Do you ever think you need to get better at budgeting? Learning how to budget well takes time and practice, but being in control of your finances brings benefits that extend past your wallet.
Harrison Hinz, a Certified Financial Planner (CFP®) with First Pacific Financial and a Spark Financial Advisor, says nurses can take some steps to begin the budgeting process, and one of the first is shifting the way you see and prioritize budgeting.
“The term ‘budget’ is often looked at with a negative connotation, mostly because you are limiting yourself to spend less money,” he says. Nurses who plan effective budgets are taking control of their financial lives in a way that can help fix past mistakes, make a current plan less stressful, and even give a path toward a future where money will help you get what you want and need. In fact, he says, budgeting isn’t always about how you save money–it’s how you spend it, too.
“The skill to control how much you spend is one of the greatest skills to have,” says Hinz, “because you use it now when saving for the future, but you will also use it when you retire and are spending down your savings.”
Where can you begin? Hinz says to first take a look at your income and your spending history. At the very least, begin with looking at the last three months, but looking back over a longer time will give you a better picture of where your money is going.
This stage is, of course, one of the biggest barriers to planning a good budget. It takes time to go through all your bills, find the information you need, and record it. And, says Hinz, nurses who typically work long and demanding shifts, end up with little desire or energy to get down to the nitty gritty of their spending habits.
Setting aside blocks of time, even 30 minutes a week to help get you going will make a difference. Like with other habits, chipping away at budgeting tasks with a friend can also help. You don’t have to share or discuss each other’s information, but you can help nudge each other (for instance, one week find all the credit card and household bills, the next gather all the bank statements, the next begin categorizing, etc.).
To figure out your patterns, Hinz recommends sorting your spending into categories. If you have steady expenses, use broad categories:
Bills
Food
Entertainment
If you want to really map your spending closely, make the categories even more specific:
Groceries
Dining out (including work snacks or meals, coffees)
Clothing
Entertainment
Household bills (electric, gas, oil, etc)
Insurance
Pets
Clothing
And there’s no right way to plan your budget–if you use the method that you like, you’ll be much more inclined to use it and stay with it. Hinz says nurses should use whichever tool makes it easier for them to approach the budgeting tasks. “Some people like the hard numbers and using spreadsheets could help sort and set limits,” he says. “Others like touch and writing it out.” And that old-fashioned method of putting money into envelopes for specific expenses? Don’t give it up if it works for you. “The envelope system can work for people who like to have a visual on the money they have to spend,” he says.
Many people delay budgeting or don’t even start because they feel overwhelmed with the task or that they should have more money than they do. “It all doesn’t have to happen at once,” he says. “Start small with understanding where your money is going and build an emergency savings account.”
Finding someone to help you can make a difference. You can hire a financial advisor or see if your employee benefits or a professional organization will offer any financial planning assistance. “Life happens and adjustments will need to happen,” he says. “Having an advisor to help you navigate the changes will allow you to focus on your goals.”
Remember that your budget reflects your own unique life and circumstances. “Don’t compare yourself to others,” says Hinz. “There will always be someone in a better situation and someone who has more challenges. Take the time to enjoy where you are at and look at what you accomplished.”
When you’re a nursing student, thinking about your finances seems almost like a pointless task. With the immediacy of paying for school and the almost universal need for student loans that you pay back after graduation, thoughts of your future financial plans stay where they are – way in the future.
Believe it or not, this is actually a great time to think about your future and your finances, which includes retirement but also might include big-ticket things like a car, a house, travel, or additional educational costs. When you start working right after graduation, you’ll want to develop good financial habits right from the outset. If you can begin planning for your future early, you’ll be much better prepared.
You may not be able to set aside money when you’re still taking courses and during clinicals, but you can learn how to make good financial choices.
Set a Budget
As a nursing student, get comfortable with the funds you have, the funds you earn, and the amounts you owe. Don’t guess at how much your food costs are each month—add them up so you know. Use an online budget app like Mint (it’s free!) to calculate that in with your rent or mortgage, any insurance costs, student loan payments, transportation, and costs for entertainment, pets, or clothes.
Balance that with what you take home each month and you’ll get a good idea of your cash flow. If you get comfortable doing that early on, you’ll have an easier time making sure you make solid, financially stable decisions in the future.
