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3 quick tips for starting the school year on the right financial track

(Reading time: 4:00)

Summer is winding down. A new school year is about to start. Can you hear the bells?

We’re not talking about school bells (although those will be sounding off soon enough). No, we’re referring to those end-of-summer ‘financial wake-up call’ bells.

And the reason for the call is the fact that almost half of Canadians spend more during the summer than any other season—something that you, as an education member, can probably relate to. It’s no wonder that 53% of Canadian parents agree on the fact that back-to-school shopping puts an added strain on their finances.

Lesson plans to finalize, classroom supplies to purchase, and a host of other back-to-school tasks to check off the list. This time of year can be demanding enough without having to stress about your cash flow.

That’s why, regardless of how you spent the past few months, you should now focus on building up your savings for next year and/or knocking down any summer debt. If you also happen to be coming back from leave or have had a change to your contract (e.g. switched from full-time to part-time/occasional), there are also other financial tasks to keep in mind.

To ensure you’re starting the school year on the right financial track, be sure to add these 3 quick tips to your back-to-school ‘to-do’ list:

#1: Take control of your debt.

According to Educators’ Financial Kickstart Challenge, 54% of education members have debt (other than a mortgage) that they would like to get under control. Factor in the free time during the summer months to both do more and spend more, making it far too easy for that debt to get even further out of control by the end of August, if you’re not careful.

To take control of your debt, follow these steps:
  • Build a debt repayment strategy into your school year. Trust us, it’ll be easier for you to stick to a stricter budget during those 10 months when you’re busy working. Here are some debt repayment strategies to get you started.
  • Stick to a cash budget for spending. Studies have shown that people spend 100% more at vending machines and on event tickets and 15% more overall when they use credit. Going ‘back to basics’ with cash (and leaving the cards at home) will make it harder for you to make any hasty splurge purchases.
  • Review your credit report. This is especially important if you’re coming off a summer of traveling. The more places you’ve been using your credit card (across the country or around the world), the greater the risk of credit fraud. Reviewing your credit report at least once a year is a good habit to get into for building and maintaining your credit history.

#2: Get proactive with your savings goals.

If you never did any pre-planning for the school year, the next 10 months would most likely be chaos. The same thing can be said for going through life without any kind of financial plan. However, the more proactive you can be with your savings goals, the better organized your finances will be to cover all of the planned (and unplanned) events that will come your way down the road.

Here are some key savings goals to start planning for now:
  • Next summer: If money has been the constant obstacle to achieving your ideal summer vacation, now’s the time to change that. How much do you need to save? Let’s say your goal is to put away $5,000. Divide that goal across 10 months. That’s $500 a month (or just under $17 a day). Definitely doable—especially once you’ve got your debt situation under control.
  • Pension buyback: If you’re returning from leave, you may want to consider buying back pension credits to ensure you retire with your maximum pension benefit. If you’re a full-time education member paying into OTPP, a year’s pension buyback typically costs between $6,000 and $12,000. While that’s a sizeable amount of money, the good news is that you have 5 years from the end of your leave to pay for it.

Learn more about OTPP and OMERS pension buybacks.

  • Emergency fund: Financial experts, including our very own Certified Financial Planner professionals, recommend saving up enough to cover at least 3 to 6 months’ worth of expenses for any financial emergencies. You only have to look at recent government changes that have impacted the education community to see how important it is to prepare for any sudden financial challenges.

GICs, PACs, TFSAs, and more: here’s how to put your very own financial plan (and savings) into motion.

#3: Remember to take advantage of educator-specific perks.

While being an education member comes with many responsibilities, there are also several perks (or dare we say, ‘edvantages’) that can add up to a great deal of savings. These perks include:

  • Chalkboard Plus+: Offers Canadian teachers a range of discounts on everything from health and wellness, to entertainment and retail. Membership is free, but a school email address is required.
  • Edvantage: A savings program offering discounts and promotions from over 50 partners in travel and entertainment, specifically for Ontario educators. It’s free to join with your Ontario College of Teachers membership.
  • Ontario Teachers Insurance Plan: Serves the insurance needs of Ontario education members and their families.
  • Perkopolis: Offered through the Elementary Teachers’ Federation of Ontario and the Ontario Secondary School Teachers’ Federation, this program provides discounted cell phone plans in addition to home and auto insurance.

BONUS TIP: save those school supply receipts.

Thanks to the Eligible Educator School Supply Tax Credit, eligible teachers and early childhood educators can claim 15% of up to $1,000 in eligible school supply expenses. That adds up to a maximum tax credit of up to $150 a year.

Get on the right financial track for back-to-school (or any time of year) by starting with Educators Financial Group.

With over 40 years of helping education members achieve their financial dreams, we can put together a customized financial plan to suit your specific needs, goals, and budget.

Have one of our financial specialists get in touch with you today.

Sources:
https://www.victoriabuzz.com/2018/07/canadians-spending-money-summer/
https://www.otpp.com/m/thescoop/
https://www.omers.com/Members/Maximize-Your-Pension/Buying-Service/Buy-back-Basics

 

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The information provided is general in nature and is provided with the understanding that it may not be relied upon as, nor considered to be, the rendering of tax, legal, accounting or professional advice. Please ensure to consult your accountant and/or legal advisor for specific advice related to your circumstances. Educators Financial Group will not be held responsible or liable for any losses, costs, damages or expenses incurred by reason of reliance as a result of the aforementioned information. The information presented was obtained from sources that are believed to be reliable. However, Educators Financial Group cannot guarantee their completeness or accuracy.

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