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Teachers' Retirement Planning
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Many teachers are struggling for money, with less money in our pockets than we had 5 years ago. Costs are rising year on year and salaries are not keeping up.
The effect of that is clear to see with 65% of teachers, in my recent survey*, stating that they are worse off than 5 years ago. Although a pay rise has now been agreed in Scotland, many teachers all over the UK are still worrying about money.
However, we are not alone. Public sector workers all over the country have had their pay frozen/capped since 2010, and are also feeling the financial pinch. There are a great many people in professional roles, who are struggling in the current economic climate.
But that’s not all.
We also have the uncertainty caused by Brexit. We have no idea how it is going to turn out, and don't know how it's going to affect the money in our pockets. Will prices go up further? Will taxes rise? How will it affect interest rates? We just don’t know. And that creates more unease, and a feeling of unrest, amongst many who are already struggling to make ends meet. When I came into teaching, I expected to have a good standard of living, enjoy a couple of foreign holidays a year, not have to think about money too much and to be retired on a good pension by 55. Over the past few years however, that sort of lifestyle has become a dream for many teachers, with high rental costs, increasing living costs and more and more pressure on the family purse. In my recent survey only 19% of teachers felt that they were "financially secure and comfortable".
At what cost?
The impact that this is having on the teaching profession cannot be underestimated. Is this adding to the stress levels that teachers are reporting in work? I think so. Teachers who are leaving home, already stressed about their financial situation, are not in a good frame of mind to even be with children all day, never mind do the important job of educating our young people. In my survey, of over 600 teachers, only 19% reported having any positive feelings about money, while others reported feeling worried (54%), stressed (40%) and fearful (21%) about money.
With school budgets being slashed, there is more pressure than ever on teachers to spend their own money on resources for their classes. We know that they are not obliged to do this, but most teachers care deeply about the children in their care and therefore want to provide the best resources for them. All of this contributes to the high level of personal debt seen amongst teachers, with 1 in 4 having debt that worries them. Only 29% of teachers have no debt, outwith a mortgage or student loans. Fifteen percent have unsecured lending of between £5,000-£10,000, with another 19% having debts of over £10,000.
As if this wasn’t enough, households earning more than £25k are expected to contribute to their children’s further education. For a family with two teaching incomes, this amount is around £5k per year per child. With students taking on higher levels of student debt than ever before, it is a concern for many parents who would like to help their children financially through further education, but already have a huge strain on their finances.
But that’s not all!
We then have the rising pension age to consider. Many teachers now have a pensionable age of 68! Yes, 68! Who can really expect us to still be teaching effectively at that age? What child wants to be taught by their granny, or indeed great granny? The pension age is likely to rise further, and we don’t know where it will end. This is creating a huge sense of unease among teachers, with 61% reporting that planning for the future is a major cause for concern for them. Sadly none of this is likely to change anytime soon. People are living longer, the previous pension scheme was unsustainable, so something had to change.
That's the reality!
Teachers are telling me that they have 4 main concerns:
- Unsecured debts
- Lack of savings for emergencies
- Retirement planning
- Providing for their children
So what can they do?
I think it’s time for us to take control of our own situations. It’s time for us to make decisions that work for us and our families and to be in control of our own destiny. We need to look at ways of increasing our income, of decreasing our expenses and find ways of making the money we do have work better for us.
But where do you start?
Firstly I think you have to accept that there is no magic answer. Unless you win the lottery, then there is unlikely to be a miracle cure. (just in case you are hanging out for the lottery, did you know that you are more likely to win an Oscar or become a successful Olympian than win the jackpot? True, apparently!) If you want to take control of your own finances and make them work more effectively for you and your family, then keep reading for specific money saving tips for teachers.
1 Spend less on resources for school
Get creative when it comes to funding your classroom, rather than spending vast amounts of your own cash on resources. If you have a specific project in mind, that you know you will need resources for, then why not check out some of the fantastic funding opportunities available for schools?
2 Make use of specific teacher discounts
There are some great teacher discounts available, so get into the habit of checking to see if you can get a discount each time you shop. For example Countdown cards are available free of charge to members of the EIS and NUT and gives discounts such as 15% off airport parking, 50% off Eurocamp, up to 60% off hotel rooms, 30% discount on Hotpoint appliances. Follow them on Facebook or Twitter, and it will remind you to check before you shop. There are some other great discounts for teachers, so take the time to check them out too.
For a great many teachers, half the problem is just not having the time to manage money effectively. A long day at school, followed by preparation and marking for the next day, coupled with running a household, means that managing money often takes low priority in our lives. This is problematic, because poor money management generally leads to wasted money. Missing payment deadlines can result in late payment fees. Going into unauthorised overdraft can incur hefty charges. Avoid this by following some of these simple tips to speed up your money management.
- De-clutter - get all your paperwork out, sort through it and get it filed. There is nothing more frustrating that having to look for half an hour for that one document!
- Automate as much as possible. Set up direct debits and standing orders for as many things as possible. Think about children's clubs, school lunches and credit card payments as well as the normal phone/utility payments.
- Use 2 current accounts. One for bills, one for spending. This is life-changing!
- Use banking apps, if you don't already. They are amazing for checking your balance on the go, and for making quick payments and transfers.
If you would like more time-saving money tips, then you can find them here.
4 Take action
How many times do we read things online and think "that's a good idea", but never actually do anything about it? Look at all the suggestions above and in the linked blog posts, choose the ones that you like best, and then get started! If you can do one task a day for the next week, then you will find that, over time, you will have more money in your pocket!
I hope that this helps you to start to make some positive changes in your financial life and inspires you to be in charge of your own future.
Please also come and join my Your Money Sorted group, where we chat about money and I share tips and inspiration for making the most of your money.