Many teachers have a spouse in an unrelated profession which can help to round out their financial plan. But what happens when both you and your spouse are teachers? You may feel nervous that the benefits you are both receiving are the same. Thankfully, there are a variety of ways that you can use your dual-educator status to your financial advantage. Here are our best tips for managing dual teacher household finances.
The median salary for a high school teacher in the United States is around $58,000 which is close to the median United States household income of $58,000 reported in 2017.
Still, a dollar doesn’t go as far as it use to. Even if both you and your spouse make respectable salaries as educators, expenses can slowly climb—especially if you find you’re spending money on classroom supplies and other teacher necessities that aren’t provided by your school.
Therefore, it’s incredibly important to budget wisely as a dual-educator household. Be realistic about how much you spend on necessary line items such as a monthly mortgage payment and transportation, as well as how much you are likely to spend on things like extra classroom supplies or family trips to the movies. Your income will not fluctuate like those in the private sector who can receive bonuses to pad their pay, so you need to ensure you are living below your means all of the time.
Don’t rely on your pensions
I would love it if every teacher had a pension that was guaranteed to fund their retirement. Unfortunately, this isn’t a reality in our world. Many pension plans are broken. The benefits that you are projected to receive during retirement could shift—and not in your favor.
If both of you are teachers, this is even more critical. Rather than putting all your eggs in a pension-basket, consider diversifying your retirement savings to include 403(b)s and IRAs. If you or your spouse (or both of you!) end up receiving a substantial pension, it will be icing on the cake. If not, you’ll still have an adequate retirement nest egg to last you the length of your years as a retiree.
Build a comprehensive plan
When people think about long-term financial planning, they often focus on investing. But true financial planners will tell you that investing is only 20% of a comprehensive financial plan.
Rather than pouring all your time and energy into investing, work to build a comprehensive financial plan that covers all your bases:
- Day-to-day budgeting
- Tax efficient financial strategies
- Estate planning
- Retirement saving
- Long-term goal saving (like purchasing a house, or sending your kids to college)
- Paying down debt
Pay attention to taxes
When both you and your spouse are teachers, you’re likely pulling in similar incomes. There may be some difference, but in general, your finances (and employer benefits) will be strikingly similar. This means you’ll probably both have a 403(b) available to you.
Putting all your funds into a 403(b) may not be the best strategy for a couple where both partners are teachers. If you expect that your salary will increase with time, which in most cases it will, you could end up hurting your financial life later. As your salaries increase over time, you will move up to a higher income tax bracket—and your retirement savings will be taxed at that higher percentage.
It’s not to say that a 403(b) is a bad resource to use—but, it may be beneficial for you and your spouse to research other retirement savings options.
Plan for the worst
When you and your spouse are both teachers, you need to plan for the worst-case scenario while hoping for the best. You may be concerned that your pension won’t pay out, or that your salary won’t grow at a pace that allows you to contribute more toward your retirement. There may be a situation when state funding falls and both of you are at risk of being RIFfed. By proactively creating a budget and a financial plan now that addresses you and your partner’s goals, you’ll be able to set yourselves up for future success.
Are you a teacher married to another teacher? What are your tips for managing dual teacher household finances? Come and share in our WeAreTeachers HELPLINE group on Facebook.
Plus, tips for navigating second marriage finances.