Guide to Financial Planning for Nurses
You’ve learned a lot in nursing school, but did you learn the essentials of financial planning for nurses? Interestingly enough, it’s easier for some nurses to titrate drips and read ECG strips than to manage personal finances.
You’re not alone if you find financial planning challenging — it’s a common struggle across the country. In fact, 62% of employed Americans are stressed about their finances, affecting workplace productivity, creativity, and morale.
Here’s a glimpse into how Americans handle their finances:
- 53% of employees live paycheck by paycheck.
- 44% of employees don’t pay off their credit cards by the end of the month.
- 27% of employees have less than one month of emergency savings.
- 23% of employees are on track for retirement.
- 33% of women versus 23% of men have saved less than $10,000 for their retirement.
- 29% of men versus 19% of women have saved $350,000 or more.
Luckily, you don’t need to earn an advanced degree to manage your money. This article is your crash course in financial planning for nurses. We’ll dive into budgeting, paying off debt, setting up emergency funds, and planning ahead — everything nurses need for financial peace of mind.
5 Causes of Financial Hardships
As a nurse, ensuring your patients’ well-being is second nature. But when it comes to your own financial health, navigating the waters can be tricky. Let’s take a look at common challenges nurses encounter in their financial planning journeys.
1. School Debt and Personal Debt
Nurses can struggle with school debt because of the high cost of education and entry-level salaries. However, there are student loan forgiveness programs designed to help ease this burden.
Additionally, nurses may struggle with credit card debt. Sadly, Americans owe $986 billion on credit cards only and pay over $163.89 billion in credit card fees and interest a year. This form of debt, often characterized by high-interest rates, can quickly spiral out of control.
2. Lack of Knowledge on How to Manage Finances
Don’t be hard on yourself. The rigorous demands of nursing often leave little time for learning about financial management. Your focus is on clinical skills, not money matters. Plus, unpredictable schedules and overtime can make it hard to prioritize financial education or seek professional advice.
3. Social Stigma around Money
The cultural taboo around talking about money might stop nurses from openly discussing finances or accessing resources for financial education.
4. Medical Expenses
For many Americans, including nurses, medical debt is a major concern — one in three people are affected and 48% owe more than $2,000. The demanding nature of nursing can lead to burnout and other health issues, resulting in hefty medical bills. Even if you have health insurance, it might not cover all costs. In a state like Florida, for example, emotional stress, including work-related PTSD, is not covered by workers’ compensation.
5. Bad Habits
Suppose you picked up vaping due to the stress you experience at work. Your healthcare costs increase by $2,000 per year, and you’ll have to spend around $1,512 to sustain the habit. Unhealthy coping mechanisms such as binge eating and smoking are common among nurses and come with a cost. Additionally, they contribute to developing chronic conditions such as heart disease and diabetes. They can also affect work, causing missed shifts or lower productivity, which means less income and fewer chances for career growth.
8 Steps of Financial Planning for Nurses
1. Assess Your Current Financial Situation
Clarity is key in managing personal finances. To address any issue, you must see it clearly, and money is no exception. Knowing where your money goes is crucial for effective money management.
By tracking daily expenses and analyzing monthly spending patterns, you’ll get a clear picture of where your money is going. It’s recommended to categorize your expenses — it will help you to see your spending patterns better. Some suggested categories include:
- Housing
- Utilities
- Transportation
- Self-care
- Groceries
- Entertainment
- Medical bills
2. Create a Budget
Once you know where your money is being spent, you’re able to better understand how to budget as a nurse.
Create a spending plan that covers all your essential expenses but limits activities that drain your money. Review your bills and expenses to find ways to reduce costs — look for cheaper alternatives, and reduce non-essentials like daily coffee runs or excessive purchases.
3. Pay off the Debt
A cornerstone of financial planning for nurses: Focus on paying off high-interest debt, like credit card debt, while making timely payments on other loans. This might mean temporarily cutting back on non-essentials. You don’t have to completely deprive yourself to the point of misery — don’t trade one extreme situation for another. Prioritize debt repayment while also investing in your emotional well-being. Find a good balance.
4. Create an Emergency Fund
Save up enough money to cover at least three to six months of living expenses to prepare for unexpected events. This is the money you don’t spend unless an emergency arises.
5. Build up Savings
After you’ve paid off your debts and created an emergency fund, start building up cash reserves. If saving a significant amount seems daunting, begin with small, manageable goals. Even saving a small amount regularly can add up over time.
Setting savings goals can be helpful, whether it’s a down payment on a home or a nurse practitioner program you want to take. Having clear goals can motivate you to save consistently.
6. Learn the Basics of Investing
Take courses to become familiar with ways to grow your money. One common mistake people make is starting to invest without understanding what they’re doing. Whether it’s the stock market, cryptocurrency, or real estate, begin by educating yourself about it.
You can explore the below courses on Coursera:
- Finance for Non-Finance Professionals
- Financial Planning for Young Adults
- Fundamentals of Investing
- The Principles of Real Estate
- Trading Basics
7. Plan for the Future
Whether it’s becoming a nurse entrepreneur, getting a master’s degree, creating a retirement plan, or traveling the world, understanding your goals can help guide your financial decisions toward the future you envision.
8. Find a Support System
Handling financial struggles can feel like a mountain to climb alone. That’s why having a support system can be very beneficial. Consider 12-step programs offering free support groups for those facing financial issues:
Looking for a Great Nursing Job?
Now that you know the basics of financial planning for nurses, it’s time to start building your cash reserves. IntelyCare can match you with the best-fitting nurse jobs across the nation, supporting your success — both professionally and financially.