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In our memory there will always be that image of how nurses were the great champions of the pandemic. They put the lives of their patients before their own, they faced the pandemic regardless of the fact that Covid-19 is a deadly virus; which was totally unknown to the world.
We have written this article especially for this health union, as a tribute to their hard work; rewarding all your dedication and effort.
So we present to you the 3 most important Financial Tips that every nurse should know to optimize their personal and/or family finances.
Factors that make it difficult for nurses to put their finances in order:
For all professional unions it is complex to put their finances in order; but, in the nursing sector there are the following factors that complicate this work:
- Variable cash flows; some months they can work overtime or at other times if they feel bad their income is highly affected.
- They have to be continually preparing themselves in their sector, having little time to learn about personal finance.
- According to Nursa.com; university studies to be a nurse can reach $55,000; and for postgraduate studies up to about $70,000. This means that many must resort to student loans.
So how do we know that they don’t have much time, let’s see in a simple way what these 3 tips would be.
First tip: Budgets are like diets, everyone starts with excitement and then leaves them
The so-called “financial gurus” will tell you that you must have a budget; but, the reality is that this is like dieting, they all start very well, but along the way the vast majority abandon them. This situation becomes much more complex for nurses with variable incomes and little time; which further complicates the control of your expenses.
In our case, we suggest that you apply the envelope methodology. It is a more modern way than asking you to take the money from the ATM; and, begin to fill in a group of envelopes with a name or an expense item.
How does this methodology of modern envelopes for nurses work?
You must open 3 high-yield savings accounts to take advantage of rising interest rates; and, each time you receive extra income, whether it be for additional hours, shift change or any other recognition; you will transfer that money to these accounts.
You will open these 3 accounts for the following concepts:
- Create an emergency fund; This must have as its main goal, to accumulate the equivalent of one month of your current spending. Then arrive at between 3 to 6 months of your monthly spending. As its name says, you will use it in case of unforeseen events, which will help you standardize your income when you need it.
- A second account for medium-term objectives; for example, the down payment on a car, your next vacation or any other goal you want to cover for the medium term.
- The third account will be the one you will use to feed your longer-term goals, such as retirement or the education of your children. This account will serve as a bridge account so that you can periodically contribute to your retirement plan. If your employer does not offer you a 401K or 403B plan; or, any plan with tax benefits where your employer gives you contributions when you contribute too.
If you wonder what proportion you should save in each one, it should work as if they were 3 glasses of water that you are trying to fill at the same time, the first account should receive a higher percentage, for example 50% and 25% for each of the other two accounts. Once you reach your goal of 6 months of spending in the first account, you can dedicate that percentage to the other two.
Second Tip: Stay away from credit card debt and Buy Now and Pay Later
Everywhere they are saying that interest rates are rising and that has made the rates you pay for the debt you have on your credit cards one of the highest in history, so every dollar you owe can be transformed in a real nightmare.
We know that you want to maintain your quality of life and that as inflation has risen everything has become more expensive and there is always the temptation to use credit cards as a temporary mechanism, but you must also remember that since your income as a nurse is so variable, they can Many things happen that are out of your control, such as a recession, and this will cause the money that comes into your home to decrease, either because your partner may have lost their job or due to any other factor.
And there you would be left with credit card debt that turns into quicksand the more you move or spend the more you sink.
On the other hand, the Buy Now and Pay Later schemes, where they allow you to take what you want only by paying a comfortable fee without interest, can be a real danger for those who do not have a constant income stream.
Remembering that for every two people who enter these financing schemes, one indicates that they cannot pay it and that is where these companies charge interest rates that are much higher than those of other companies. If you can’t buy something today, it’s better not to buy it and as Warren Buffett says: There is no better investment than paying your credit card.
Third Tip: The best time to save for your retirement is now
We know that nurses live in situations of great stress on a day-to-day basis, which together with daily expenses make it seem impossible to save for the future.
But nurses also have the opportunity to see firsthand how so many people in the United States come to the end of their lives with financial problems. According to the National Council on Aging, 1 in 2 adults over the age of 65 live in conditions of financial insecurity.
So if you do not want to be part of this statistic, it is vital that you start your retirement savings as soon as possible and it is relatively simple:
Always remember that you must save and invest this money in accounts that offer you tax benefits, which means that the money grows without paying taxes while it is in these accounts.
- If your job offers a retirement account where the employer will give you a contribution for each contribution you give, try to give the maximum that they allow you to take advantage of the employer making the maximum contribution (401K or 403B Accounts) .
- If, on the other hand, you do not have a retirement plan, it is extremely important that you learn what IRA accounts are, or Individual Retirement accounts with tax benefits.
As a final bonus for nurses we give you the following ideas:
- Beware of burning yourself out at work by demanding too much of yourself, since it can bring you health problems that make you unable to work for a while and have a direct impact on your income.
- Beware of divorce: we know that having such a variable work schedule can mean that many times you cannot be present at home for your family or partner; but always remember to take care of your relationship, see that divorces, in addition to their sentimental cost, are very financially expensive.
- Always have a good professional liability or malpractice insurance.
The world of personal finances has been changing and it is always good to look for a professional who can help you with these issues. Remember that self-medicating financially can be much more expensive than what you are going to pay a Financial Planner. If you do not know where to look for it, in this link you will find a list of CERTIFIED FINANCIAL PLANNERS.
And if you don’t have a Financial Planner you trust, remember that at Advise Financial, we specialize in the nursing profession and we can help you.