How to save money in ELT

If the title of this post makes you double-take, you read it right. Yes, you can save money in ELT, despite it being a mostly low-paying profession. It might surprise you to hear that plenty of people who earn way more, don’t necessarily save much. In fact, how good you are at saving has little to do with how much you earn. Actually it has everything to do with money management and education. Unfortunately, most of us don’t get any education when it comes to money. But we can all start once we know a few things about how to save money, in ELT or any other field.

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Change the way you think of saving

I lived and taught abroad between 2000 and 2014. Apart from one year in 2010, I never had a high salary. If I wanted to do something, I had to set money aside for it aka saving up money. I paid for my MA in ELT fees and accommodation that way. Then I got a part-time job while I was studying to earn my living money. 

Admittedly, Masters courses were a lot cheaper then and my student house in York was reasonable rent too. But, anyway, we’ve all probably got used to the idea of saving UP for something. Whether that’s travel, or buying a bike, or maybe for a professional self-development reason like the DELTA or an MA, or going to a teaching conference. Then, once that thing is paid for, we go back to spending our disposable income. The money that we saved gets spent and that balance goes to zero again.

But, when you know how to save money, you understand that there’s another way of saving. And that way is saving in general, setting money aside for no specific spending goal. This is the habit that will truly build financial security. And it’s worth starting no matter how little spare money you’ve got. Think of it like training. Saving a tenner a week now, means having the discipline to save 100 a week when your income goes up in the future. 

And, to be honest, even a tenner a week soon adds up and probably won’t feel like scrimping. But, in two years you’d have over 1000 saved.

Make saving more effective

While you’re saving up the money, look for a high-interest account and put that money into until it’s time to pay. Leaving it in your current account not only risks you dipping into it, but you’re missing out on earning interest. Plus, in a high-interest account, you’ll reach your saving goal a bit faster because the interest is getting added. 

Part of knowing how to save money is knowing where to save it. Look beyond your bank for good interest rates as they might not have the highest offer. For example, currently beating all my options in Spain is Wise which has interest-earning “jars” in most main currencies. NB Spain is not currently (as of August 2024) on the list of countries where Wise interest is available. Check the list here to see if your country is included. If not, and you’re in the EEA (European Economic Area) don’t worry as you can get what Wise calls cashback on EUR, USD and GBP accounts which might be higher than the interest rate you can get from a local bank.

A lot of people like to get something paid for as soon as they can so they can tick it off and not have to save any longer. But, unless you need to pay early, e.g. to secure a place or a flight, pay as close to the final deadline as possible. That way the money you’re saving up is earning interest right until the last minute. 

If you do have to pay upfront, ask if they’ll let you pay in instalments. But work out if there’s a charge for that and what interest you’ll earn on the money first! Even if the price is slightly higher, it might be that the interest you can earn will be more than the fee for paying in instalments. 

How to save money using your tax bill

As a freelancer, I have to manage and pay my own taxes. Very few of my clients are businesses that deduct tax before they pay me.

One way I always make some interest is by setting aside money to pay quarterly and annual tax and VAT. I estimate what tax bracket I expect to be in according to my typical earnings. Then, every time money comes in, I deduct that percentage (and any VAT I’ve had to charge) immediately and transfer it to an interest-earning account. Again, for me that’s a dedicated jar in Wise set to “interest”. 

The money stays there for the quarter, making a few euros for me. Then, when the bill is due, I transfer it back to my current account a day or two before. Not only does this mean I won’t have a sudden bill I’m unprepared for, but I’ve made a bit of money on it while I wait. If this seems hard, think of it like you would a salaried job where tax is usually taken before you receive your pay. You’re just doing that for yourself. 

Actively seek out discounts

People who know how to save money get used to asking for discounts whenever they get chance. A discount for paying in cash, a discount for paying in advance, a discount for buying in bulk – whatever reason you can think of because maybe the answer will be yes. Online courses might give group discounts if you can get a few colleagues to sign up. I happily offer a discount for group bookings on my No-Stress Money Plan course – get in touch and ask me!

In some countries, being a teacher will get you special rates on things like books or at certain shops. You might need to join a union, or apply for a card but ask in local teacher Facebook groups if there’s anything like that where you live. Try asking mainstream school teachers, they’re the most likely to know the answer. 

If you’re thinking about professional development, lots of conferences offer bursaries and scholarships. Often, at smaller conferences, speakers attend for free – so, go on, apply! 

And, then, whatever you saved on something you were going to buy anyway, put that money somewhere it won’t get spent.

Money-saving tips that work for everyone

The standard money-saving tips are the same for everyone from Wall Street Bankers to ELT teachers. If a banker spends everything they earn on 5-star restaurants and a private jet, they end up worse off than a teacher who saves a little every month. Hard as this is to believe, it’s key to shoring up wealth and financial security.

So, the main ways to save money in ELT (or any field) are to work out your fixed and optional expenses every month and year. Your main expenses are probably rent, food, bills, transport and internet/phone. Can you cut any of those by changing providers, splitting with a friend, or replacing them with something else?

After you’ve looked for ways to trim essentials, look at your optional expenses and cut things that you don’t even like. For example, I prefer walking home from school but my kids want to take the bus. Now they’re a bit older, I can put them on the bus (they travel for free) while I walk home and get there about 15 mins later than them. Peace and quiet plus a free journey and exercise and it saves me 5 euros a week or so!

Go beyond just saving

A focus on saving up, and even on saving in general, means you’re missing out on other ways to use your money. You basically want all your money aside from your daily needs and your short-term savings goals (the saving UP money) to be working as hard as it can.

High-interest accounts are fairly good at the moment, at least, in some countries and currencies. As I’m writing, in July 2024, interest rates are still high enough in the UK and USA that you can earn as much as 5% on cash. In Spain, by comparison, 2–2.5% is about the highest the banks are offering. Though I’m able to make more than that by using Wise interest on Euro accounts.

But, for the last few years. Interest rates were pathetic and even making as low as half a percent or less was normal. So, it’s a good idea to learn what other tools there are for making money on money you’ve set aside as you will usually find that other methods, like low-risk investing, pay much better over the long term. And then use those tools to grow savings that you don’t need in the short term. 

That’s how you’ll start to build long term financial security, no matter how much you earn. Even better, even as a low earner, establishing a habit of saving money and investing it will mean that, if you become a higher earner, you’ll already have Grade A+ money management skills and the tools and skills to build real wealth.