I am currently seeking financial advice (not in desperate need of help). I have just finished my probationary period.
My senior nurses generally expects New Grads to splurge their hard earned money during the first year. Then start saving after the one year mark.
Background: I have spent my whole life studying to be an RN, but did not develop finance management skills through my college days. I graduated at age 23. Employed right after passing NCLEX. I am in California.
Financial background (monthly):
a. Monthly income (after tax): $4000
b. Monthly bills $600
c. Gas $90 (usually fill up 2-3 times)
Goal: To build up my savings hopefully to the 5-digit range by the holiday season
PS please don't let this be a debate on how nurses should get paid. I am looking for advice on how to properly save and spend.
Save for at least some travel while you are young and can enjoy it. You never know when your health may take a turn or you wake up and find yourself too old to get around.
You must live with the folks if your expenses are so low. That is great and it is wonderful that you have that option. I would suggest reading about personal finance. Some books I like include Personal Finance for Dummies by Eric Tyson, Deal with your Debt and Your Credit Score by Liz Weston. Take a personal finance class online thru a cheap tech college if you are interested. Start paying off your student loans, pay attention to the highest interest ones such as private loans first. Start a Roth IRA you can contribute $5500 a year, start a 403B with your employer at least at 6% eventually to 10-15%. Once you move out your expenses will rise so it is good to learn about money and budgeting now. An interesting idea from Senator Elizabeth Warren's book All Your Worth is a budget of 50/30/20. Keep your needs to 50% if you can, then you have 30% wants and 20% for saving and debt reduction. Consider a high deductible health plan if your employer offers it and maxing out your HSA even if you are healthy it is a good idea for future health expenses as you get older or even for retirement. It is a good idea to have disability insurance if you are lucky it is offered at work, do it when you are young as up to 25% of people will become disabled before they are 65! When you plan to move out you'll need first months rent and a security deposit plus money for furnishings. Also you will need a reliable car to get around. Of course, you should spend some money on yourself besides just saving. I encourage people to take vacations when they are young, you don't have to spend a lot of money to have a good time.
I wish I had known more about money when I was younger. Reading Personal Finance for Dummies really opened my eyes and it motivated me to start saving for retirement. I encourage everyone to learn about personal finance.
1) Put money into an emergency fund pronto. People go into debt because of expenses they didn't see coming - car repair, health care, etc. Funneling $$$ every month into this fund keeps you from living paycheck to paycheck.
2) If you have consumer debt or student loans, cease all extra spending until these have been paid off. OR work overtime to pay for fun stuff while still paying off the debt. This is a huge miscalculation college grads make. They continue to spend money on new cell phones, vacations, and clothes while the debt they have ALREADY accumulated gathers interest.
3) Look ahead every month and see how much money you will need to get through it. It requires you to identify areas where you will probably spend money. So, if friends routinely do Sunday brunch and you want to go, eliminate spending ELSEWHERE in order to finance your fun. And prioritize what you want to do...if an activity sounds so-so and not awesome, do not spend money on it! Tell your friends "I can't, but thank you for inviting me!"
4) Put $$$ into savings from every paycheck, even if it is only $100.
5) Make a list of what you value. Is it travel? Hair highlights? New shoes every six months? Once you identify where you want your money to go, put it there and don't buy so-so stuff you don't care about and barely use.
6) Start a retirement account NOW. You can do one through your work, or start one with an outside company. At 23 you have lots of time to prepare for a great retirement while still working and enjoying life.
I am 24. Fortunate to find a job locally. Not married. No kids. I still live with my parents. I still have two more years of being covered under my parents insurance. My parents cut my off financially, but allows to live rent free at home. Monthly expenses are my student loans, phone bills, Netflix, etc.
I am aware my financial responsibility is at its lowest right now. I want to take the initiative to budget my paychecks wisely while at the same time enjoy my hard earn money.
