Managing Your Finances as a Nurse

Managing Your Finances as a Nurse

Managing your finances is something schools and universities still neglect. Coming out of college some people don’t know how to open a bank account. A career in nursing can be lucrative when it is done right. The highest nursing salaries also allow you to pick and choose where you will work around the US.

We also did a great episode about how to pay off debt and save money with the DebtFreeNurse

Understand how much you get paid

The 2 biggest things in understanding your pay are; there is a difference in the amount you get paid by your employer and how much you take home. That is called net and gross income.

  • Gross income = Income before taxes
  • Net income = Income after tax (the amount you actually get)

It’s always good to know how much money you make on a yearly basis as well as know your average paycheck total. 

  • If you make $2,800 biweekly then your monthly income is double, $5,600/month
  • That’s $67,200 a year

Your income means that just by yourself you already make above the median household income of the US, according to the median income in 2019. Median household income was $68,703 in 2019, an increase of 6.8 percent from the 2018 median of $64,324.

It is also important to take into account how much you pay for insurance. Most people get health insurance, dental, and vision through their employer. It gets taken out directly from your paycheck. 

Understand your bills

We are entering a more and more subscription-based society. It is a lot harder to keep track of monthly occurring expenses vs a one-time payment basis. What makes it tricky is they offer something low cost with improved tiers which don’t seem like a lot at the time but multiply it for the year and it might add up to $1,000. 

Some staple bills to always keep in mind are; cell phone, internet, home bills (gas, electric, water, rent), Netflix, apple subscriptions, and car insurance. 

Take into consideration your costs of groceries.

Create a budget and stick to it

Knowing your income and expenses is the key to understanding your financial situation. Once you have those understood it is time to create a budget. When making a budget to add up all the money you make from work and add up all your recurring monthly/weekly expenses.

This gives you an idea of how much you make and basic necessary spending. This also gives you an amount left over. You need to budget the money you have leftover when you subtract your expenses from your income. 

The money you have leftover is technical your “spending money”, but that also accounts for money you want to save. This is the money you have to do things outside of food, shelter, water, etc.. Your budget should consist of 2 major things; money to save and money to spend.

It is important to realize what percentage of your money goes where. The best way to make a budget is to break it down into months. X% is devoted to categories like bills, food, restaurants, ets.. Let’s take $4,000/month of income for example

  • 40%: $1,600 in monthly bills (water, loans, mortgage, rent, comedy, internet, cellphone, etc..)
  • 15%: $600 on groceries
  • 25%: $1,000 saving
  • 10%: $400 extra
  • 10%: $400 eating out/leasure

Starting with just breaking down to the major categories gives you an idea of how much money it actually costs to live and how much you really make. Once you have the fundamentals of the budget you can then add other categories like goals, or you can rearrange where your money goes. Once you have a budget you can safely save and spend. It’s about understanding your money not how much money, at least in the beginning. 

Saving and Paying off debt

The biggest and most inconvenient things about being an adult are saving for the now, saving for the future, and paying off debt. The best way to battle debt is to not get in it in the first place. 

The number one rule with paying off debt is to pay the high interest off the quickest because that’s the one that is charging you the most for borrowing. Another good step would be to pay your credit off in full if you have the chance to instead of just adhering to the monthly payments. It is also good to use your leftover income to get used on the loans, trying to make a higher than your regular/minimal monthly payments because you’ll pay it off quicker.  

When it comes to credit cards you should use them like a debit card. Only spend money you have, not money you will have. The majority of the time it is more beneficial to use your credit card so you can earn points and build your credit. Most debit cards don/t offer any perks. 

It is good to save outside of your 401k, most employers over a 401k plan which makes it very simple. You should still have a savings account as your savings for the short term. In your savings, you should also have an emergency fund with at least 3 months worth of living expenses.

Understand your credit score

Your credit score is a three-digit number that can have a big impact on your finances. Lenders are willing to offer borrowers with high credit scores better loan terms and lower interest rates.

As you apply for large loans such as a mortgage, a small interest rate reduction can save you thousands of dollars. Credit scores generally range from 300 to 850

What Factors Impact Your Credit Score?

  • Pay your bills on time, every time.
  • Pay off your debts as quickly as you can.
  • Keep your credit card balance well below the limit.
  • Applying for multiple credit cards
Share This