Four reasons why leaving teaching might be more affordable than you think
If you’re a teacher, you’ve likely witnessed the headlines about a 6.5% pay increase in June. It might have seemed like a glimmer of hope amidst the ever-increasing cost of living.
However, if you’re contemplating a career shift, this news might have left you grappling with the financial uncertainty that often accompanies such a move.
Research by the National Federation for Educational Research (NFER) warns that leaving the teaching profession could result in a pay cut. They found that teachers that leave the profession saw their pay fall in the first year after leaving and that it took them four years to recover that pay to the level it was when teaching.
But the hit to your net salary might not be as severe as you think. Here are four reasons why leaving teaching might be more affordable than you think.
1) Your pension contributions will decrease
Teachers enjoy one of the most generous employer contribution pension schemes in both the public and private sectors, with employer contributions standing at a substantial 23.8%.
However, while your pension contributions are tax-deductible, the bitter reality is that you’re also making some of the most substantial percentage contributions in the UK job market. This can significantly dent your take-home pay compared to roles with lower pension contributions.
The difference between your teacher pension contribution and the auto-enrolment pension that many other jobs offer could easily amount to a staggering 8.4% of your gross salary. So, you should be carefully assessing the employee pension contributions offered as packages by potential employers.
2) Your tax bill will fall
The extent of this depends on your current teacher salary and the degree of pay drop you anticipate. If your teaching salary places you above the higher rate threshold of £52,270, you’re handing over 40% of your earnings above this threshold in tax. If you’re a seasoned teacher or working in London, transitioning to a lower-paying role will result in a sharp reduction in your annual tax contributions.
If you’re a headteacher or a high-ranking figure in an academy chain, a substantial chunk of your salary is destined for Her Majesty’s treasury. So, the reality is this that a salary reduction maybe partly offset by a reduction in tax.
It’s also worth noting that National Insurance contributions, calculated as a percentage of gross salary, will also decrease in a lower-paying position, providing some financial relief during your career transition.
3) Your student loan repayments may lighten
With 97% of teachers holding a degree the chances are, if you’re actively working in schools you’re shouldering some form of student debt, most likely a student loan. Servicing this debt becomes a necessity if your teaching salary exceeds your student loan repayment threshold. For early-career teachers, this is a pressing concern.
Transitioning to a lower-paying job may see your monthly repayments decline or even vanish altogether, depending on the extent of your salary drop. If your salary falls below your loan type’s threshold, your repayments will be suspended, offering much-needed financial breathing room after leaving the profession.
Some potential employers might even sweeten the deal by contributing to your student loan repayments as part of their benefits package, so it is always worth checking what potential employers have on offer.
4) Childcare costs could plummet
Juggling a successful teaching career and family life is a constant struggle, exacerbated by the high childcare costs. While childcare is a necessity for working parents, the rigid school schedule often forces teachers to spend more for wrap-around care in the form of breakfast clubs and after-school activities.
Most breakfast clubs charge a nominal fee and others run by private concerns can be as high as £15 per session. Whilst research by Money Helper found the average weekly cost of an after school club in England to be £66.75 which equates to £267 a month!
A more flexible career might finally give you the freedom to do the school run and spend more quality time with your children. Plus, you’ll be saving on costs, sparing yourself the feeling that you’re bankrolling the childcare of other people’s kids.
Other factors that will reduce the financial burden
So overall leaving teaching may come with a drop in salary, but the broader financial picture may be more favourable than you initially thought. Don’t forget the potential savings on commuting and travel costs, as well as additional perks like performance bonuses, equity, or share options in your new career.
You might even enjoy dental and medical care as part of your benefits package, offering financial relief and swift access to healthcare when you need it most. And for the first time in your adult life, you might be free to take holidays during term time, saving a small fortune on travel expenses.
Use the Did Teach salary calculator to check your take-home pay
If you’re a teacher contemplating a move outside the classroom, use the Did Teach salary calculator to assess the real difference in your take-home pay between your current teaching job and that of a job outside of teaching.
If you need support with managing your monthly spending and budgeting for career change the Did Teach budgeting spreadsheet can be downloaded for free.
