For nurses, managing debt from nursing school, saving for retirement and home ownership, investing in an advanced degree, and keeping an emergency fund in case of injury or illness may be important considerations that factor into personal finance management.
Published June 16, 2022
Personal finance refers to saving, investing, and budgeting your money. For nurses, managing debt from nursing school, saving for retirement and home ownership, investing in an advanced degree, and keeping an emergency fund in case of injury or illness may be important considerations that factor into personal finance management.
While saving money and simultaneously managing debt can be challenging, the good news is that nurse salaries are on the rise from a median salary of $77,330 for RNs and $117,670 for APRNs. Additionally, in comparison to other professional fields, practicing nurses can generally feel confident in their job security and the continued demand for their expertise and skillset independent of changes in the economy.
However, while the essential work of nursing comes with good compensation and relative job security, many nurses struggle with a significant amount of debt, especially those with advanced degrees. The median amount of student loan debt for APRNs is between $40,000-$55,000. For Certified Nurse Anesthetists (CRNAs), who go through seven to eight years of education and training, it’s not uncommon to have between $150,000 to $200,000 in student loan debt. That amount of debt can feel overwhelming, but nurses can take control over their student loan debt by following a few personal finance tips.
For many busy nurses, the major challenge of personal finance management focuses on paying down student loan debt while maintaining a balanced lifestyle.
Defining your goals is a critical first step for managing your personal finances well. Good goals are SMART:
Your goals can be short-term or long-term, and your short-term goals can often help you transition to longer-term ones. Examples of SMART goals might look like:
Try starting with 5 one-year goals, 3 five-year goals, and 2 retirement-oriented goals. Check in with your financial goals annually around tax time to make sure you’re keeping your priorities top-of-mind.
Making a realistic and sustainable monthly budget is key to getting a handle on your personal finances and reaching your goals. A good rule of thumb is to keep yourself accountable with a 50/30/20 budget, in which 50% of your income goes toward your needs (housing, food, and bills), 30% goes toward your wants (travel, entertainment), and 20% goes toward paying down debt, building your retirement, and other savings goals. Note that your minimum monthly debt payments are considered part of you ‘needs’ bucket. Watch this video to see how to build a 50/30/20 budget.
After you’ve defined your goals and mapped out your monthly budget, now it’s time to create a strategy to pay down your debt and work on your debt-to-income (DTI) ratio. Several strategies for paying down student loans faster include:
Your debt-to-income (DTI) ratio is an important factor for lenders considering if they will lend you money. Your DTI is calculated by dividing your total recurring monthly debt payments by your gross monthly income. To estimate your DTI, enter your information below.
Add your information to the left to calculate.
In the high-risk, high-stress field of nursing, it’s important to have an emergency fund for peace of mind. After you’ve created a budget and understand your monthly expenses, you should aim to save between three and six months’ worth of expenses in an easily accessible emergency savings fund. While more than half of Americans have less than 3 months of living expenses saved, you can take small steps to build out your emergency fund over time. To save yourself time, you can set up an automatic monthly transfer from your checking account into savings account on your pay day.
Currently, the average age for nurses is 52, which means you may be planning for retirement sooner rather than later. No matter what age or what career stage you’re at, you have many retirement planning options available to you as a nurse. Depending on your employer, you may have access to different types of plans through work:
Additionally, you can use different types of Investment Retirement Accounts (IRAs) such as a Roth IRA or Traditional IRA to save for your retirement as well. It’s never too early to start thinking about your retirement savings, even if you only start with smaller contributions.
Following these five tips for good management of personal finances can lead to a more positive outlook and help relieve the stress that comes with balancing an intense professional career and your finances. Whether your goals are retiring early, being debt free, or buying a home, you can achieve them by sticking to a consistent personal finance management plan.
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