Yes, I am one of the millions of teachers who complains I am not paid enough money to support the average lifestyle. But that is not the soapbox I am standing on for this article. My goal today is to share how I manage the (little) money I make and my best tips for budgeting within an educator’s salary. While some of these tips are teacher specific, most of these can be applied to any income…so please keep scrolling.
Many of us have probably heard the 50/30/20 rule (50% of your income on needs, 30% on wants, and 20% on savings). While I do tend to follow this pattern, I like to break down my spending into more specific categories.
At the beginning of every month I adjust my spending categories to match my current needs. This is typically based on what I spent the month prior, what I spent that specific month last year, and any new expenses or changes to expenses. I find it is important if I am entering July of 2023 to look back at July of 2022 to note any specific spending patterns for that month. For example in December I know I will need to purchase Christmas gifts, in August I know my electric bill is going to skyrocket because of the heat, in March I will get my hair cut, etc. Planning for specific fluctuations in my spending per month is imperative for staying within my budget.
Everyone will have a different breakdown of their spending. I think it is important to know yourself and know where you will spend your money. Do not make a budget that is so restrictive it is impossible to maintain. At the same time, push yourself to make cuts and adjustments. The point of budgeting is to understand where your money is going and be happy with how you spend the income you are making. If you find you want more freedom to spend money in one area, you have to find another area to cut your spending. Hence, budgeting.
These are the categories I use personally and the average percent of my income I dedicate to each one; but again, adjust, add, and remove as you see fit:
For me personally, giving is important; it always takes up at least 10% of my income. I tithe to my church and sponsor a child through the Compassion organization.
Second is savings, which, for me, is a little lower than the recommended average. My savings is broken down into three categories: emergency, summer, and yearly goal. I always put the same amount towards my emergency savings every month without fail. This is usually about 5% of my income.
This is a non-negotiable, consistent number that automatically goes into my emergency savings account. Next is my summer savings. This is the educator-specific section of my budget that only applies to teachers. The county I work in only provides a nine-month contract. Therefore, I take a percentage of my paycheck each month and put it into a summer savings account to use during the three months I do not get paid.
Finally I have a yearly goal. At the end of each year I choose a new goal (or sometimes continue the same goal). These are those large-scale items that you want to spend the year saving up for. It can be anything from a house to a car to a vacation to a wedding. Anything long-term for which you need to save. For this category, I have no set percentage because I have no deadline, I literally just dump whatever extra money I have at the end of each month into this savings account. It fluctuates month to month, but even small deposits can go a long way by the end of a year.
Next is the “needs” category, which includes housing, transportation, and food. Housing is approximately 22% of my income, and includes rent, utilities, landscaping, etc. My savings hack for this category is live with roommates. That is my strategy for lowering my rent in an expensive market.
While it is not for everyone, it does save money (and when you are a teacher, it is almost a requirement – unless of course you managed to marry a rich husband, which in that case, good for you). Transportation is approximately 16% of my income, and includes my car payment, car insurance, tolls, gas, maintenance, etc. This is a category I had to adjust this year when my commute to work increased and gas prices increased. Food is approximately 10% of my income, and includes groceries and dining out. I typically have a 40/60 split between groceries and dining out, but that fluctuates month to month. If I spend more on dining out, I try to spend less on groceries and vice versa. Unfortunately, food is the category I overspend most frequently in my budget.
Finally, the personal section or “wants” category is about 27% of my budget. This category varies from month to month because of those random items that come up like gifts (birthdays, weddings, baby showers), hair cuts, Taylor Swift concert tickets, etc. There are also consistent items like streaming services, music, cell phone, vacation, clothing, and spending money. I always give myself general spending money because I know I will buy random things, get my nails done, see a movie, etc. Again, you want to give yourself room within your budget to spend money. If you make it impossible to follow, then you probably won’t.
Going Over Budget
One of the biggest mistakes I feel people make when budgeting is simply tracking their current spending instead of planning their future spending. The point of budgeting is to plan out your future spending, track your current spending, then make changes and adjust by comparing your plan to what you actually spend.
If I see I am consistently overspending in one area, I increase that category and cut from another. It’s about finding areas you do not need to spend as much in order to be able to spend more in other areas that you enjoy. For example, a couple years ago I looked back at my budget and realized I spent an exorbitant amount on Starbucks throughout the year. I love Starbucks, but I did not realize how much of my income was going towards my coffee addiction. When I saw the numbers, I realized I would rather use that money elsewhere. I set a goal for myself to only get coffee on Sundays. This drastically decreased my monthly coffee expense, and allowed me to put more money towards prioritized areas of my budget.
As mentioned earlier, my most frequent overspend is my food budget. In order to tackle this (and I still struggle), I downloaded a budgeting app (personally I used Mint – highly recommend) to better track my daily spending on food. You connect your credit card and it gives minute-to-minute updates on your spending.
You put in your categories and goals, link up your spending, and track your daily charges. I was able to watch what I was spending on food, look at each week, and make decisions to monitor my choices. If I am two weeks into the month and have already reached my dining out limit, I know I need to cook and meal prep and say no to going out. If I only have twenty dollars left in my dining out budget the last week of the month, I know I can hit up McDonalds, but probably not go to a sit-down restaurant three times that week. It helps me be more aware of my spending and make choices that prevent going over-budget instead of being frustrated at the end of each month that I’d overspent again.
More than likely, you will go over budget. When that happens I simply move things around, adjust categories, and make sure I am finding room in other areas to compensate for going over budget.
My final piece of advice is to track your savings account. I have a separate spreadsheet where I keep track of my savings and budget within that account. It is important to earmark money for the future and know how much of your money is earmarked versus how much is purely savings. I track things that need to be paid in the future that I am saving for monthly, like insurance, as well as my yearly goal, my savings for summer, and my emergency funds. I subtract this from the total in my savings account. This way I know the number shown in my savings account is different than the amount of money I actually have saved because some of it is earmarked for future expenses.