Navigating Life’s Milestones and Financial Transitions

Imagine chatting up your new neighbor with this gem: “So, how’s your retirement planning going?”

If you want to shut down a conversation quickly, ask someone about personal finances. Shrouded in mystery and rife with rumors and misinformation, the subject of money is right at the top of the list of to-be-avoided topics—right along with sex and religion. But being ignorant about money matters and not planning for all life’s milestones put you at a disadvantage.

What keeps people from learning about handling their own money?

Lack of knowledge tops the list. Professionals in non-financial fields, such as nurses, may not be skilled in financial lingo, so they don’t think much about it, says Cary Siegel, author of Why Didn’t They Teach Me This in School? 99 Personal Money Management Principles to Live By. “It’s the last thing they want to do,” he says.

Enjoy the Nursing Life

You might not think about your money, but you need it, and each life stage brings unique financial challenges. New grads are sorting out student loans and rent payments. In another few years, getting married and starting a family might be closer. Later on, travel, vacation homes, extended family obligations, and retirement become more pressing.

Luckily, job prospects for nurses are encouraging and show strong growth, which means some job stability and financial security. According to the Bureau of Labor Statistics, jobs for registered nurses are expected to increase by 19% in the 10-year period between 2012 and 2022, which will outpace all other occupations.

That’s good news for nurses seeking great salary and benefits package—and for those who are looking for ways to pay for advanced degrees, too. “There are all kinds of opportunities through the state and federal government to fund education or forgive loans, and that’s especially true for minority nurses,” says Nancy Sharts-Hopko, PhD, RN, FAAN, director of the PhD program and professor at Villanova University College of Nursing.

Start with the Basics

Despite that strong employment outlook, life is unpredictable. How can you plan for all these transitions? Follow the advice of many financial experts: be prepared, learn all you can, don’t panic, and just start saving.

Establish a written monthly budget and stick to it, says Siegel. “If you don’t know what you’re spending and saving and where it’s going, there’s no way you’ll ever manage it,” he says. If you follow your budget, spend less than you earn, and have only one credit card that you pay off monthly, Siegel says you have established habits needed for financial stability.

Change Your Financial Patterns

Financial attitudes accumulate over a lifetime and can impact relationships, especially between spouses, says Chris Hogan, financial expert with Ramsey Personalities.

Be aware of financial tensions and then get everyone on the same page, says Hogan. “The key is having conversations,” he argues. “Couples need to ask each other, ‘How do you look at money? How do you feel when we don’t have enough to do what we want to do?’”
Many couples have a saver/spender dynamic, says Hogan, and that isn’t a bad thing. “They can complement each other once they know where they are going,” Hogan says. “It all boils down to working together.”

Whether as a couple or not, decide what you want, when you want it, and figure out if you are ready to get serious about it. Then plan how to reach your financial goals, says Hogan. You don’t have to be an economist or a financial expert to achieve financial stability and independence. “It’s a process and you have to keep your eyes on the steps,” he says. “You have to sit down and look at it and realize it is possible.”

Taking that first step might be all you need. “For people who are overwhelmed,” says Christine Benz, director of personal finance at Morningstar, an investment research and management firm, “it’s empowering to get your priority list and to get started.”

Build an Emergency Fund

Once you start making an income, put aside money for an emergency fund. “Life does happen,” says Hogan. “That’s why you have an emergency fund.”

Benz advises putting three to six months’ worth of expenses into an easily accessible account, such as a money market fund or a CD. Plan to keep a higher total if you are in a per diem career or if your career (or even your partner’s career) is unstable. “But don’t overdo it,” she says. You still want your money growing, and a money market account won’t offer as much long-term growth as other savings vehicles, such as stocks. Keep just what you need so you can have instant access to it if needed, but don’t use your emergency fund for long-term investments.

Shop around at local banks or even check online outlets for the best rates, suggests Benz. Use Bankrate.com to compare different savings vehicles, too. “It’s like a supermarket for savings,” she says.

If you want to start an emergency fund, but have no extra cash, Hogan advises taking a fresh approach. Hold a garage sale and take a hard look at your expenditures. Can you start packing lunch and forgo the outlet trip with friends? The gratification isn’t immediate and giving up things you enjoy isn’t fun, but if you ever need a financial cushion, you will be glad you have it. Don’t forget to replenish any funds you use.

Get a Jump on Retirement

When you’re serious, start learning. “When people think of savings, they aren’t sure what savings vehicles to use for each event,” says Hogan. “But oftentimes pride will get in the way of them asking for help.” Look at it this way—it’s no different than hiring an expert mechanic to fix your car.

And it helps to know what to expect over the years. In your 20s and 30s, your money hardly seems like your own. You’re focused on paying the immediate bills, and retirement is decades away.

When you’re starting out, you probably can’t sock away tons of money for retirement. According to Richard Marston, PhD, James R.F. Guy Professor of Finance at the Wharton School at the University of Pennsylvania and author of Investing for a Lifetime, that’s okay. Your early goal isn’t the amount you save, it’s the action of saving at all.

