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I was lucky. As a 25-year-old teaching high school economics many moons ago, I accidentally learned a lot about personal finance. I鈥檝e carried these lessons with me to this day. And though I feel fortunate to have taught a course that included financial literacy, I wish someone had advised me and my colleagues more explicitly about this important subject at the outset of our careers. 

With that in mind, here鈥檚 what I believe all educators should know about managing their money and achieving their financial goals.

Saving for Retirement

Try to save 10 percent of your income each month for retirement. This may be difficult, but time is your financial superpower. Play around with a and see for yourself. No less than Albert Einstein apocryphally said, 鈥淐ompound interest is the most powerful force in the universe.鈥� Though young teachers may not have much money, they do have time鈥攁nd they should harness it to their advantage. 

You鈥檒l invest in a 403(b) plan, which is a tax-deferred retirement savings account for public school teachers much like the private sector 401(k). Crucially, you get to choose where exactly you put your money. Ask your district鈥檚 business office for their list of approved vendors. Selecting a 403(b) provider can be complicated, but know there are many good options, and you have the freedom to decide. 

In addition to defined contribution plans like 401(k)s and 403(b)s, most public school teachers also automatically receive defined benefit plans, known colloquially as pensions.

In retirement, your pension will pay out a percentage of your salary for as long as you live. That percentage is largely based on your age, your years of service, and an average of your highest years鈥� salaries. Thus working for as many years as you can will generally maximize your pension since the system rewards longevity. And when combined with the 10 percent you鈥檝e been saving in your 403(b) account, you will have a great shot at retiring comfortably and maintaining your quality of life. 

Saving for a Home Down Payment

Buying a home can seem out of reach for many teachers, but it鈥檚 not impossible. In addition to the 10 percent for retirement, save another 10 percent for big midcareer expenses like a down payment.

And while you鈥檙e saving, put at least some portion in a mutual fund, where your money is pooled with others鈥� in a combination of stocks and bonds, in order to get a better return on your investment than a low-interest savings account. As with 403(b) plans, there are myriad mutual funds to choose from, some riskier or more conservative than others.

Saving for a Rainy Day

Aim to build an emergency fund of approximately three to six months鈥� income鈥攐r more if you鈥檙e able. No one wants to run out of money or go into credit card debt; plus having a financial cushion goes a long way toward lowering stress and anxiety.

As Morgan Housel writes in , 鈥淟ess ego, more wealth. Saving money is the gap between your ego and your income, and wealth is what you don鈥檛 see.鈥� 

Important Insurance

If you鈥檙e injured on the job, employer-provided workers鈥� compensation will supply you with income and benefits. But what if you鈥檙e injured outside of work, or you fall seriously ill and use up all your sick days? In this case, you鈥檒l be glad you鈥檝e purchased disability insurance. It鈥檚 not terribly expensive and offers invaluable peace of mind. 

Long-term care insurance can be a financial lifesaver as well. Designed to cover services not included in traditional health plans, like assisted living and hospice, it鈥檚 especially important for those who may someday no longer be able to care for themselves.    

And if you have a family, you should also contemplate life insurance. If the worst should happen, they will be protected. 

Also Important

If you do have children, consider investing in a 529 college savings account, which offers a number of tax advantages, starting when your kids are very young. This will help lessen the sting of the already-astronomical costs of higher education. 

Kids or not, you might also think about opening a flexible spending account (FSA) if you have health-related expenditures not covered by insurance. Like 403(b) accounts, FSAs are funded with pretax dollars, which can lead to big savings over time. 

The 50/30/20 Rule

With so much emphasis on saving, it鈥檚 useful to offer a framework for budgeting as well. The 50/30/20 rule says, spend 50 percent of your monthly income on needs, spend 30 percent on wants, and save 20 percent for big purchases and retirement. Though far from a hard-and-fast directive, the 50/30/20 rule is a helpful way of thinking about how we should be spending our money. 

To see where your money is actually going, consider making a budget. There are many great spreadsheet templates online with preset categories and equations, allowing you to enter your income and expenditures with relative ease.

Credit

One of the most important numbers in your life may well be your credit score. There can be slight variations, depending on the credit bureau, but generally, over 800 is excellent, over 740 is very good, and in the 600s is fair to good. Your credit score affects everything from the interest rate you鈥檒l pay on home and car loans to leasing an apartment and even getting a job鈥攕ince landlords and employers can also pull your credit score. 

Maintaining healthy credit requires some discipline but is fairly straightforward to achieve. Use your credit card every month and pay it off in full every month; don鈥檛 鈥渕ax out鈥� or get close to your credit limit; and establish a long credit history. You might also use your credit card like a debit card in order to accumulate points, charging everything you can, then paying it off with the money in your checking account. It鈥檚 surprising how quickly you can accrue benefits like free flights and hotel stays. 

We all have different financial goals, so there is no single correct path for everyone. But all of us should have access to this simple, powerful advice. Ideally, all high school economics students will learn about personal finance, and hopefully now new teachers will, too.