Learn Where to Save
When you have a budget, you’ll know what you have and don’t have. You can figure out if you can cut back on one thing to make some extra money for something you want. Eliminating a take-out lunch once a week and you can easily save another $50 to $70 a month. Add that to an emergency fund until you have enough to cover three to six months of expenses. Then start putting it in a retirement fund. You’ll never notice the difference.
Pay Your Loans
This one is simple, but can be difficult. If you have student loans pay them on time every single time they are due. Defaulting on your student loans or being late on payments can wreak havoc with your credit score. And you’ll need good credit to secure a car loan, a loan for a home, or even future student loans if you return to school. Don’t let a mistake limit your life that much.
Plan Your Next Steps
Set some financial goals. Do you want to save $1,000 this year? Do you want to commit to saving 15 percent of your income? Figure out how much that breaks down to save each week and then do that. Either have it automatically withdrawn and placed in a different account or fund or do it yourself each payday. Setting concrete goals complete with amounts and the steps you have to take to reach your goal is half the battle.
Start implementing steps toward setting good financial behaviors now and you’ll be thankful years down the road.
Budgeting, it seems, can be a four-letter word. As soon as the word B-word is mentioned, people start to think of all the things they can’t have, all the ways their spending will be changed, and all the ways they will have to do without.
Who wants to do that?
But if you think of budgeting as a positive, not a negative, you might find it easier to save money. Do you want to think of the lost lattes or would you rather think of how quickly those forgettable coffees could turn into funds for a very memorable vacation?
See the difference?
Here are some quick budgeting hacks so saving money doesn’t seem so hard.
1. Make It a Game
Have you heard of the people who save all their $5 bills? Or what about the people who never spend their change but instead throw it in a jar at the end of the day? Those people have figured out very effective ways to save a chunk of money quickly without feeling deprived of anything. Make it into a game – see how long it takes to reach a mark on the coin jar, for instance – and your focus will soon be on saving more, not what you aren’t buying.
2. Make It Worthwhile
Just as the coffees you buy aren’t a lasting pleasure, decide that your hard-earned money isn’t worth wasting on things that aren’t worthwhile. Would you rather spend $30 for pizzas or would you rather skip the take-out a few times so you can have a nice meal in a restaurant? You work hard enough for your money – you should make it bring you big rewards.
3. Make It a Goal
If you envy that designer bag at the mall, look for different ways you can budget and save for it. Can you plan your errands so you waste less gas this month? What about forgoing Netflix for a few months and getting movies from the library? Can you suggest getting together with friends for coffee instead of dinner? None of these suggestions mean you are losing anything – you still get to watch movies, see friends, and get what you need. But rethinking a few old habits can help you save significant bucks.
4. Make It Public
If family, friends, and close colleagues know you’re trying to trim costs, they might be inspired to join you. It’s easier to cut corners when the people you typically spend extra money with are trying to do the same. You don’t have to disclose details, but let them know you are working toward a goal and trying spend less. Even if they don’t jump on board, they’re likely to understand and might even have some great tips to share.
Are there other ways you can cut costs without feeling deprived?
If you’re like most people you loathe the word budget. It’s the equivalent of a four-letter word to some, but in many cases it’s a necessary evil to reach financial goals. Budgeting doesn’t have to be dreadful but can be easy!
Evaluate your finances: Take a good look at what you spent you spend your money on each month. Do you find you spend way too much dining out or maybe your cable bill is out of control? Those areas may be where you could carve out additional money to save.
Do you have a specific savings goal? If not, make sure you have at least 3-6 months living expenses set aside. Once you determine your monthly savings goals adjust your budget to meet them.
Auto-pay your recurrent monthly bills: The easiest way to budget is to set your recurrent monthly bills on auto-pay like your cable, phone, electricity, etc. Take analysis of these expenses and see if they are really necessary. Some of these expenses may be negotiable. Do you really need to spend $200 on Dish TV when you can get by with Netflix, Hulu or a Roku for a fraction of the price?
Put yourself on a “cash diet:” The third aspect of your budget should consist of a “cash diet” for your variable monthly expenses. Variable monthly expenses include grocery, clothing and entertainment.
