Rolling Hill nursing

A Beginner's Guide to Personal Finance for the New Nurse Part 1
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16

JUNE, 2020

Depending on what point in your life you are starting your nursing career, this may be the first job you have that you are actually making a livable wage. Chances are, this is the highest paying job you have ever had. But with great power comes great responsibility.

I am under no delusions that nurses are rolling in cash – I WISH. But alas, many of us have student loans, rent, children, and any number of things that demand a large part of our paycheck.

This article is probably going to be the most beneficial for those new nurses who never had a prior career before nursing and who might need a quick introduction to the basics of personal finance.

This is very, very beginner level, but has some really great tips that could be useful to anyone! I am not a financial advisor, I don’t have a degree in this. I just want to share a few things that I have learned along the way. These things are definitely not taught in nursing school. 

I also want to preface this post by saying that any one of the topics below could fill entire books (and they have). This is not a deep dive, this is really just a way for you to dip your toes into these basic personal finance principles. This is just a new nurse’s beginner guide to personal finance.

These are the tips and small changes that I personally made as a new nurse that helped me get my finances on track.

1. Investing

Before you run and scream about the idea investing, just take a deep breath, and read this whole section. 

You might be thinking that investing is something for rich, old, white dudes. Not young people just starting out their careers who don’t have much expendable income. I mean, you’re not wrong about the rich, old, white dudes. But you are wrong if you think investing isn’t for you.

I will tell you right now, the best time to start investing is yesterday. 

One of the most fundamental and important aspects to investing is that the longer your money is being invested, the longer it has to make you money. With investing, time really is money.

Investment accounts are kind of, sort of like savings accounts, but they have the ability to make way more money than a traditional savings account. This also means they will fluctuate more – good and bad.

For investing, it is important to ride the wave. Essentially I am trying to tell you to put some money in there and (almost) forget about it. Without going into too much detail, you might want to check your investments once or twice a year, just to make sure that your portfolio is arranged how you want it.

Otherwise, you really want to just let it be. This is especially true during times when the stock market drops. This is NOT the time to pull out your investments. If you do, you will be losing money. 

The stock market has and will always have ups and downs. No matter how high it gets, it will always drop. No matter how low it drops, it will also rise back up. This is similar to nursing in a way, because it is like a roller coaster with lots of ups and downs! But, my new grad nurse friends, it does get better.

Again, investing is something you should be doing now, to prepare yourself for future financial success. Due to something called compounding interest the longer your money is invested it will actually start making money on that money.

This is a very basic example, but basically if you invest $100 and in that year, you gain 10% interest. You now have $110 in the account, that following year, you will earn 10% on $110. 

So basically investing makes your money work for you to make more money. 

This is why it is so important to try to start investing when you are as young as possible. 

There are so many different aspects to investing, and a great beginner resource is this book (which I have read and learned a ton from): Broke Millennial Takes on Investing by Erin Lowry. It is geared towards the complete novice, has lots of great insight, and defines all of the terms you might need. Honestly, it got me pretty jazzed to want to try out investing.

2. Pump the Breaks

Before you get too gung ho and run out to find a financial advisor, there are a few things to take into consideration. Investing is a good idea for people of any age. However, here are some good reasons to not jump into the investment world just yet:

  • You are struggling to get by, living paycheck to paycheck
  • You don’t have your basic personal finances in order
    • Have an emergency fund for the unforeseen events that life sometimes throws at you
    • Ideally a base of 3-6 months of your most basic financial obligations
  • You have a lot of debt to your name

If the above applies to you and you want a little bit of help in figuring all this out, Erin Lowry has another great book called Broke Millennial: Stop Scraping By and Get Your Financial Life Together.

Lowry’s books provide such a great beginner’s guide to these very complex topics, that anyone can understand. Honestly, these topics are things that really everyone needs to learn at least the basics.

There is one important exception to investing that everyone should take advantage of even if they aren’t ready to really start investing, yet. This exception is: employer matched retirement accounts. 

I’ll be talking more about this in the next section talking about employer benefits.

3. Benefits

I know when you get your first nursing job or even when you are deciding where to apply it might seem like the most important thing is: how much does it pay? 

