Summer break: a financial checklist
Another school year has come and gone—which means it’s soon time to get your summer break on!
Whether your plans are to pack up and head to the cottage, take additional courses to move yourself up the pay grid, or enjoy life after school (i.e. retirement), the end of the school year means it’s also time to ensure your financial ducks are in a row.
To help keep your summer finances flowing smoothly, we’ve put together the following checklist (which includes a few educator-specific points you’ll want to pay close attention to):
Checklist item #1: Contract coming to an end? Make sure to file your paperwork for EI earnings.
If you are an educator whose contract comes to an end at the close of the current school year (and you have not yet signed a new contract for next school year), you may be paid Employment Insurance (EI) benefits. If you qualify for EI, you’ll want to make sure you submit your claim as early as possible so you have uninterrupted cash flow over the summer months.
Click here for the variations to the rules regarding EI and the teaching profession.
Checklist item #2: Newly retired? Don’t forget to apply for medical/dental benefits.
As soon as you hit retirement, you’ll no longer have the medical and dental benefits you had while you were working. This means you’ll have to apply for supplementary coverage.
There are options retired education members can choose from where premiums are deducted directly from your Ontario Teachers’ Pension Plan (OTPP) income: Retired Teachers Insurance Plan (RTIP), and Entente (previously The Retired Teachers of Ontario). You can also choose to go with supplementary coverage outside of these plans. If you choose to go that route, note that you will then be directly responsible for ensuring premiums are paid.
Regardless of which supplementary plan you choose, be sure to explore your options before you retire to ensure uninterrupted benefits.
Note: plan requirements vary. While RTIP no longer requires a medical questionnaire, other plans like Entente do require late applicants to submit and Evidence of Insurability form if you do not apply right away.
Have questions about health insurance and your pension? Get the answers here.
Checklist item #3: Evaluate your summer cash flow
Those of you on 10-month pay cycles face a drop in active income during July and August, making summer the perfect time to review emergency funds and short-term liquid savings.
Summer is also a time education members tend to spend more money, which leaves plenty of opportunities for you to save more.
For example, consider minimizing travel costs this year by going camping—a fun, low-cost option for the entire family.
It also pays to keep an eye out for all of the free events being offered in your area this summer.
TIP: Energy costs tend to rise during the summer. Keep those costs down by turning your thermostat up a few degrees during the day, keeping shades down, and sealing any leaks in your home.
Checklist item #4: Further maximize your summer cash flow by minimizing your debt payments
No matter where you are on the pay grid or how much your pension pays you in retirement, you could always use a boost in cash flow over the summer, right?
If your cash flow is feeling particularly pinched, it could be because the interest on your loans and credit cards is higher than you need to be paying.
That’s where consolidating all of that high-interest debt into one line of credit, for example, can save you some serious money not just during the summer, but also all year round.
Checklist item #5: Make sure your money is still working hard (while you’re on break)
This means instead of keeping your money parked in a savings account, consider investing it in a Tax-Free Savings Account (TFSA).
If you already have money invested in the market, summer is the perfect time to get a mid-year report card from your financial advisor into how those investments are performing.
Schedule your summer portfolio review with an Educators financial specialist.
Checklist item #6: Check in on the progress of your financial goals
Was this the year you were going to save for a down payment to purchase your first home or build up a renovation fund to update your current place?
Or maybe you were finally going to put money away for your future ‘4 over 5’ goal of travelling the world.
Whatever goals you set for yourself back in January—it’s time to see just how far you’ve come toward achieving those goals.
The reason why it’s so important to check your progress before you set off on your summer adventures is so you can see whether or not you need to adjust your budget in order to keep those goals on track.
Checklist item #7: Before you go away, be sure to cover your assets.
Unfortunately, the temperature is not the only thing that tends to rise during the summer months. According to various Canadian insurance companies, July and August also see a rise in burglaries and theft. If you’re planning to be away from home for longer periods of time, you’ll want to check in on your homeowner’s or renter’s insurance to make sure you have the coverage you need for peace of mind while you’re away.
Checklist item #8: Update your passwords.
‘Summers off’ don’t apply to digital hackers and fraudsters, which leaves your financial and email accounts particularly vulnerable if you’re entering passwords from various locations during this time. To protect yourself and your information, it’s a good idea to change up your passwords at the start of every season.
TIP: For added security, generate a long password consisting of numbers and letters (it can be based on a sentence that’s familiar to you).
Checklist item #9: Have access to a financial fund you can tap into for emergencies.
According to Murphy’s Law, “If anything can possibly go wrong, it will—and at the worst possible time.” Not to say that anything WILL go wrong for you over the summer—but to borrow another old adage, “it’s always better to be safe than sorry.” That’s where having an emergency fund can be your saving grace for when life throws a costly wrench your way (such as a medical emergency or critical home repair while you’re away on vacation). Having an emergency fund to tap into will also prevent you from having to rack up debt to pay for whatever unexpected expense may arise.
Need to set up an emergency fund? Have one of our financial specialists reach out to get one started for you.
Don’t have an emergency fund saved up? Get pre-approved for a low-rate line of credit — just in case you need it.
Checklist item #10: Take time to enhance your financial literacy over the summer.
From what you need to know in order to take advantage of a deferred salary leave to how to maximize your pension income in retirement, there are certain details you’ll only learn about from Educators Financial Group. That’s because we’ve been exclusively serving the financial needs and goals of education members since 1975.
