Financial Planning for Nurses – The Challenges and Benefits

As a nurse, you’re used to putting other people’s needs in front of your own. Whether you work in a hospital, nursing home, urgent care center, doctor’s office, or another facility, you spend long hours taking care of others.

The demands of your job may cause you to put your personal needs, including financial planning, on the backburner. Since your finances can significantly impact your current life and future, you must prioritize them. By doing so, you can relieve unnecessary stress and lead the happy, fulfilling life you deserve.

Challenges of Financial Planning for Nurses

While you’re a pro at patient care, you may be unfamiliar with how to plan for your financial future. After all, nursing education does not usually offer financial literacy, requiring you to learn it on your own or hire a professional. Further, a nursing career comes with unique opportunities and challenges important to consider when building a financial plan.

Fortunately, we’ve prepared this guide to help you get started. This guide paired with professional support from a financial advisor can help you reach your goals to enjoy life more with less money stress. We’ve included questions you can ask a financial advisor throughout this article to help you make the most efficient use of your time and get straight to the topics most relevant for you as a nurse.

Financial Planning for Nurses

There are several topics to consider and questions you’ll have when planning your finances as a nurse. Here’s a brief overview of several of them.

Living Well on a Typical Nursing Salary

According to the Bureau of Labor Statistics, the median annual salary for a registered nurse in 2019 was $73,300. Whether you earn around that figure or more or less, you can lead a comfortable lifestyle. While you may not have the funds to buy a fancy home, drive a luxury car, eat out every night, and travel whenever you feel like it, you’ll be able to allocate your money to the things most important to you.

To live well on a nursing salary, you’ll need to prioritize your wants and needs. If driving a nice car matters to you, for example, you may have to save money on other areas of your life such as housing or education.

Here are a few questions a financial advisor can help you answer to make the most of your nursing income:

  • How much should I have saved today to retire comfortably at my desired retirement age?
  • If I don’t have enough saved today, what steps can I take to get back on track?
  • What financial planning insights have you gained working with other nursing clients like me?

Repaying Your Nursing Student Loans

To become a registered nurse, you earned a nursing diploma or degree at the associate’s or bachelor’s level. Of course, your degree type and where you went to college will dictate how much student loan debt you may have accumulated. On average, nurses graduate with anywhere from $40,000 to $55,000 in student loan debt.

No matter how much student loan debt you have, it’s important to develop a repayment plan that’s right for you.  In many instances, it may be preferable to repay the loan as quickly as possible so you can focus on other financial goals like buying a house, saving for college, or paying for retirement.

In other instances, a very low-interest rate on your student loans may make it preferable to prioritize the payoff of another debt or savings strategy. A financial advisor can work with you to determine the best payoff strategy for your individual circumstances.

Additionally, there are many loan forgiveness programs available to nurses. If you’re eligible for any of them, it’s very likely worth your time and money to go through the application process. A few of the most popular loan forgiveness programs include the Public Service Loan Forgiveness Program (PSLF) and Nurse Corps Loan Repayment Program (NCLRP).  A financial advisor experienced working with nurses can help you decide which programs to consider and help you navigate the application process.

Making the Most out of Your Nursing Employee Benefits

If you’re a full-time nurse, you likely receive more than just a good salary. Chances are you’re eligible for medical, dental, and vision insurance. Depending on your employer, you may also enjoy long-term care and life insurance.

You may also receive sick time and accrue vacation with each hour you work. If you don’t use all of your vacation days, they’ll either expire or be converted to monetary compensation. In addition, you can enjoy a retirement package like a 401k or 403b, with or without an employer contribution.

We can’t forget one of the greatest nursing benefits employees in other fields may not receive: overtime pay for working scheduled holidays. It’s essential to familiarize yourself with all of your benefits so you can develop a game plan on how to take full advantage of them.

When you meet with a financial advisor, you’ll discuss how to make the most of your employee benefits. Examples of questions a financial advisor will help you answer include:

  • How much of my income should I invest in each of the retirement and savings plans available through my employer to maximize my benefits?
  • How should I allocate the investments in my retirement and savings plans?
  • Are there special considerations about my overtime pay when it comes to my benefits?

Buying a House as a Nurse

If you’re a staff nurse with a consistent paycheck, qualifying for a mortgage to buy a house shouldn’t be a problem. If your income fluctuates because you work extra hours, are a travel nurse, or PRN, it may become more difficult. It’s your responsibility to provide additional documentation that gives a lender a good idea of your entire income.