“You only need half of your estimated retirement income by the time you are 55,” he says. Even if you only put aside $50 a month for retirement, if you start doing that at 25, your money will compound dramatically more than if you start at 35.

Contribute even a modest amount to your company’s retirement plan or start one on your own. “This gets you in the habit of saving,” says Marston. “A lot of saving has to do with making it as automatic as possible. With a 401k, you take it out before you even see it.”

Hogan recommends saving 15% of your household income for retirement by putting it into a retirement account, such as a 401k, 403b, an IRA (pre-tax savings), or a Roth IRA (which is post-tax savings, but you are not taxed when you withdraw on your substantially more valuable fund in later years).

Some money has nothing to do with cash. Many employers also offer some kind of tuition reimbursement, says Sharts-Hopko, a bonus for those who want advanced degrees. For instance, many established nurses are going back to school for a BSN degree so tuition assistance is valuable.

“Those are opportunities to be aware of,” she says. “Maximize your employer’s contribution.” Plan with your own aspirations in mind. For example, the federal Nurse Faculty Loan Program will forgive up to 85% of graduate school loans in exchange for four years of full-time teaching at an accredited nursing school.

Use Salary Changes

Siegel says that as your salary increases, put half of a raise into savings, but spend some of it as well. Enjoy yourself, Siegel says, but remember you are going to need money when you are 75, too.

Think hard about how you spend any increase. Siegel notes that many people get into trouble when they buy things they really can’t afford. “Don’t try to keep up with the Joneses because they are going bankrupt,” he quips.

Assess Mortgage Options

Home ownership is a huge milestone and you want to minimize your total expense. Varying home-buying advice abounds, but the overall message is to borrow only what you can comfortably afford—this is often a lower number than a bank provides—and for as short of a term as possible. Hogan’s approach of taking out only a 15-year fixed-rate mortgage is tough, but if you can do it, the extra amount you’ll pay each month could save you tens of thousands of dollars in interest.

Plan for All the Other Stuff

Once the emergency fund is in place, the retirement fund is established, and the home buying is in motion, it’s time to start thinking about other expenses that might come your way over your lifetime. Not everyone will have the same financial needs and not everyone will follow the same order. But thinking ahead to see what might be in your future can help you plan and earmark funds.
As Sharts-Hopko notes, many minority nursing students are supporting or involved in the care of their extended family. “They have a great sense of responsibility to their families,” she says. And while that extensive network offers great comfort and support, any crisis in the family can touch everyone.

What if you lose your job? Benz says income shock calls for tough measures. Instantly reduce your expenditures and cut out all unnecessary expenses. Once that’s done, where can you go for cash?

Emergency funds are the first place to turn, but lacking that, you have a couple of options. You don’t want to take from any funds that will penalize you for early withdrawal (like many retirement funds), but sometimes potential credit card charges can surpass those withdrawal fees. Compare the costs of withdrawing any money with the potential interest payments if you use your credit cards. Be aware that you typically cannot borrow money from a retirement fund like a 401k if you are no longer an employee of that company.

Consider Insurance

Benz believes nursing’s physical demands make disability insurance coverage a good idea. If your job involves lots of physical exertion, short- and long-term disability coverage—either through your employer or on your own—will protect your financial resources should you get hurt.

And long-term planning means you hope for the best but have plans for the alternative. The cost of living in a nursing home is astronomical, so long-term care insurance is something to consider adding to your financial landscape.

Take Control of Your Money

Here’s the dreaded part: You need to do more than just save money. Understanding finances is essential, but it should not be daunting, says Siegel. “Spend an hour a week learning about money,” he says. “Just get your brain going and thinking about it. No one bothers to teach us about this stuff in school. But you don’t need to know so much about stocks and bonds; you just need to know how to manage your own money.”

Find something easy to look at—read Money magazine or the financial columns in the paper and check out some finance blogs (such as TheBillfold.com or GetRichSlowly.org). Sign up for newsletters like Morningstar’s Practical Finance Newsletter. Nurses should especially look at the Women’s Institute for a Secure Retirement’s Nurses’ Investor Education Project. Google “money management” to become familiar with terms, trends, and general advice.

Managing money means more than actual cash. Check your credit report using the three credit bureaus that offer one annual free report (Experian, TransUnion, and Equifax) through Annualcreditreport.com and request one every four months. By alternating your requests, you can monitor your credit for free. Security breaches aren’t going to disappear, so make sure your information is secure and correct. Fix any problems immediately.

If you find tracking accounts, paying bills, and following budgets unwieldy, plenty of apps and programs will help you get organized. Mint.com offers a place to consolidate your bills, follow your savings goals and spending habits, and even get your credit reports.

Find Peace of Mind

What’s the final take away from financial planning and financial security? For Hogan, it means more freedom to use your money the way you want, which, for him, includes helping others. “Once you are completely debt-free, you can give money to charity,” he says.

Taking the first steps at managing your own finances gives you control and helps you change what you aren’t happy with. “Seventy percent of people are living paycheck to paycheck,” says Hogan. “Where they are right now doesn’t have to be where they will end up.”