Imagine two second-grade teachers. They’re the same age. They started their international careers at the same time. They even began working at their current school together. Both are single. But there’s one difference. Sarah is raising her 12-year-old daughter. Sarah’s colleague, Chelsea, however, doesn’t have children. Which of these two is saving more money?
After speaking about money at more than 90 international schools over the past decade, I came to a bizarre theory. To my eye, it appeared that teachers with children saved more money than teachers without children, when adjusting for equal factors such as age, marital status, and numbers of years teaching overseas. I can hear what you might be thinking, “Andrew, there’s no way that makes sense.” And I get it. After all, children are expensive. You feed them. You clothe them. You take them on vacations. You shell out money for their activities, sports, and passions. Let’s not even talk about braces. And most likely you haven’t stuffed your kids in closets while you take the apartment’s only bedroom for yourself. No, you need larger (often more expensive) accommodations to house your kids, compared to teachers without children.
Fortunately, we now have more than just a theory. International school psychologist, Dr. Jeff Devens, created the first financial survey for international educators. We posted the survey on three Facebook groups, requesting international teachers to complete it. The sites included International School Educators, and Expats & International Educators Financial Advice. To date, 1,149 international educators have completed the survey. And the results mirrored what I noticed, anecdotally, when giving my financial wellness talks. Teachers with children appear to save more money for retirement than teachers without children.
Are you curious to know how much teachers are saving? Before revealing the numbers, let us offer one caveat. A sample size of 1,143 international educators from regions such as Africa, Europe, Asia, the Middle East, South America, and Central America represents the largest financial survey that has ever been done. But it’s still a relatively small sample size.
How much money are international educators saving each year?
For this example, all figures are in USD. The median amount international teachers are saving is $22,500 per year. That differs, of course, with age and marital/partner status. Married couples are saving a household median of $27,500 per year. Some of those couples have to feed their kids each day. Others are sending dollars, euros, or pounds to children while they attend university abroad. Other international educators have launched their now-adult kids into the working world, so those kids no longer receive supplements from mom and dad.
Married couples with children in the home are saving a median of $22,500 a year. Married couples with children out of the home are saving a median of $32,500. The difference accounts for the fact that kids cost money, and by the time children are out of the home, teachers are typically older and better compensated financially.
I’ve long suspected that married couples without children “adult later,” when it comes to saving for their financial futures. Children, perhaps, bring a sense of urgency and responsibility to the mix. Consider married couples without children who have worked overseas for at least 16 years. They save a median of $32,500 a year. In contrast, their married counterparts who have worked for at least 16 years overseas (who have children) save a median of $42,500 per year.
Single educators (more of whom are younger) are saving a median of $12,500. Singles with children in the home are saving a median of $22,500.
Single educators without children, who have been overseas for at least 16 years, are saving a median of $17,500. Their single counterparts with children in the home (and at least 16 years’ experience overseas) are saving a median of $20,000 per year. Singles with at least 16 years of experience overseas, and with children out of the home, are saving a median of $36,250 per year.
Based on the data we have, educators with children appear to save more. That might be a result of the added responsibility place on themselves and their children’s futures. When looking at “outliers,” however, the highest saving couples are those without children (as you might expect). But based on medians in every comparable category, the responsibility of having children appears to juice the urgency of saving money for the future. Typically, people with children save more for retirement than people without children, when adjusting for age, marital status, and equal experience teaching overseas.
How much money do international teachers have saved for retirement?
The median amount international teachers have in retirement savings is $250,000. That differs, of course, with age and marital/partner status.
Married couples have a median of $350,000.
Singles have a median of $125,000.
Married couples with children in the home have a median of $250,000. Married couples with children out of the home have a median of $750,000.
The differences accounted for the relative ages of these couples. Those with children out of the home tend to be older. As such, their investments have also had more time to grow.
Married couples without children have a median of $250,000. But married couples above the age of 51, who don’t have children and have at least 16 years of overseas experience, have median retirement savings of $600,000. Their equal counterparts with children (16+ years of experience overseas, aged 51 and older) have median retirement savings of $1.13 million. Once again, children appear to enhance savings rates and overall net worth.
The wealthiest outliers are still married couples without children. But few teachers without children save as much as their counterparts with kids. So, if you would like to have children, but you fear the cost of raising and educating kids, it might pay to think twice.
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Andrew Hallam is a former personal finance teacher at Singapore American School. He speaks to teachers, students, and parents at international schools around the world. He’s also the author of Millionaire Expat: How To Build Wealth Living Overseas, Millionaire Teacher, and Balance: How To Invest and Spend for Happiness, Health and Wealth.