Smart Money Moves For Texas Teachers

Chris Reddick |

As a teacher, it is important to be smart about your money since it impacts your retirement. Here are some smart money moves for teachers to make the most out of their money.

1. Claim your educator tax deduction

When you file your taxes, don’t forget to take your educator tax deduction. It is only $250 above-the-line deduction for items such as classroom supplies that do not have to be itemized, as well as tuition and professional development deduction if you’ve been continuing your education. Qualified expenses are amounts you paid or incurred for participation in professional development courses, books, supplies, computer equipment (including related software and services), other equipment, and supplementary materials that you use in the classroom.

2. Track your expenses to reduce monthly bills

Get your finances in order by recording everything you spend. Keep a detailed spreadsheet and record income and expenditures every month. Remember to record every month as bills are typically due on the first of the month. You can use software such as or You Need a Budget, to track your spending. Once you’ve done that, you will know exactly what you’re spending your money on and where you can find savings. The more you are aware of what you spend the better choices you will make!

3. Build up an emergency fund

Every year, expect that unexpected expenses will crop up, so you need to build an emergency fund. Set up an automatic transfer to savings of a manageable amount each paycheck that you do not touch unless it’s an emergency. It is recommended to have 3 to 6 months of living expenses on hand. The emergency fund is used so you don’t put the unexpected expenses on credit cards and rack up debt.

4. Pay Down Credit Card Debt

For most teachers, this is the top priority to pay down credit card debt. From your credit cards figure out which has the highest interest and pay off that card first. After that card has a balance of zero, move onto the next card with the highest interest. When all your cards are paid off, stay on top of your balance by paying all of your cards off every month.

5. Pay Off Your Student Loans

Be on track to pay off your student loans. Pay as much as you can each month. If you can pay more than the minimum payment this would be better. If you meet certain requirements, you may be eligible for loan forgiveness. As a teacher, you may be eligible for the teacher loan forgiveness program. If you don’t qualify for these programs, then you may be eligible for the Public Service Loan Forgiveness (PSLF) Program, which will forgive the remaining balance of your Federal Direct Loans after 120 qualifying payments over about 10 years.

6. Consider Buying Term Life Insurance

Life insurance is especially important if someone in your family depends on your income to survive. If you have children or other dependents buy term life insurance. With term insurance, you can get enough low-cost coverage to cover expenses in the event of a spouse’s death. Term insurance will give you peace of mind that you or your loved one are taken care of.

7. Make a Will

If someone depends on you for financial support, you should get a will, a trust, and a power of attorney. Typically you would pay an attorney to help you create them. But the cost is well worth it to know your loved ones are protected. There could be other low-cost options for making a will that you should look into as well.

8. Save Beyond Your Pension

Most Texas teachers pay into Teachers Retirement System (TRS) of Texas. TRS has the teacher and their employer make contributions to TRS. In exchange, the state promises a guaranteed payout for life upon retirement.

Payouts will vary based on your length of service and earnings history. But the amounts generally fall short of most teachers' financial needs in retirement. TRS reports that its pension normally only covers about 2/3rds of teacher's salaries in retirement. In addition, almost all public school districts in Texas do not pay into Social Security, so teachers will not normally get this benefit in retirement.

As a result start paying into a 403(b) plan, also known as a tax-sheltered annuity plan. This is a retirement plan for employees of public schools. A 403(b) plan allows teachers to contribute some of their salary to the plan; up to $19,500 per year for those under 50.

So, as early as possible in a teaching career, it's wise to begin setting aside as much money as possible to supplement your expected pension, such as through a defined-contribution plan or 403(b) plan. You will have many choices of 403(b) plans, and it is best to speak to a financial planner to see what plan is the right plan for you.

9. Seek Professional Help

Two good places to start your search for educator-relevant retirement advice are the websites of your teachers' association, your school district human resources department, and the Teachers Retirement System of Texas. Most advice is usually free of charge.

Don’t be afraid to reach out and talk to a fee-only financial planner who is able to look at all of your finances and help you make smart choices with your money.


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*This content is developed from sources believed to be providing accurate information. The information provided is not written or intended as tax or legal advice and may not be relied on for purposes of avoiding any Federal tax penalties. Individuals are encouraged to seek advice from their own tax or legal counsel. Individuals involved in the estate planning process should work with an estate planning team, including their own personal legal or tax counsel. Neither the information presented nor any opinion expressed constitutes a representation by us of a specific investment or the purchase or sale of any securities. Asset allocation and diversification do not ensure a profit or protect against loss in declining markets.

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