Apple Teacher“The mediocre teacher tells. The good teacher explains. The superior teacher demonstrates. The great teacher inspires.” — William Arthur Ward

Yesterday, the LA Times printed a story about an ex-teacher that left her fortune to her school district. They write, “A woman (in Davison, Michigan) who spent 29 years as a teacher and counselor at the city high school has left $1.3 million to the school district.”

“Edna Diehl left the money when she died at age 88 in July. The Davison Educational Foundation will hold the money in trust with the interest to be used to fund scholarships. The district expects the interest will generate about $60,000 a year, paying for two years’ worth of college for five students every year.”

That’s a generous gift that Ms. Diehl left behind. What’s even more remarkable is how a teacher amassed this amount of wealth on a teacher’s salary and even after a long life of 88 years, had over a million dollars left over to bequeath to her school district.

Mark C. Schug and William C. Wood wrote an article called Teachers Can Be Millionaires Too. They write, “Teachers often regard themselves as unlikely candidates for financial success, chiefly because they earn low starting salaries. But people of modest means can build wealth over time if they adhere to certain simple strategies.”

They cite this tale of a teacher who started early. “When Pat was getting started in her first teaching job, she didn’t know much about personal finance. She had never studied economics or personal finance in school, and she did not come from wealthy family. But, she was certain”since her teacher’s salary wasn’t all that much”that she would need to act prudently if she wanted to be financially successful. Pat actually became a millionaire. How?”

“Pat began her teaching career at age twenty-two, earning $30,496 ” the national estimated average salary for a beginning teacher, according to the American Federation of Teachers. After she signed her first teaching contract, she met with the school district’s benefits manager. The benefits manager suggested that Pat begin a savings program separate from the teacher retirement plan provided by the state. She advised Pat to have forty dollars every week withheld from her paycheck and put into a mutual fund account. Pat knew this would be hard but she decided that putting forty dollars aside each week would be the best thing to do for her future.”

“When Pat retired, it became clear that her sustained program of investment had served her well. She had become a millionaire on her invested funds”over and above what she would receive from the state retirement fund. Her own retirement account was worth more than a million dollars.”

In getting her lifetime net wealth up to one million dollars, Pat followed these three rules:

1. Start early. “Pat began saving when she turned twenty-two, so she had forty-five years in which her savings could grow.”
2. Buy and hold. “Pat automatically bought a tiny bit more in financial assets each payday with the small amount withheld from her pay. She never touched that account as it grew over the years. Most importantly, she did not withdraw her money and spend it even when times were tough.”
3. Diversify. “Pat’s retirement account was invested in a broad variety of financial assets; it wasn’t put into any one asset.”

The magic isn’t in being a teacher… rather it’s learning to live within your means on whatever income you might generate. MP Dunleavey at MSN Money gives an example of How a Single Mom Makes it on $31K. She writes: “Here are some of the ways she manages to keep body, soul and family together on $553 a week, net pay, including child support.” Click on this link to read the tips. It all boils down to saving as much as possible and spending money only on essentials. Teachers do it. We can learn from them.