Teaching is tough right now, perhaps tougher than ever before. And that means a lot of teachers are dreaming of leaving the disrespect, unreasonable demands, and sometimes toxic work environment that has become the norm in too many schools. While there are many, many questions we need to ask ourselves about what we want to do, and how we can find joy in life again, skipping “boring” questions about money could lead us to a bad place. And the last thing you want to do is go from job stress to financial stress because you didn’t ask important questions as part of your “leave teaching” plan. As a money coach for teachers who want to leave teaching, I recommend finding answers to these- 7 money questions to ask before you exit teaching.
What are my options for insurance?
One of the 7 money questions to ask before you exit teaching is options for insurance. You might have this one covered easily, for example, if you live in a country with national health care or if your partner already carries the family’s insurance. You might also be able to easily transfer your coverage to your partner’s health insurance. A change in job status is usually considered a qualifying event (but double-check to be sure).
If not, COBRA can allow US employees to continue their current coverage by paying the full cost (employee contribution + district contribution), plus an administrative fee. Having to cover the full cost often makes COBRA cost-prohibitive. However in some cases, it could be well worth the money, especially if you have a family member with chronic health issues or if you know you have another job lined up, but you won’t be covered by the insurance for a few months.
A couple of little-known facts about COBRA are that it can extend up to 18 months and even if the former employee doesn’t enroll, their dependents can. If you want more of the nitty-gritty, check out the Labor Department’s website here or call 1-800-444-3272.Another option is healthcare.gov. Depending on your situation, coverage could be more affordable than you think, so if insurance is the primary obstacle to leaving, check it out before deciding you don’t have options. You can check and compare plans even without logging in. Some of the plans I found were surprisingly reasonable, even for a family of 5.
One of the best ways to find answers about insurance is by talking to an insurance broker. In the Life After Teaching Facebook group, we have two insurance experts, Jim Moore and Angel Copley who are more than happy to answer questions as they have helped several of our teachers already.
What are my low, medium, and high salary goals?
Another of the 7 money questions to ask before you exit teaching is about salary. A lot of teachers say, “I want a salary to replace what I’m making as a teacher,” without having really thought through all the details. However, if you are truly unhappy, or if your health is suffering, it might be worthwhile to take a temporary pay cut if you can afford it. Or you might be selling yourself short by shooting too low. Also, remember that outside of the education world, you can often advance faster, and that would mean salary increases.
That’s why I recommend a low-end, a medium, and a high-end salary goal. The low-end goal can be determined either by the minimum you need to pay your bills or by the amount that you would allow you to avoid feeling exploited. One of my clients turned down several jobs, even after quitting, because 1) she had a nice nest egg and could afford to be choosy, and 2) the idea of making $15/hour with a Master’s degree left her feeling angry and resentful – not the emotions you want when starting a new chapter of life.
On the other hand, you might just say, “I want out of teaching NOW, and whatever job will pay my bills, that’s where I’ll start.” That’s a perfectly valid option, especially if your workplace is dangerous, abusive, or toxic. Consider that leaving a toxic job can greatly improve your health, cutting down on the cost of doctors, medication, and more.
Medium and high-end goal
A good medium-range goal is to approximate your current salary or to increase it a bit if you feel your vacation time may be different.
A stretch goal should consider that you will need to do some serious work, either updating your credentials or researching roles in which your current skills will be valuable. It will probably also require a longer job search than the other two. One rule of thumb is to allow a month of job search for every $10,000 in salary you expect to earn. Of course, a rule of thumb is just an estimate and mileage will vary, but many teachers underestimate the time required to transition jobs when you are switching careers and looking to make an above-average salary.
Once you have the three goals, you can also combine them to give yourself more options. You can accept your low-end goal and pay the bills while up-leveling your skills and applying to jobs that would be in line with your high-end goal. You also look into adding a side hustle to bring in passive income while you are still teaching.
Do I need to reduce my expenses in preparation for leaving?
If you need to leave quickly, the answer is probably “Yes.” And honestly, it is a lot less stressful to do this before you are in panic mode than if something suddenly changes. Yes, it can seem like a hassle, but reducing expenses doesn’t have to mean depriving yourself. Calling service providers every 6-12 months to make sure you aren’t paying more than you need to can save you thousands. If you feel awkward or don’t know where to start, check out the 5-Day Found Money Challenge I created to help my clients reduce their monthly expenses without giving up ANYTHING they enjoy or value. You can get it free here.
Do I have cash savings just in case?
“Cash is King,” they say, and for good reason. Having cash reserves can fix a LOT of different problems. And while we hope that your transition will go without a hitch, job changes always bring uncertainly.
In a perfect world, you’d have 6-12 months’ expenses in cash before transitioning. But in a perfect world, you wouldn’t NEED to leave teaching, right?
So, here’s the deal: Don’t let the perfect be the enemy of the good. While more is better, something is better than nothing. Take that money you find in the 5-Day Challenge, (and any other extra cash you can find) and use it to improve your financial situation. Unless your health (mental OR physical) is suffering, you should plan on a MINIMUM of 2 months’ expenses saved. At that point, you may choose to shift any extra to paying down credit cards.
How will leaving impact my retirement?
I’m not even going to attempt to give specifics here. There are simply too many complex variables. I’m just going to say, talk to your state’s Teachers’ Retirement program, and make the best decision you can with the information you have now. You can also talk to a financial advisor for other options.
I will remind you, though, to keep a real perspective on retirement. Retirement is important, yes. But while having an extra $1000 a month in retirement is a big difference, it isn’t going to be worth much if excess stress has destroyed your health.
Who is counting on me financially?
One of the biggest of the 7 questions that you should consider before you leave teaching is the people who count on you. This doesn’t mean, “Who do I enjoy supporting or hope to leave money in my will?” Who actually requires your financial support? Do you have a disabled child, spouse, or other dependent? If so, a career change is still possible, but it’s good to err more on the side of caution. A larger cash reserve, a solid plan for health insurance, and reduced debt can reduce the uncertainty and risk of leaving a job like teaching for a different one, especially during a recession. On the flip side, you may be in a much better position financially, emotionally, and physically for those counting on your financial support if you do leave teaching.
Are there penalties for breaking a contract in my district or state, and can I avoid them?
Some places require a set notice period, while others include some serious penalties for leaving in the middle of a school year. In some states, the decision can impact the status of your teaching license and may even carry a financial penalty of up to thousands of dollars. Knowing what your specific situation is before you resign is essential.
With that said, there may be ways to avoid penalties. If your mental or physical health is suffering, speak with a doctor. Having a doctor’s confirmation that the job is causing health issues may allow you to avoid penalties. Additionally, if your role has changed, you may be able to use that to argue that they have already modified the agreement, so the contract isn’t enforceable.
Remember, this is a “MAY”. Please do your own due diligence and check the laws in your state. It could be worthwhile to have a consultation with an employment lawyer. And BTW, NEA members are entitled to 2 free 30-minute consultation sessions per contract year with a lawyer who is part of their referral program. You can learn more here.
There you have it – 7 money questions to ask before you exit teaching. Always remember that the advice given here is general, and you should consult your own financial professional with questions about your specific situation.