Financial Literacy for Nurses: Budgeting and Paying Down Debt
I never considered myself to be someone who was “financially responsible.” Whenever I had money in my pocket, it was gone faster than you could say savings. These spendthrift habits continued when I graduated from nursing school and became an RN. Not surprisingly, I bought a car as soon as I received my first paycheck. However, I soon realized that fiscal responsibility was a muscle I had to build.
Building Financial Muscles
Financial literacy is the ability to make good decisions with money. I will share how I paid down debt and created a realistic budget. Using these strategies, you can start building your financial muscles as well.
Budgeting
Before you can save and pay down debt, you need to analyze your income and expenditures. Think of it as a patient I & O (intake and output) for your money. Then, look at your budget closely to see if there are any areas you may be able to free up cash.
The first step is to calculate net income from all sources. Your net income is the amount of money you make after paying taxes, health insurance, and other paycheck deductions.
Next step, what expenses do you have?
Some examples may be:
Mortgage/Rent
Car Payment and Insurance
Student Loans
Health Insurance
Utility Bills
Child Care
Credit Card Payments
Retirement/Savings Contributions
Groceries, Gas, Clothing, etc.
Other Routine Expenses
Once you analyze your I&O, what does your budget look like? How much money can you put into savings each month? Financial advisors recommend saving 20% of your net income. If this is unrealistic, then make the goal smaller. Consider saving 10% of your income or a designated sum. Start with an ambitious goal. It is simpler to scale down to a smaller amount than increase it once you have established your budget.
Saving money is essential for a variety of reasons. First, saving gives you a cushion in case of emergencies. For example, you can use those funds to pay for a car repair or take care of a sick family member. Second, your savings allows you to reach long-term goals.
The most critical steps are having a strategy and being consistent. Your budget and savings plan can be made on an Excel spreadsheet or in an app to assist with budgeting. It doesn’t matter how you develop your budget and savings plan. Just take those first steps.
As nurses, we appreciate the benefits of early interventions and consistent treatment to achieve physical wellness. Similarly, your financial wellness depends on the same dedication. Your planning will give you a sense of accomplishment and empowerment.
Easy Wins
Once you have a budget in place, dive in to see where you can potentially save money. Here are some ideas to get started.
Refinance your mortgage if your current interest rate is higher than advertised.
Explore different internet and cable tv options. Often, there are great opportunities to save money with a different internet provider and switching from cable to streaming services.
Compare car insurance options. You can potentially save hundreds of dollars per month.
Set up an automatic monthly transfer to a savings account, and consider setting it up in a way that funds can’t be withdrawn unless physically going to the bank. This makes it more difficult to withdraw the money on a whim.
Consolidate all credit cards into one. Choose the credit card with the lowest interest rate and transfer balances to that card. One credit card allows for easier tracking and has better control of your spending.
Consider making additional mortgage payments each year. You can also round up your monthly payment. These extra payments impact the principal mortgage amount.
Limit the times you eat out, order delivery, or buy convenience foods. A little meal prep and planning can go far when looking to trim your spending.
Additional Savings
As you look toward your financial future, here are some additional measures to save you money in the long term. These may take a little more discipline but can really make a difference in the future.
Open a 529 savings plan for your children’s college fund or look into Prepaid College Tuition. Several states have prepaid college tuition available. This is a good plan if your child plans to attend an in-state college.
Explore the maximum contributions you can make to your 401k or IRA.
Did you receive a tax refund? Great! Transfer the refund into savings or pay toward your mortgage principal.
Implement your Plan
Now that you have created your budget and set goals to pay down your debt, remember to celebrate your small successes..
You are one step closer to financial freedom. The most important message in all of this is consistency. If you can consistently stay within your budget, you will achieve your financial goals.
Often, your financial and professional goals are intertwined, so why not connect with a company that can assist you? EARN can connect you with companies that share your preferences and goals. Schedule your EARN evaluation with a peer RN today. The process is 100% free and only takes 15 minutes!
Written by Jeanine Clancy MEd, BSN, RN
Jeanine has been a nurse for twenty-seven years with an extensive background in perioperative services, school/community health, quality/education, and leadership/administrative roles. Jeanine creates high-quality health content and is a mom(to 4 awesome kids), dog mom, and avid hiker. For more information on her services please visit inspiremedicalwriting.com
