If you haven't heard Creating a Budget That Works For Teachers yet... you might wanna :).
People fall into two categories.
Those who love playing with numbers and planning things. They are probably a natural at budgeting on a teacher’s salary.
The other half actively dread looking at bills and scheduling things out. For you, budgeting on a teacher’s salary can be (or is) overwhelming!
The problem is that everyone needs a plan for cash flow, especially if you’re budgeting on a teacher’s salary.
What makes budgeting for teachers so different?
Since pay structures vary across districts, you are budgeting on a teacher’s salary and for a unique pay schedule!
The first thing I would strongly suggest is to find out your “why”. You need to know why you make the monetary decisions that you do. Is there something you learned in childhood that affects your views? Is there a fear or insecurity? Do you spend as a comfort measure? The answers will be the foundation for budgeting on a teacher’s salary!
It’s so easy to swipe your cards or make a small purchase here or there. This is the reason why I want you to look at your financial transactions for the last 12 months.
Why should you go back that far?
You are looking for any trends that show up, and things you pay for multiple times a year. Comb through old bank statements or get a CSV download file from your financial institution. If you use a tool that aggregates all of your accounts you will be ahead of the game.
I know this next step sounds like a lot of work, but it pays off in the end!
Find a place for every one of your purchases, and add them to an Excel sheet, you’ll find a list of suggested categories among the resources on this website.
While you are looking through your transactions, really think about what you bought. Why did you buy it?
Now, let’s consider the feelings the purchases evoke. Do you remember the item or the event? Are there good memories attached to the experience? If not, it might be time to re-evaluate what you are spending your money on.
Also look for money leaks, such as paying for a magazine subscription that you don’t read.
That was your past cash flow experience.
Now is the time for budgeting on a teacher’s salary. There are so many different formats that you can choose from, such as the envelope system (cash for categories divided into envelopes) to high tech with Tiller or Quicken.
In the past, writing down every purchase was the only way to manage your bank accounts. In other words, you were aware of what was going on with your money in real-time!
I want you to recreate that intentionality with your money!
My clients use a super effective program called You Need A Budget, also known as YNAB.
If you look here on my website, there is a link to get two months for free. Let me just say that we don’t get affiliate fees for recommending this. After the trial, I think it’s approximately $80 for a year.
Why this program?
Once you get the hang of it, you are able to quickly manage your money. You are actively budgeting real money, and categorizing it daily. It’s not reconciling what you have already spent. The transactions are automatic and you get notifications.
The next step is simply a jumping-off point when you are budgeting on a teacher’s salary. Think of your budget in terms of 20/50/30.
Your first priority is 20% for paying down debt and saving (paying yourself first).
Then 50% is for your needs (after taxes). We are talking about mortgage, utilities, and food.
The 30% is for new tires, vacations, hobbies or gifts. You can anticipate and fund items that come up once per year.
The 10 pay system will be broken into 16/17/42/25. The program YNAB makes this process so easy. You simply put in each number as a percentage.
The 16% will be your paycheck during the two months you aren’t paid. 17% is for debt paydown and savings. 42% is for living needs. 25% is in anticipation of once per year purchases.
A tip is to lay out your income and expenses before you build out your budgeting tools. Then on payday, you divvy the money into your categories so every dollar has a job!
If you are paid once per month--spread that into every category.
If you are paid twice per month, you split it up as 50/50, but again, you are covering every category.
Summer is usually the time to vacation. It’s also a great time to create a budget and set your program. Once the school year starts you won’t have the time!
Now is a better time than any.
Hey there! One more (OK, two more things)...
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