10 or 12 Month Pay Cycle for Teachers?

I used to work as a teacher. In general, teachers don’t make much money, AND they’re not very good with money.

When you’re a teacher, since teachers often work 10 months out of the year, you’re often presented with the question – Do you want to be paid your salary over 10 months, or over 12?

Meaning, if your salary is 60k, do you want the steady 5k per month for 12 months, or 6k per month for 10 months and no money the last 2 months? (pre tax of course)

So why am I writing this?

I’m writing this post because I know a lot of people who elect for the 5k per month for 12 months because they’re afraid they won’t be able to budget properly with 6k coming in for 10 months and then 0 coming in for 2.

While I understand what these people are saying, this line of thinking is insane. This will keep you poor … forever.

As a general principle, the sooner you get the money, the sooner you can invest it to make it worth more. The later you get your money, the less its worth because of inflation, and because you haven’t been able to use this money to pay off x, y, or z. Your employer is not paying you more money the longer you wait … so what are you waiting for?

If you’re worried about budgeting then I’d say you have much bigger problems. Here are some options I’ve come up with.

1. Take the extra money that you’re getting each month and put it in a high-yield savings account, then use that high-yield savings account over the summer (if you need it) to pay your bills in June and July.
2. If your budget is 3k per month, don’t spend more than 3k per month. Don’t tie your spending to how much is in your bank account at any given time. Tie it to your budget which you made at the beginning of the year.
3. If you really are so poor that you’re worried you won’t be able to budget for those 2 extra months, then you need to be living well below your means to acquire some savings.

If you can’t handle a little extra money each month, and you spend literally everything you get each month right now … that’s a problem. So every time you get a raise or you get more money for the year you just spend it? This makes no sense.

Summary – take the 10 month pay schedule. 12 month pay is for someone who has no self discipline or self control – is that you? Take some ownership over your finances and your life, demonstrate some responsibility, and make the decision that gives you more control over your money.

If you want more control over your money, I would also recommend you checkout my post on Federal Withholding. Odds are your employer is withholding too much from your paycheck every 2 weeks, and then you’re waiting until the beginning of next year to get that money back in the form of a tax refund.

Sam