Money tips for New Nursing Graduates
When you finally graduate from nursing school and start the process of landing your first job there are often many financial decisions to be made and a lot of new information given around employee benefits and different ways to save and protect this new established life.
Below are easy tips that will apply to new nursing graduates who have landed their first job:
I have student loans. How should I manage them?
You may have accumulated a substantial amount of debt through student loans and very often an initial thought is to get rid of that debt as fast as possible. Having debt is never a pleasant thing but there are many ways of managing your debt.
Step on should be to look at the student loan debt and figure out what payment options the specific loan program offers. There are often several different payment plans and they range from accelerated payment plans all the way to stretched out plans where the monthly payment is substantially lower but the term is longer.
There is no complete right or wrong way of paying off this student loan as it completely depends on a lot of other factors. One factor that has to be taken care of before accelerating the payment would be to have adequate liquid savings.
Make sure that you have at least 6 months of liquid savings that are available to you without any tax penalties. If you are accelerating your debt payment and live life without liquid savings you may end up going into credit card debt ,If any unforeseen event happens where you need additional cash.
So If you do not have liquid savings an easy way to free up cash flow and start building that bucket of money is to lower your monthly debt payment and saving the difference in a liquid account.
What about my option to participate in the retirement plan at work?
You will most likely have the option to participate in the retirement plan at your workplace and often there is a lucrative matching to give you an incentive to take part in the plan. This topic of when and how much should be put into the retirement plan at work is a hot topic with many different opinions.
It’s really again a very simple decision to make as you should not be putting money into an account, where you will have a difficult time accessing the money before age 59 ½, unless all your savings and overall financial plan is in balance.
So if you do not have enough liquid savings make sure this is taken care of before you stash away money for retirement that could be 30 years into the future. Take care of your today before you take care of the future.
What about other places to save and how much should I actually save?
Once you have enough liquid savings you need to start saving for future goals. One future goal will be retirement and now could be the time to put money into the employer sponsored retirement plan.
From an overall financial plan standpoint, you will need to save at least 15% of your income in order to have enough for the future. A portion of that 15% should go into your retirement plan at work and we would recommend that you find out what the match is and then put enough into the plan to get that match.
Anything above the match could be put to better use elsewhere. There are a lot of other factors that come into play when making these decisions (taxes, joint household income and more) but for now we will let this stand as a generic rule.
So if your company matches up to 3% you should put 3% of your paycheck towards this account. Other than this account you need to build a midterm savings bucket that potentially is available for retirement but also is available in a situation where a down payment for real estate is needed and could be available for future business opportunities or even college planning for your future kids.
Each individual will have a slightly different situation but as a general rule you should have liquid savings for at least 6 months. You should not accelerate your debt payment until you have these savings in place and you should make sure that you also have the right amount of income protection (either from work or through individual plans) in place.
Written by Jan Axel Tribler, CFP ® Co-Founder of CreativeNurse
2017-36496 Exp. 10/17