Because I taught the course for years, I'd advise you to look at Dave Ramsey's advice. He actually has a charted example of two men (Ben and Arthur)who took very different routes investing. One guy splurged and spent and finally started his retirement/investement around age 30, and invested 15% EVERY CHECK for many many years. At retirement he had less than $400k. The other invested a TOTAL of $2000 to retirement during the first 2 years of his work career, stopped, and let COMPOUND INTEREST work for him. At his retirement he had a couple million dollars.
Google "Dave Ramsey Ben and Arthur" graph and you'll get all the info you need. I'm not trying to sell a brand, I simply believe in Dave and his teachings. He teaches you how to live like nobody else (now) so that someday, you'll live like nobody else (wealthy, carefree, early retirement, etc). Good luck!
I've been working full time at my current job for 10 months now. I have managed to put away a decent chunk since I started at this job. I average $1700 every 2 weeks, so around $3400 after taxes each month. I do ask for extra shifts for the OT, so sometimes the amount is more like $4000 per month after taxes, but lately I've cut back on OT. Here's a few things that I've been doing:
- I lowered my monthly expenses by opting into discounts at work (I was able to get my monthly cell phone bill down to $35 per month) and talking with my student loan company (I was able to reduce my monthly payment to $120 per month).
- I put away as much as possible. When I first started working, this was about $2000-2500 every month, straight into my savings account. I did not touch it unless an unexpected expense popped up. Currently, I'm putting away about $1500 each month.
- I set a limit on how much I can use for "extra" things each month. Usually I allow myself to spend $50-100 on whatever I want, once per month. The remainder of money spent goes towards my usual expenses such as bills, gas, etc.
- I try not to eat out, which is difficult sometimes because my coworkers love to eat take out and fast food, but it is manageable. I definitely notice the difference in my bank account when I make my meals at home and bring leftovers for dinner at work.
- If you're young, not married, do not have kids and have a good relationship with your parents, there's nothing wrong with staying at home a little longer to save money. Rent, renter's insurance, deposits, utility bills, etc. are all expensive when you're just starting out.
First, start a retirement fund. If your employer doesn't offer one, you can open an IRA via any brokerage. Your bank may even offer one. Put a percentage of each paycheck into your retirement account.
It's also a good idea to line up your debts, and put any extra money you have toward the debt with the smallest balance. You'll pay it back faster, and get a feeling of accomplishment that will encourage you to stick with the plan.
I'm not a fan of Dave Ramsey, he's waaaaaaaaaaay too religious for my taste. I like Michelle Singletary (Washington Post) and Suze Orman (though I think she's completely wrong about weddings). I'm also a fan of the book "Your Money Or Your Life." Its about setting priorities in your life and spending accordingly. If you really enjoy Starbuck's, or travel, or shoes, or cars, or handbags, you don't have to give them up, just find a way to fit them into your budget.
Lastly, don't get so focused on saving for the future that you forget to live in the present. Money is a tool, and it's meant to be spent. Even savings are spent eventually. My father worked hard, retired at 66, and died 3 months later. He had big plans for retirement, and never got to do them. Tomorrow isn't guaranteed to anyone.
Personally I would be paying off as much as you can of you student loan, because sounds like your not paying much a month off it right now. Make a budget of how much money you want a week to just spend on whatever you want, then whatever is left set up a automatic payment to your student loan and another one for general savings so you can't touch it. One your loan is gone you'll be in a much better financial state, you could travel, buy a house, grad school, or whatever else you want pretty quickly.
I am about to graduate, living with my parent and turn 24 in a couple of weeks. Though I will be moving out of parent when I start working, I have already planned my budget to be loan free 1.5 years later. another year of living like that I'll have enough money to do any of the above options I mentioned and I'll only be 26 by then!
I agree with most of the advice given to you. I'm will strongly advise you to make more payment on your student loans so that our overall loan amount can significantly reduce. Also enjoy your life, travel if you like, nursing is stressful, so have some fun. Also work on building some credit.
Thank you for your responses! I'll most def look into Dave Ramsey. I suppose I am just looking for numerical values the needs to be distributed to my savings and credit card bills.
caliotter3
38,333 Posts
Save for at least some travel while you are young and can enjoy it. You never know when your health may take a turn or you wake up and find yourself too old to get around.