Obviously, I know that you know that the culture of the hospital, the patient care, and potential magnet status, etc. are all super important to where you want to work as well.

I also know that we nurses have to make a living and the pay is important, too. 

It is important to remember, however, that the hourly pay rate is not the only component of your total compensation. When evaluating and comparing different hospitals, also consider what benefits they offer.

There is a big difference between salary and total compensation.

Some benefits that might be offered include: insurance (health, dental, vision), life insurance, long- and short-term disability, retirement investing plans, and even community discounts.

Occasionally an employer will offer the rare and coveted pension plan. These used to be pretty common, but are now super rare. If you find an employer that offers a pension plan, this is pretty swanky. 

In very, very basic terms a pension plan involves you working for this company for a certain number of years and then when you retire, you continue to get a paycheck even though you aren’t working. 

There are a wide range of ways pension plans work, and it often won’t be a ton of money, but hey, it’s still pretty awesome if you can continue getting paid when you retire.

One of the big benefits I want to talk about in this post are the retirement investment accounts. This could include: 401K, 401A, 403B, 457B, or I’m sure other ones. Those are just the retirement savings plans that I have encountered through my employers.

Specifically though, I want to talk about any employer matched retirement plans. You know how I listed off those reasons why you maybe shouldn’t start investing yet? Well when it comes to employer matched programs, throw those reasons out the window. 

Employer matched accounts are free money. I know, I know. There is no such thing as free money – my entire life my dad always told me, “there’s no such thing as a free lunch” and he is mostly correct. 

Employer matching is one of the rare, rare occasions of actually free money (I mean, besides the fact that you are working, and also have to invest some money for it to be matched… but whatever, semantics).

You may think that you don’t need to worry about retirement now. Even for me, it feels like retirement is so forever away. It is far away, but if you want to have a really sweet retirement life, start saving now.

It may seem like you are “losing money” by putting it into your retirement account. You have to show a little bit of restraint and willpower. Remember, the longer your money is being invested, the longer it has to grow and make you money.

Do you remember the psychology study about delayed gratification where if the unsupervised kid didn’t eat the marshmallow, he/she would get two marshmallows? Be the kid who gets two marshmallows. Heck, if you start saving now, when you retire you could buy as many marshmallows as you can stuff in your cheeks.

One really smart way to do this is to just have it come directly out of your paycheck. This helps because you never actually see the money. You can honestly just pretend it doesn’t exist.

When it is taken directly from your paycheck, you don’t have to think about it. You never see the money in your checking account. You don’t budget it for it, you don’t think about those new Fig Scrubs you could buy with it, or any of that. It just goes off to work for you in the background.

4. EAP

I know these topics have been super dense, and also not super in-depth. There is honestly so much more that goes into all of these things. I am definitely not an expert.

I just want to put a little bug in your ear about becoming a financially responsible adult nurse like you deserve to be! #adulting

Getting a financial advisor might seem like a big crazy step, but don’t forget that many employers offer something called EAP or employee assistance programs. A lot of times this includes a certain number of free therapy sessions (which is amazing), but it also can include financial advising, legal help, and other programs to help nurses. 

I personally have not taken advantage of EAP as far as financial advising goes, but honestly, now that I am writing about it in this post, I think I will! 

If after reading this, you are feeling amped up and ready to try your hand at investing, I highly suggest you check out the resources that your hospital offers.

Financial advisors are invaluable, especially for anyone who doesn’t have a degree in finance or accounting or business, but they can also be pretty expensive. There are definitely cheap to free ways of starting investing. If your hospital EAP offers financial advising then heck yeah, you might as well take advantage of it!

While writing this, I very quickly realized just how HUGE of a topic this really is.

I originally had planned on touching on a few more aspects of personal finance for new nurses.

I have decided to split this into two parts. So stay tuned and subscribe to my newsletter to make sure you check out part 2 next week! 

Next week we will touch on budgeting, credit cards, and the power of direct deposit. 

Please if you have more questions about these topics or any other topics I would LOVE to hear about it and do my best to help you any way that I can.

As always, I would love to connect with you on social!

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A Beginner’s Guide to Personal Finance for the New Nurse Part 2

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