When it comes time to buy a home, be careful not to overspend. You don’t want to spend the next 15, 20, or 30 years picking up extra shifts and working overtime so that you can make your mortgage payments. A less expensive home may give you greater flexibility in your career.

A financial advisor can help you develop a plan to save for a down payment and establish a price range based on factors like interest rates and taxes to ensure you’ll be able to maintain your desired quality of life.

Saving for Retirement as a Nurse

As a nurse, you may save retirement through a 401k or 403b, depending on whether your employer is a non-profit or for-profit organization. You can determine how much money you’d like to deduct from each paycheck and put it in your retirement account. If you’re lucky, your employer will match your contribution and help you save even more for retirement.

If you don’t receive a 401k or 403b, you can open up a Roth IRA or Traditional IRA and stash your retirement savings there. Your lifestyle and preferred retirement age will allow you to determine the amount you’ll need to save.

When you partner with a  financial advisor, you’ll work together to design a strategy to help you retire when and how you’d like. You’ll discuss questions such as:

  • How much do I need to save to meet my preferred retirement lifestyle?
  • Where should I keep my retirement savings?
  • What is my long-term investment strategy?

Expenses and Deductions: Keep More of Your Income

When it comes to taxes, you’ll have two options: take the standard deduction or itemize your expenses. If the itemizing route makes more sense, you'll be able to write off the money you spend on uniforms like scrubs, equipment such as your stethoscope, licensing fees, and continuing education costs.

Remember that you’ll qualify for more deductions if you work as a 1099 contractor instead of a W2 employer. However, you’ll also be on the hook for paying your own taxes and may not receive the stable paycheck you desire.

If you work with a financial advisor, they can help you address questions such as:

  • Does it make sense to take the standard deduction or itemize?
  • Which deductions am I eligible for?
  • Is it better for me to be a 1099 contractor or a W2 employer?

Your Insurance Needs as a Nurse

Since you work in the medical field, it may make sense to invest in professional liability or malpractice insurance as your employer’s coverage may not be enough. This way, you can protect yourself if you make a mistake or an accident happens when you care for a patient. Lawsuits are not uncommon in nursing, so professional liability insurance may be essential for your peace of mind.

Financial Planning is a Necessity

If you’d like to ensure your commitment to the nursing profession benefits you and your family personally, financial planning isn’t an option. It’s a necessity. With a solid financial plan in place, you’ll be able to keep your debt to a minimum (or even avoid it), make the most out of your monetary earnings and benefits, and most importantly, meet your short and long-term financial goals.

A financial advisor can help you develop a solid financial plan that is ideal for your unique situation. In addition, they’ll motivate you to stay on course and focus on making smart financial decisions.

Enjoy a Secure Financial Future

Once you embark on your financial planning journey, you’ll feel more confident in your finances. You’ll have the information you need to spend your money wisely and live life the way you want to. Financial planning is truly the key to a secure financial future as a registered nurse. It can change your life for the better, as long as you do it strategically.

How To Find The Best Financial Advisors for Nurses

While you may find a great financial advisor to work with through the referral of an acquaintance or whose office you drive by on your daily commute, it's important to consider several factors to improve your odds of hiring the best financial advisor for your individual needs.

As a registered nurse, you may decide the best financial advisor for you, specializing in understanding the unique financial planning challenges and opportunities common among nurses and other healthcare professionals. These specialist financial advisors may hold credentials that demonstrate their expertise along with considerable experience working with healthcare workers that could benefit your own financial planning needs.

Because many financial advisors can work with you online, you're not limited to hiring a financial advisor in your neighborhood when the best financial advisor for you may live hundreds of miles away.

In other words, whether you choose to hire a financial advisor who lives near or far, it may be most important to hire a financial advisor who truly understands your individual needs based on their education, experience, and commitment to helping people just like you.

Question: What is the job outlook for nurses? Answer: According to the Bureau of Labor Statistics, the employment of registered nurses is projected to grow 7 percent from 2019 to 2029, faster than the average for all occupations. Growth will occur for several reasons, including an increased emphasis on preventive care, increasing rates of chronic conditions, such as diabetes and obesity, and demand for healthcare services from the baby-boom population, as this group leads longer and more active lives.

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Brian Thorp is the founder and CEO of Wealthtender, a leading personal finance website helping thousands of people each month find the best financial advisors, coaches, and educational resources to enjoy life with less money stress.