Teachers: How do you get paid?
Oct 23rd, 2007 by Nut
I know some teachers and I’ve always been jealous of their schedules—having three months a year off is one of the big attractions of the profession. At least to me.
But recently I’ve wondered about how they get paid during those three months. Turns out they can choose to have their salary evenly distributed throughout the year (an equal paycheck every week of the year) or they can get a paycheck only during the nine months they are actually working.
Now, the first time I thought about it, I thought that getting a paycheck when I’m relaxing by the pool with a good book would be pretty sweet.
Now that I’ve thought about it, I would choose the other option. I would take the larger paycheck, automatically deposit the excess amount in an high-yield account (ING Direct), and have my money make me some more money during those nine months.
Sure, it takes a little bit (very little) discipline and it can be scary for people who don’t trust themselves to not touch that money, but it’s the most financially nifty way of doing it.
You don’t have to be as organized as this guy from My Money Blog, even though it may feel as complicated to some.
With a salary of $50,000 and a tax bracket of 25%, here is the difference is weekly pay (roughly) of a pretend teacher:
Year-round pay: $721
9 months: $937
Now, according to my calculations, if you took that excess $216 and automatically placed it into an ING account (which is at 4.3% right now), at the end of the nine months you would end up with around $8,800, which is about $220 dollars of interest. Now you have the money you need to live the three months you won’t be working and some extra spending money. Is it worth it?
So, it there are any teachers out there or if you know of any teachers, what do you think about this? I recently asked a teacher and she told me the most popular option is to get paid year round as opposed to running this little scheme. What does this say about teachers and how they view their finances? Strictly speaking, getting paid year round is the most responsible, conservative choice, so can you really blame them?
One of my best friends is a fourth grade teacher and opted for the every-week option. I told her I thought that was nuts, but she says she doesn’t have the discipline to budget.
Get this: she actually makes a little less total (!!!) by having them distribute it evenly through the year. They admit this freely when the give the option; yet most of her colleagues make a similar choice, too.