Article Overview: The role of the career teacher is one of the most valuable in our society. We value our teachers so much that teaching consistently ranks in the top 10 most respected professions. Yet the average salary of a career teacher is 17 times less than the average salary of a professional football player. Therefore, it’s critical that teachers create a family financial plan and make it work with what they have and what they’re earning today.

Financial Mastery for the Career Teacher

The role of the career teacher is one of the most valuable in our society. We value our teachers so much that teaching consistently ranks in the top 10 most respected professions.

Yet the average salary of a career teacher is 17 times less than the average salary of a professional football player. Therefore, it’s critical that teachers create a family financial plan and make it work with what they have and what they’re earning today.

Set SMART Financial Goals

You’ve probably heard it a hundred times or more—and depending on the grade you teach, you might even have told your students how important it is to set goals for themselves. We all talk about, and generally appreciate, the value of setting goals for our businesses and our careers.

But how about financial goals as a pattern for your personal life and career? Considering the average salary of a teacher today, even though it has crept up in recent years, you need to make some serious choices if you want to live a full life and enjoy a comfortable retirement.

Goals work best when we make them clear and visible and when we work them with discipline. In fact, there is an acronym I like that conveys the characteristics of goals that work for us—I call them SMART goals:

S = Specific targets: For example, an amount of money in the bank.

M = Measurable: Something you can track so you can keep a record of your progress.

A = Achievable: A goal that is reasonably within reach, albeit a stretch.

R = Relevant: A goal that relates to where you want to go financially.

T = Time sensitive: A specific date when the goal will be met.

Next, separate your goals into short-term goals and long-term goals. I think of short-term as being anything to be accomplished in the next 12 months, and long term as anything that I expect will take longer than one year. Short-term goals should be steps along the way to achieving long-term goals.

For example, a short-term goal might be putting $500 a month into a savings account designated to become a first-home down payment. If the needed down payment is $20,000, then the long-term goal might be to buy that home in about 3½ years ($500 ./. $20,000 = 3 years and 4 months).

I generally suggest that short-term goals should directly support long-term goals (as in this example) so that your day-to-day commitment is to the short-term goals. If you do this, the long-term goals will pretty much take care of themselves.

Here’s something important to keep in mind: You can’t achieve a long-term goal—you can only take small steps today in its direction. Achieve all the small steps and the long-term goal is handled. If $500 a month is the down payment, goal achievement is about saving $500 this month.

How To Do It

Here’s a simple four-step process for developing a plan to meet a specific financial goal:

1. Decide what your goal is and when you want to achieve it. For example, let’s say you want to be living in your own home in five years: a three-bedroom, two-bath home that’s located within 10 miles of your work and two miles of an elementary school.

2. Validate the data you need to clarify your goal from a financial perspective. In our example, that would involve contacting a real estate agent to find out what you should expect to pay for such a home. Let’s say that the typical price for that type of home runs between $200,000 and $350,000, and you decide to shoot for $300,000 as the price you’ll be prepared to pay.

3. Be flexible with your goal. Your broker-to-be also tells you to plan for a 20 percent down payment and closing costs of $3,000. That’s $63,000 you’ll need to have in the bank, so over 48 months, you’ll need to save an average of $1,312 a month. Yikes! That’s never going to happen, you decide, so you need to adjust the goal. This is a normal element of planning—the goal has to appear reasonably attainable for everyone involved to believe in it.

4. Be prepared to revise your goal. Let’s say you extend the timeline to six years and reduce the purchase price to $275,000. Now the front-end money to be saved is only $58,000 over 72 months, which works out to $806 a month, which you decide you can do. Your first goal has been established and reduced to a short-term goal that will lead to the long-term goal.

Put It In Writing

Your family financial plan should outline each key goal that is meaningful for you and put them all down on paper. Your own mind—your logic, feelings and emotions—will tell you if the goal, the amount and the timeline are reasonable and attainable, really relevant to the life you want to create for yourself, and worth working for.

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Article Tags: career teacher, family financial plan, financial mastery
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