Nursing is one of the most noble and service-oriented professions that requires dedication, expertise, and attention to detail toward patients. As a nurse, since you are putting so much physical and mental strain on your job to get things done and maintain an exceptional patient-care system, it is critical to prioritize your financial well-being and ensure that you are getting maximum returns from your job to build a secure future.
From your daily savings to planning for 401K, a lot goes into creating a financially secure future. As a nurse, if you plan to get there, we might have some valuable tips to share.
So, without further ado, let’s explore this comprehensive guide discussing financial planning for nurses.
Learn the Art of Budgeting
The average salary of a registered nurse is around $82,750, which is good but not the best package out there. It means that being a nurse, you need to stay in touch with your income and create a solid financial plan that provides you with a secure future. To obtain maximum security, nurses must create a comprehensive budget focusing on income sources and expenditures. How much cash flow are you generating? What are your avoidable and unavoidable monthly expenses? Are you even making savings or need to cut down some of the unnecessary stuff from your life?
The first step towards a financial plan is a sound budget. You must stay on track with your budget and spend accordingly to have enough in an emergency. Most professionals like to create SMART financial goals that help you make well-informed decisions with money and allow you to make capacity for leisurely activities and goals.
The key thing to remember when making a budget is keeping a realistic approach. Don’t create something that neglects your fundamental requirements and becomes very tough to maintain.
Hire a fiduciary financial planner to perform a financial needs analysis before finalizing the monthly budget.
Have an Emergency Fund
Emergency funds are like a shelter — an umbrella for stormy days. As a healthcare professional, no one knows better than you about how helpful emergency funds and savings can be in case of unexpected adversity. You need at least three to six months of basic living expenses such as your rent, groceries, mortgage, installments, and loan repayments in an accessible account. It is a financial safety net that will help you get through economic crises like inflation and unemployment.
A UNFCU rule for budgeting helps you plan for your future better with the 50-30-20 rule. It implies that 50% of your income is supposed to go to your daily expenses and needs i.e., the things you need to survive. We are talking about groceries, rent, and other utilities. The following 30% goes to the things that are not mandatory but you want. It can be a new car or a luxury vacation. The final 20% is your savings, i.e., the emergency fund.
Manage Your Loans
Like many other students, nurses graduate with student loans, and managing this recurring cost is a challenge, given that you are earning a somewhat average amount. Loans are an unavoidable expense therefore, you cannot discard them or remove them from your expense list.
An ideal practice for dealing with student loans is to explore different repayment options to find the one that reduces your burden and helps you smartly pay your loans without financial strain.
‘The Nurses Corps Loan Repayment Program is the official body dealing with both federal and private loans for nursing students in America. This body was created to handle all kinds of loan-related matters for nurses. It repays 60% of the pending loans once the nurses obtain two years of full-time experience. They also pay an additional 25% if you opt for a third year of full-time employment.
However, the Nurses Corps Loan Repayment program doesn’t just provide this facility to everyone. To become an eligible recipient of these funds, the nurse must obtain working experience in a critical shortage facility registered with the institution to get the benefit.
Invest in a Good Insurance Scheme
As medical professionals on the front line of dealing with patients, nurses are very well aware of the importance of health insurance. Look for a plan that protects your income in case of potential health issues and injuries. Your insurance plan covers medical issues that can be super expensive and out of budget if you are trying to pay from your salary. The healthcare plan can include regular checkups, OPD visits, and preventative care measures. Since nursing is a physically and mentally draining profession, you can also opt for an insurance plan that deals with your mental health to manage issues like stress, anxiety, and emotions that make you feel overwhelmed.
Paying regularly for your insurance is vital as it helps maintain financial stability even in the most unforeseen circumstances. Do your research and opt for the most promising nursing liability insurance company that covers your requirements.
Timely Plan Your Retirement
A person who spends his life serving the people deserves a peaceful retirement with no financial burden or concerns. To get there, an efficient retirement plan is mandatory. For nurses, 10 – 15% of monthly income towards retirement is a safe zone if you plan to retire by age 65.
Different types of retirement plans are present for professionals, so you can choose one that fits your needs. According to the Employee Benefits Survey, 90% of professional nurses get retirement benefits such as medical, dental, and vision insurance. However, other plans such as the 401k and 403b, IRAs, and pension schemes can also make your retirement easier.
- 401k and 403b: Automatically deducted from a paycheck, and employers match your contributions. However, the plan is primarily employer-dependent, and you may be penalized for early withdrawals.
- IRA’s: It is an independent plan that is not governed by the employer. You have complete control over how much you wish to contribute to the retirement plan. However, due to the nature of your spending habits, you might be saving less than a 401k/403b.
- HSA: If your future concern is declining health, a health savings account is tax-free for building your retirement plan. People with high-deductible healthcare plans are qualified for an HSA, and it does cause a 20% penalty for early withdrawal, which is restrictive.
- Pension: A specific income flow throughout your retirement that you can start withdrawing as soon as you retire. If you opt for a pension scheme, look for career progression and investments to counter unexpected inflation.
Conclusion
Nurses are the backbone of the healthcare industry. Despite the physically and mentally exhausting lifestyle, nurses are earning an average than expected income. Nursing professionals need to plan their finances in a way that not only helps them save money but also generates a sensible retirement plan.
Regardless of your choices, onboarding a financial planner can help you create a customized monthly budget and an emergency fund. Pay off your loans as soon as possible and invest in an insurance plan to counter emergencies.
