How Can Nurses Emergency-proof Their Finances?
Lauren Mochizuki is an ER nurse, wife, mother, and financial blogger at www.casamochi.com where she has written about living a great life within your means. Lauren has been featured on Forbes, Wall Street Journal, Yahoo Finance, and Good Morning America, and she is passionate about helping other nurses feel confident with their finances.
* Editor's Note: This blog was posted in early 2020 and comments about nurse furloughs, low census in medical facilities, et cetera may no longer be relevant.
Many nurses are currently experiencing a collective financial crisis. Full-time and part-time nurses are being flexed home or laid-off and furloughed, while some per diems are receiving fewer hours.*
Many medical facilities are encountering
This current situation has revealed a greater concern among many nurses. Many of us have learned that it’s not enough to rely exclusively on job security and bi-monthly paycheck deposits to keep our finances afloat. Having an emergency financial plan is imperative!
Six years ago my husband and I paid off $266,000 of debt in 33 months. I did this while working 2 jobs as an ER nurse. I know what it feels like to be overwhelmed and in debt, anxious from living paycheck to paycheck, and frustrated because it’s difficult to pay the bills, and save money.
Nurses are resilient and are used to challenging situations. We need to ensure that our finances are supporting the best possible life we can live within our means; and not a life where we are required to pick up overtime to sustain our lifestyle.
The following steps took several years for my husband and I to achieve. It’s not about how long it takes you to achieve financial security, but more importantly, that you are taking the necessary steps in that direction.
Revisit a Nursing School Classic: “Who Moved My Cheese?”
Did you read this book in nursing school? If you didn’t, I strongly recommend this book which is about change, and why change is necessary when you want positive outcomes.
The idea of willingly choosing different money habits, and ultimately a different financial identity is the first step to emergency-proof your finances. Ask a friend, or your partner to hold you accountable by checking in with them on a weekly basis.
Intake and Output
As nurses, when we measure intake and output, one of the things we monitor is making sure the patient’s output isn’t consistently greater than the intake, because this is not sustainable, and can lead to dehydration.
There are two important principles to attain a financially secure future: live below your means, and live debt-free. When I was paying off my debt, I quickly realized how I managed my income was more important than how much money I made. Choosing to live below your means gives you options and more importantly, peace of mind.
Like many of you, I wasn’t debt-free. I knew that in order to live life on my own terms, I needed to pay off my $266,000 of debt. Acknowledge your debt, create a sustainable plan to eliminate it. It doesn’t matter how much debt you have, the most important thing is that you start.
When creating savings goals, I encourage you to make them specific, measurable, and have a visual aid to track your progress. There are three types of savings goals that you need to be aware of: short term savings, long term savings, and sinking funds.
I recommend having money in savings for no other reason besides for emergency purposes; $3-5,000 is a great place to start for your short-term savings. If you are experiencing a decrease in hours, I recommend saving immediately for your long-term savings: 6 months of your household expenses.
Sinking funds are categories in your budget that you fund over time, knowing that these are bigger expenses that will need to be addressed one day. Some examples of sinking fund categories include “car fund”, or “house maintenance”.
Get off the Paycheck to Paycheck Cycle
When you are off the paycheck to paycheck cycle, you change from having a reactive financial plan, to a proactive one. I recommend striving to have a one-month buffer, and live off last month’s earned income.
Have a Retirement Plan
Nurses deserve to retire with integrity. The sooner you start planning for retirement, the more likely you can retire on time, or even earlier. Be cautious about depending solely on any pension you will receive. I recommend checking out this free retirement savings calculator, taking advantage of your employer match, and maxing out your retirement account(s).
How's your financial health? Tell us in this discussion.