Check the background of this investment professional on FINRA's BrokerCheck Budget ImageAs a nurse, you work hard to take care of others, but it’s important to take care of yourself too.  Creating a budget that works for nurses is basic to your financial wellness.  Think of a budget like taking vital signs.  You start with a baseline and review the numbers periodically.  Many nurses I know try to avoid financial topics.  And because nursing pays well, many nurses do not feel the need to establish a budget.  If you are planning to retire, setting a budget is critical and easier than you may think.  Read on to learn how to create a budget that works for nurses.

Step One, Understand the Parts of a Budget

A budget has two sets of numbers, income and expenses.  Income includes money you receive.  Typically, income is anything you must claim on your taxes.  Income includes wages, salaries, tips, commissions, fees, alimony, interest, and earnings from investments and businesses.

Expenses include money you pay out.  Expenses may be fixed like your mortgage or rent, car, and student loan payments.  Or expenses may vary like credit card balances.  Regardless of whether fixed or variable, expenses deduct from your income.

Step Two, Use the Right Tool for You

Creating a budget that works for nurses and picking the right tool is personal.  Avoid overwhelm by picking the right budgeting tool for you.  Creating a personalized budget is more powerful than trying to use a cookie cutter one size fits all tool.  Your budgeting tool can be as simple as a piece of paper and pen, like this one.  Or if you like technology, you may want to consider using Excel.  Excel has budget templates to use.  If you love to learn software, consider an app.  The importance of picking a tool is that you like it and want to use it.

Step Three, List your Income and Expenses

Remember from the above, income is money you receive.  Using your budget tool, list all sources of income you receive.  Remember to include income from a second job, or a bonus.  If you have a side business, include the earnings.  If you have investment or interest income, list these as well.

Next list all your expenses.  Include expenses you pay on a regular basis like mortgage or rent and student loans, and utilities.  Also include expenses that vary like gas or transportation costs.

Step Four, Total You Income and Expense

Total your sources of income.  Then total your expenses.  Subtract the lower number from the higher one.  Ideally, your expenses will be lower than your income and you will have money left over to use towards your retirement planning.  But if your expenses are higher than your income, move on to step five.

Step Five, Look for Ways to Cut Expenses without Sacrificing

If you are serious about retirement planning and you have more expenses than income, look for ways to cut back without disrupting your standard of living.  One suggestion is to look at reoccurring subscription charges, where you sign up with a credit card for a free trial and forget to cancel.  This is common among busy people.  Another suggestion to save money is to cut back on eating out.  And finally, paying off or renegotiating high interest rate credit cards is another opportunity to lower your expenses.

While not actual steps, there are some best practices when creating a budget.  For example, remember to keep realistic goals.  Setting realistic goals and timelines for cutting expenses and saving money will help you stay in your budget.  Consider setting a goal to cut back on one item a week or even a month.  Or set a goal to save a percentage of your income you can live with without feeling stressed.

Another best practice when it comes to creating a budget is to be flexible.  Budgets should allow adjustments as your life changes.  Job changes, divorce, and sending children to college are examples of life events that may require a change to your budget.  Rigid budgets are unrealistic, difficult to follow, and may get abandoned.

Finally, review your budget often.  Set up calendar reminders to review your budget periodically, like monthly or quarterly.  This will help ensure your budget stays aligned with your goals, needs, and income.

Conclusion: Creating a budget that works for nurses may seem overwhelming at first.  But with a little time, and the right tool and strategies for your needs, you will soon have a budget that works for you.  Knowing your income and expenses and reviewing your budget often will help you stay on track with your financial goals.  Setting realistic goals and allowing flexibility will help you stay on budget and avoid abandoning it.  If you are planning for retirement, having a budget you create and can stick with is important to achieving your lifestyle goals.

Are you preparing for retirement?  Want to know how your preparation is going?  Take the Retirement Readiness Assessment to find out more.

Categories: Money Management

Georgene Collins

Georgene Collins, RICP®, RN, PhD, MBA is a registered nurse turned Financial Advisor at Airey Financial Group. Georgene helps other nurses take control of their finances and prepare for retirement. Georgene began her career with Airey Financial Group in 2017 after retiring from 30 years in healthcare. Georgene holds the Retirement Income Certified Professional (RICP®) designation from The American College of Financial Services. She holds health and life insurance licenses and a long-term care certificate in Indiana and Illinois. Georgene is a Registered Representative and Investment Advisor Representative and has earned the FINRA Series 63 and 65 registrations.