Can you believe the school year will be starting again soon? Every year it seems like summer goes by faster and faster. As you embark on the new school year, here are some back-to-school financial planning tips to get you on the right track.
1. Replenish your savings account.
It’s not uncommon for teachers to see their savings reserves dip in the summertime. Whether from projects around the house, extra entertainment expenses or back-to-school shopping for your family, now it’s time to replenish. Make sure you have enough to cover 3-6 months of expenses in your emergency savings account.
2. Pay off debt.
If your summer spending went a little overboard or you are still paying off student loans, now is the time to have a solid debt payment plan in place. Start by making a list of each of your debts, including the balance, interest rate, payment date, and minimum payment. Pay as much as you can on the highest rate debt first while maintaining minimum payments on the lower rate debt. Once the highest rate debt is paid, redirect the funds you were paying to the next highest rate and so on.
If you have student loan debt, review the details of the Teacher Loan Forgiveness Program and see if you qualify.
3. Review your benefit options.
If you are married, your employer and your spouse’s employer might be on different fiscal years, complicating your benefit selections. Take the time to review all of your options and have a plan in place to make any necessary adjustments.
Determine if you need any supplemental coverage such as additional life insurance and schedule time to look into your options.
4. Review your retirement plan options.
Are you enrolled in the State Teacher Retirement System (STRS)? If so, are you participating in the defined contribution plan, the defined benefit plan, or both? This can vary based on the types of positions you’ve held in the schools so make sure you know what to expect when it’s time to retire.
I’m sure you know that it’s important to plan for other assets besides your pension in retirement. What are you doing to build wealth outside of your pension? Have you opened a 403-B? Do you have a ROTH IRA? Review your overall retirement plan to make sure you are on track to reach your goals.
5. Update your retirement plan contributions.
Are you starting the year at a higher salary than last year? If so, congratulations! Be sure to update your retirement plan contributions to reflect the change. Increasing your contribution a little bit each year can make a huge difference when it comes time for retirement.
6. Update your beneficiaries.
Have you had any life changes over the last year? If so, make sure the beneficiaries on all of your accounts are up-to-date. Make sure to review your beneficiary selections at least annually.
Let us help