Set aside a certain amount of cash for each expense and place it in an envelope. Spend only what is in the envelope on the allotted expense. When the envelope is empty, your spending is done for the month.
If you happen to have money left over at the end of the month roll that money over into the next month if you want extra money to spend in that area. You can even add the extra money to another envelope if you want. The point is to not increase your spending money by adding additional money outside of your budgeted envelope money. Say you have 4 envelopes divided into four different categories and the total money of all envelopes combined is $500 and you place $125 in each envelope at the beginning of the month. If you find at the end of the month you have an additional $25 in one envelope feel free to move it to another envelope you feel you need more money in.
If you tend to run out of money earlier in the month than you expected then you either need to scale back on your spending even more or allot for more money in that category.
Remember to pay yourself: After setting up the previous three aspects of your budget the saving part should be easy. Everything left over from your monthly bills should be placed in a savings account.
When you budget for a couple of months you’ll have an idea of how much you can comfortably save each month. As a matter of fact, make your monthly savings a “recurrent monthly bill.” Set your savings up on an auto-pay just like your bills.
Remember to continually look for ways to save more money through your budget. Maybe you could put your extra envelope money at the end of the month into your savings instead of another envelope? Make it a habit to follow these four steps and watch your savings grow!
In addition to working as a FNP, Nachole Johnson is a freelance copywriter and an author with her book, You’re a Nurse and Want to Start Your Own Business? The Complete Guide, available on Amazon. Visit her ReNursing blog at www.renursing.com for more ideas on how to reinvent your career
The word “budget” doesn’t usually excite most people. In fact, many think of budgets as restrictive. Or they may think of spreadsheets, complicated equations or time consuming number crunching. The good news is that a good budget doesn’t have to involve any of those things. Well, a good budget may be a little restrictive – but only in the sense that you’ll only spend money you actually have and you’ll have a good idea of where your money is going.
If you’d rather relax during your time off than balance complicated personal accounts, keep reading for an easy, 3-step budget that will put you on the road to better financial health.
Total Your Bills
How much does your life cost each month? Take out a sheet of paper and list the regular bills you pay each month and the amounts (e.g. rent/mortgage, utilities, cable, phone, debt repayment, etc.). Then write down all of the irregular bills you pay quarterly or annually and the total amounts for each (e.g. car registration, car insurance, taxes, etc.). Now add both your regular and irregular bill totals together for a grand total and divide that total by the number of paychecks you receive each year. For instance, if you get paid once a month, divide your total by 12. This is the amount you need to set aside from each paycheck and deposit into your bills account (more information below).
Keep Things Separate
Now that you have a handle on the amount of your bills, the next step is to open separate bank accounts for all of your various needs. A good place to start is with three accounts: An operating account, a bills account and a savings account. Here’s the purpose of each account:
Bills: This is the account you’ll use to hold money for your regular and irregular bills that you totaled on a piece of paper (see, no spreadsheets required). Deposit this amount each pay day into this account so that you are confident that you’ll always have money to pay your rent, utilities, annual car registration, etc.
Savings: This is where you’ll save money for an emergency fund, travel or anything else that you need to set money aside for. You may choose to have more than one savings account to keep track of each goal separately.
Operating: Need cash from the ATM? It comes from this account. Buying concert tickets? Purchase them from this account. Basically funds in this account are free for you to spend because you’ve already allocated funds to cover your bills and any savings.
You can have your pay check direct deposited to your operating account and then simply transfer the amount you need to set aside into your bills account each pay period.
Be sure to shop around for banks that don’t charge fees for these various accounts. You want to utilize free checking and/or savings accounts so that money isn’t flying out the door each month in fee charges.
Spend
The remaining funds can be used at your discretion for groceries, entertainment, hobbies, etc.
Feel free to tailor this budget plan to fit your needs. You may want to include things like car repairs, gas and groceries as part of your bills account and save for them out of each paycheck. You can make this plan work for you and your budget. The most important things is that you are planning for each area of your life – the necessities and the fun stuff, and you that you have a pretty good handle on how much money each area costs.
Image credit: Stuart Miles/freedigitalphotos.net
Denene Brox is a Kansas City-based freelance writer. Visit her online at www.earnmorelivewell.blogspot.com.
