**This is the Labor Day Post which I offer to my fellow teachers and educators.
I’ve been in the academe for less than two years, but it is easy to notice teachers’ usual money habits.
Before I started teaching, I often hear that teachers are underpaid. Though they have valid points, earning at least P20,000 per month is not as low as you would think.
As I mentioned in my previous posts, some private-sector engineers are paid as little as P8,000 (this is not a typo) in the province, far lower than public school teachers’ salary.
Disclaimer: Personal finance is never taught in school, so, commonly, even teachers don’t know how to manage their salaries properly. Some teachers may find some of the following advice as offensive, so I have to apologize in advance.
Here are 12 Money Advice For Young Teachers:
1. Don’t get into loans as much as possible.
The ‘LONDON’ Lifestyle is widespread for teachers, “Loan dito, loan doon,” that it is almost institutionalized.
Don’t get pressured by your co-workers to take out unnecessary loans just to “feel like you’re an adult.” This loaning habit will eventually be dangerous if not avoided earlier.
Recently, my sister-in-law told me a story about how teachers, after having the P1500 increase in their salary this year, immediately went to the bank to take out another loan.
Another story is about how my cousin, after being accepted in DepEd, was immediately offered by his co-teachers to take out a loan.
There are also incidents when teachers only receive P5,000 as their take-home pay because of their loans.
2. Be careful who you take financial advice from.
Anyone can give financial advice, but not everyone can provide sound financial advice.
It is okay to listen to them to know how they think, just don’t take their advice. Sometimes, it is best to learn from other people’s mistakes to avoid doing them yourselves.
There are so many resources regarding personal finance on the Internet. You just need to look.
You can also follow my blog for more.
3. Learn how to budget your salary.
Budgeting is telling your money where it should go. It also needs to be simple enough that you can follow it. Please read my previous article regarding budgeting.
It is essential to understand that budgeting is not only for married people but for everyone, regardless of their salary. The earlier you learn the habit of budgeting, the better your future will be.
Don’t think of budgeting as depriving yourself. Remember that we are constantly doing that. It just depends whether you want to be deprived today or in the future. The choice is yours.
4. Save up your bonuses.
Teachers have several bonuses throughout the year. For Regular DepEd Teachers, they have the following bonuses, among others:
- Clothing Allowance
- Chalk Allowance
- Proportional Vacation Pay
- Performance-Based Bonus (PBB)
- Mid-year Bonus
- Year-end Bonus
- Cash Gift
- Productivity Enhancement Incentive (PEI)
As a young teacher, you can start saving at least 20% of your bonuses to quickly build your emergency fund.
Don’t immediately allocate your bonuses to non-essential things that are not in your budget.
5. Build your emergency fund for the rainy days.
An emergency fund is a saving worth three to six months of your monthly expenses that you will use in emergency situations. You can read more in this post.
Emergencies can always happen in an unfortunate moment, so it is best to be prepared.
6. Don’t be hasty in buying unnecessary items.
Since you’re already earning money, it will be very tempting to buy things you previously never had. You may think you don’t want to deprive yourself anymore, so you buy cool clothes, the latest gadgets, a motorcycle or a car.
However, you need to assess whether you really need it or just falling into peer pressure.
It is crucial to understand early on that material possessions are temporary, so use your money wisely and for a more life-changing experience.
7. Buy insurance. You don’t know when you’ll going to need it.
Life and health insurance are essential for everyone, especially for breadwinners. However, it can be intimidating since it may feel like it is expensive.
If you are younger, the premium for life insurance is lower, which gradually becomes more expensive as you grow older.
Life insurance brings a slice of peace of mind that if you leave the world earlier than expected, your family will have time to recover financially.
8. Don’t be afraid to say no when someone borrows money from you.
Ironically, the debt culture is very much alive in the Philippine teaching communities, which I find very unfortunate.
So, don’t be surprised if someone suddenly asks to borrow money from you. You may refer to this article regarding lending money.
It is also essential to note that you can turn down even your superiors if they tried to borrow from you.
According to the Civil Service Commission (CSC), it is prohibited for superior officers to borrow money from subordinates or lending by subordinates to their superior officers.
9. Open a separate savings account.
A separate bank account from your payroll is necessary when budgeting. It allows you to separate your personal savings from your other money.
As a personal rule of thumb, I have three (3) bank accounts (2 traditional, 1 digital) – one for my payroll, one for my savings, and another for a high-interest rate account.
10. Pay off your debts fast.
If you don’t have debt, that’s great! You just need to keep it as it is.
However, if you have a debt, especially those that incur interest, you have to pay them immediately.
If you have multiple debts from multiple sources, you should try to apply the Debt Snowball Method of Dave Ramsey.
11. Don’t be a co-maker or guarantor for another person’s loans.
Whoever puts up security for a stranger will surely suffer, but whoever refuses to shake hands in pledge is safe.Proverbs 11:15
Don’t agree to guarantee another person’s debt or put up security for someone else.Proverbs 22:26 (NLT)
How many times have you heard that someone became a co-maker for a friend? However, the time came when the original debtor could not pay for the loan and started hiding.
Now, the co-maker is harassed by the loaning agent to pay for the money that they never received, just because they agreed to be a guarantor for another person.
Don’t fall into this trap – learn to say no.
12. Invest in your future. Don’t just depend on your pension to be.
“Failing to plan is planning to fail.”
Many teachers (and government employees) just assume that their GSIS pension will be enough when they retire. However, they usually haven’t considered inflation.
Though you are earning enough for yourself or your family, you just don’t know how prices of goods and services will change in the future, so you need other money sources once you stop working.
There are so many investment vehicles that you can explore as early as possible. There are stocks, bonds, VULs, Mutual Funds, UITFs, Cryptocurrencies, Businesses, Real Estates, and many more.
Just do your due diligence and research for an investment’s legitimacy.
Money is a great servant but a terrible master.Francis Bacon
Teaching is one of the noblest professions, and I have the highest respect for it. However, we must manage it wisely because if not, we will always live in a constant state of lack.
It is also essential to learn to be content without being complacent and spend more on experiences than stuff.
Another, salary hikes are great, but as long as you don’t know how to manage your finances, any increase will never be enough. You will always find something to spend it on and will always ask yourself, “where did my money go?”
If you are faithful in little things, you will be faithful in large ones. But if you are dishonest in little things, you won’t be honest with greater responsibilities.Luke 16:10