Teachers are significantly underpaid.
At the moment, the average salary for a teacher in the U.S. is $72,030 according to the National Education Association. The average starting salary for a teacher in the U.S. is $46,526.
Key Points About This Article
- According to Ramsey Solutions’ National Study of Millionaires, teachers rank third on the list of professionals who become millionaires.
- For one, teachers, again most, are a well-educated bunch. Two, many are smart investors that consider what they’re spending.
- The average student loan debt for educators is $55,800.
- Your future is too important to leave to chance. See if you’re on track for retirement by taking this simple quiz and matching with a fiduciary financial advisor serving your area. It only takes a moment, and is totally free. Click here to begin. (sponsor)
Most, not all, deserve much more.
After all, they’ve helped shape the minds of millions of students. Many have to deal with deplorable situations with strict school rules and a lack of student respect from all parts of the country. And yet, they’re some of the most underpaid.
However, teachers are more likely to become millionaires.
In fact, according to Ramsey Solutions’ National Study of Millionaires, teachers rank third. They’re right behind engineers and accountants. Meanwhile, physicians aren’t even in the top five on the survey. In addition, as noted by Ramsey Solutions:
“The top five list came out of a survey of millionaires that drew upon answers from 10,000 participants. The majority — 79% — had not received inheritance. Eight out of 10 had invested in a 401(k) plan. And contrary to expectation, most millionaires surveyed didn’t have high-salary jobs. Instead, 3 out of 4 said they’d created wealth simply by working hard.”
How is that possible?
For one, teachers, again most, are a well-educated bunch. Two, many are smart investors that consider what they’re spending. As also noted by Ramsey Solutions, “They’re also methodical shoppers: 85% of respondents use a grocery list. Nearly a third (28%) always stick to their list, while 57% sort of stick with it.”
Why Didn’t Physicians Rank Higher on the List of Millionaires?
The short answer – debt.
We have to consider other professions, such as physicians may come out of school with higher debt, with less capital to invest.
Consider this. The average student loan debt for educators is $55,800.
Meanwhile, according to the American Medical Association:
“The average medical school-related debt load for students in 2023 was $202,453, according to the Education Data Initiative. About 70% of medical students, per AAMC data, graduated medical school with some student debt in 2023. About 50% of medical students graduated with loan debt that was more than $150,000.” That’s another factor to consider.
So, How Can You Become a Millionaire Like a Teacher?
According to Dr. Kim Moore, an educational leader and military veteran on LinkedIn.com:
One, Start early and leverage compound interest
“The key to building wealth as a teacher is to start saving and investing as early as possible. By taking advantage of compound interest, even small contributions can grow significantly over time. Teachers should consider contributing to retirement accounts like Roth IRAs and 403(b) plans, which offer tax advantages and long-term growth potential,” says Dr. Moore.
Two, Live below your means – This is a great way to free up cash to invest.
As noted a moment ago, teachers, according to Ramsey Solutions: “They’re also methodical shoppers: 85% of respondents use a grocery list. Nearly a third (28%) always stick to their list, while 57% sort of stick with it.”
Three, Diversification is key to success.
It’s important to discuss diversification with your financial advisor with regards to stocks, bonds, real estate, dividend stocks, and other income generating assets. If you’re not familiar with finance, please check with an advisor.
Four, Dr. Moore says you can increase your income with side hustles.
As she noted, “While teaching is a fulfilling profession, teachers can explore side hustles or additional sources of income to accelerate their journey to millionaire status. Tutoring, freelance work, or online teaching are viable options to supplement their primary income. The extra income can be used to boost savings and investments.”
Five, develop a written financial plan.
This is essential. Even finance coach Dave Ramsey will tell you the same.
That includes current income sources, such as Social Security, pensions, investments, and retirement plans. It should also include projected expenses such as taxes, and money set aside for unexpected events, as compared to expected income numbers.
As you near retirement, “begin with the end in mind,” as noted by Stephen Covey, author of The 7 Habits of Highly Effective People.
That includes the consideration of how much you need to spend every year on rent or mortgage unless you’re one of the lucky ones who have paid off your mortgage, healthcare and long-term costs, groceries, medication, transportation costs, and perhaps even pet expenses. Plus, do you expect to travel a lot, and how much do you foresee spending? Maybe you have plans to help your children, and even their children with things such as college tuition.
Six, minimize debt and pay off high-interest loans.
And seven, as any smart person will tell you, seek professional financial advice.
“By starting early, leveraging compound interest, living frugally, diversifying investments, increasing income, creating a written financial plan, and seeking professional advice, teachers can pave the way towards financial independence and work towards their millionaire aspirations,” concluded Dr. Moore.
The image featured at the top of this post is ©Pineapple Studio / Getty Images.