The “how to” guide to saving for teachers
(Reading time: 3:30)
Saving has perhaps never been more important. Tried-and-true, plus other, more surprising, ways for educators to save.
In the education community this year, incomes have taken a one-two punch – salary disruption due to job action, plus the financial stress caused by COVID-19. Suddenly, saving is taking on greater urgency, as people look to pay off debt, stretch the money coming in, and save for an Emergency Fund.
Increasing the amount you save takes a combination of knowledge, discipline … and some inspiration. Below are some tried-and-true saving strategies to inspire you.
Build a budget.
This is first on any list of how to save. The process entails tracking your expenses, increasing your awareness of where your money is going and where it might be possible to cut to find savings.
Use our handy budget calculator to easily build your own budget.
Cut back on spending.
From price matching to switching to a no-fee chequing account, here are some areas to look at to lower your expenses:
- Memberships, subscriptions, and plans – sometimes called ‘variable expenses’. Are you using that expensive gym membership? Could you do with a less expensive internet or phone plan? Could you share your Netflix account with your adult child? (Here’s a suggestion: while at home due to COVID-19, you went out less often. Instead of restoring your previous-pandemic spending habits completely, consider maintaining the habit of spending less on entertainment outside the home.)
- Make a grocery list, based on what’s on sale, and stick to it. Ask your grocery store to price match. And get into the habit of using coupons. Cutting back on alcohol can save you money, too.
- Look at less expensive alternatives. A streaming service or two like Netflix, Disney+, Crave or Prime can cost less than cable packages. You can still borrow books electronically from the library rather than buying new.
- Classroom supplies. If you need supplies for your classroom, consider first reaching out to other teachers or the parents of your students. Alternatively, the school supply tax credit allows eligible teachers and early childhood educators to claim 15% of up to $1,000 in eligible school supply expenses. That adds up to a maximum tax credit of up to $150 a year.
- Expensive impulse purchases. We’re not talking the dark chocolate bar at the grocery store, but that $300 pair of boots you might not need. Consider putting a 24-hour ‘hold’ on something you want to buy. If you still want it after a day, fine… but it reduces impulse buying.
- Items that include labour. From making that birthday cake at home to mowing the lawn yourself or learning how to do an oil change… ‘do it yourself’ can mean big savings. It’s amazing what you can learn to do on YouTube these days.
- Bank fees. Take a look at the benefits you’re getting from your premium credit card, and if you’re not using them, consider switching to a no-fee credit card. You can also get a no-fee chequing account. (And while you’re at it, maximize your interest with a High Interest Saving Account.)
- Need a car? Consider buying used rather than new. Used car ratings can be found in Consumer Reports or Phil Edmonston’s Lemon-Aid (check your library). And it you’re a two-car family, think hard about whether you could sell one… the average vehicle owner in Canada spends around $9,000 a year to own, maintain and insure their vehicle.
- Paying full price. Develop a habit of asking for a teacher’s discount. Check out online sites like Edvantage, Perkopolis, and Chalkboard Plus+ for a wide variety of stores that offer discounts. Download the Canadian Teacher Discounts: The Ultimate List.
Reduce the amount of interest you pay on debt.
Because of your budget, you’ll know to the penny how much this is. There are ways to reduce your monthly interest payments, such as consolidating your high interest debt into one, low rate line of credit.
In addition, avoid overdue charges by always paying at least the minimum owed, and paying on time. Write down the due date on your calendar, or arrange for automatic payments.
Know how to minimize the taxes you pay.
You may be able to reduce your taxable income by maximizing the tax credits that are unique to educators or contributing the maximum you’re allowed to your Registered Retirement Savings Plan (RRSP). (Note: the amount you can contribute to your RRSP is affected by your OTPP. You can ask your Financial Advisor for details why. Your allowable contribution is provided on your tax assessment from the CRA.)
If you own a home, make it a practice to appeal your property tax assessment.
Use any tax refund you receive wisely.
While tempting to use a tax refund as ‘found money’ (and treat yourself), using your refund to reduce your debt can decrease your monthly interest payments, increase your peace of mind, and save you more in the long run.
Boost your income.
Although not as simple as it sounds, there are ways to boost your income. Many educators take a part time job over the summer or in the evenings. Or you may have a hobby that could be turned into a source of income.
If you have items you don’t use, consider selling them online, at consignment stores, or through a neighbourhood garage sale (as a bonus, you’ll reduce clutter in your home).
Set up a Pre-Authorized Contribution (PAC) Plan with Educators, to make saving automatic.
With a PAC, you arrange for an amount of money (you decide how much) to be automatically withdrawn from your account and transferred to an investment account (you decide how often). You can find out more, here.
Need help putting a savings plan together? We are here to help.
Having served education members since 1975, Educators Financial Group knows the unique elements that make up your financial world. This means no matter where you are on the pay grid, or what your pension income is in retirement, we can provide you with the right strategy to make your money work harder so you can achieve your financial goals, faster.