The Educator Magazine UK May- August 2023 - Magazine - Page 61
Cost-of-living takes
teachers back to school
Simon Rake, head of education at
the Wesleyan Financial Services, the
specialist financial services firm for
teachers, discusses new data about
how the cost-of-living crisis is impacting
teachers and shares practical advice
for managing your money.
Increased costs are affecting us all.
For teachers, who’s pay increases have
trailed behind inflation for years, the
cost-of-living crisis is even more difficult.
Costly energy bills, increasing mortgage
rates and expensive weekly food shops are
all putting pressure on already stretched
pay packets.
Taking action
New research from Wesleyan Financial
Services has revealed that many teachers
are planning on taking action to help
manage their finances through this
challenging time – with some surprising
results.
While most teachers are already
committing far and above their
contracted hours, one in 12 teachers
said they planned to increase their
working hours because of rising prices.
Putting additional pressure on themselves
to work even harder, for even longer.
A further one in ten (8%) said they would
take on more hours in their role to help
boost their income. But perhaps most
surprisingly, one in six teachers said they
would delay their retirement to help them
through the cost-of-living crisis.
As we hear from some teachers that they
expect their financial situation to get
worse in the next twelve months, here
are tips to help teachers manage their
finances.
Put proper plans in place
When money is tight it can feel tempting
to bury your head in the sand, but this
only kicks problems into the long grass,
where they can build into more complex
issues.
Start by looking at your expenditure and
assessing what income you need to cover
those costs. Then, if you can, make cuts to
non-essential spending such as magazine
subscriptions.
For those struggling with day-to-day living
costs this can feel like it won’t make much
of a difference, but even small savings can
quickly add up.
Once this is complete, and you’ve done a
true audit of what you’ve got coming in
and going out, you can start to plan for
your financial future. This might include
paying off a mortgage, saving for special
event or putting more money away for
grandchildren. Once you’ve planned what
you want to achieve you can cost up your
goals and start saving for them.
Even if you’re only able to save small
amounts of money irregularly, ensuring
you are saving in an account that is
earning the best interest rates will ensure
that it maintains its spending power over
the long-term.
Cancelling policies like income protection
might save a few pounds in the short term,
it could leave you exposed should you find
yourself needing to claim on it.
Make the most of investments
What’s more taking advantage of tax
efficient tax-wrappers like ISAs can protect
any saving growth from tax liabilities.
Planning solely for short goals is not
enough, there also needs to be long-term
financial planning for retirement and
having the pension pot in place to grant
the retirement lifestyle you wish for.
Investing your money in a varied managed
fund with exposure to assets likes stocks
and shares in the market, rather than fixed
rate savings accounts also creates a better
chance of outstripping inflation. It doesn’t
have to be complicated. Products like With
Profits Stocks and Shares ISAs give you
access to a managed fund, led by experts
who make the day-to-day decisions on
which companies and assets your money
is invested in.
Typically saving for long-term goals takes
the longest amount of time and requires
the most dedicated course of action –
saving over years for the benefit of your
future self,
Over time, money in the market tends to
perform better than that kept in savings
accounts, and can also outpace inflation,
meaning your money doesn’t lose its
spending power.
With rising costs, it can be tempting to put
these long-term goals on the back burner.
I would advise against this and with the
latest budget announcements the correct
retirement planning is essential,
making the most of using your TPS
pension as part of your long-term savings
goals.
Of course, market volatility is a risk and
there is a chance that that your investment
may go down in value, but you can vary
how much risk you’re prepared to take
with your money.
Remember the three Rs –
retirement, retirement,
retirement
If you’re one of the teachers who is
thinking about delaying retirement, seek
professional financial advice around this
decision – and the implications, first.
Recognise the power of small
savings
Einstein said that compound interest is
the eight wonder of the world, and he
may have been under playing it.
When it comes to savings, having
money locked away, earning even modest
interest, can made a huge difference to its
value over the long-term.
Get financial advice
What’s for certain is that, at a time when
the cost-of-living is continuing to put
pressure on pay packets, teachers will find
there are challenges in balancing their
books.
Getting support from financial advisors
that understand the unique challenges
teachers face can be a huge difference.
Whether you’re starting out or getting
ready to retire, speaking to someone who
understands your financial position, and
how to best maximise it for your
enjoyment is the best way forward.
For more information visit
[https://www.wesleyan.co.uk/teachers].