When most nurses think of budgeting, they might feel restricted. But budgeting is a tool to help you meet your goals and find financial freedom. It lets you get the most out of your income, feel good about your purchases, and save for the future.
As a nurse, your days are busy, and you might not have a lot of free time to create a detailed budget or account for every purchase. However, small steps can go a long way in working toward your financial goals. Let’s look at why nurses should budget and how to create a budget in 6 easy steps.
A budget is simply a spending plan based on how much you make and your expenses. It accounts for everything from fixed expenses to discretionary spending and saving goals.
Why budget? If you tend to spend too much or feel guilty about spending, budgeting can help you stay on track and reduce stress around money. Budgeting can also help you achieve your goals, whether that means taking a vacation, getting your next degree, or saving for retirement.
Nursing comes with its own unique set of financial challenges. You might come out of school with student debt that you want to pay off in a reasonable timeframe. Maybe you have an associate degree in nursing, and you want to pursue a bachelor’s degree to increase your earning potential. Or maybe you’re considering a master’s degree. Budgeting can put you on track to meet these goals.
Work-related expenses, like new uniforms or equipment, might make your credit card bill higher at the end of the month. Having these items in your budget helps you prepare for these expenses when they come up.
Nurses should keep a few things in mind while putting together a budget. Income is always a factor—there are only so many hours in a day. If you’re a travel nurse, you’ll likely be reimbursed for basic living expenses while staying in a different location. However, other costs might change depending on where you are.
Financial products designed with nurses in mind can help with budgeting or help you earn a little extra. For example, Laurel Road’s Loyalty Checking account for nurses offers a cash welcome bonus and $20/month in cash rewards for the first year – just for setting up qualifying direct deposits.1 So, make sure you’re taking advantage of any extra benefits like this that can help you earn a little extra cash for your budget.
Budgeting comes down to balancing your total income, your total expenses, and your savings. For most people, it makes sense to look at your expenses on a monthly basis.
The 50/30/20 budget is a great way to get started. This budget method sorts your expenses into three buckets — needs, wants, and savings. Here’s how it works:
Your Needs: Up to 50% of your income should go toward your necessities, such as mortgage or rent, groceries, transportation, scrubs, health insurance, and minimum debt payments.
Your Wants: 30% of your income can go toward things you want but don’t necessarily need, like a vacation, a concert, or a night out.
Your Savings: 20% of your income goes toward savings, investments, or additional debt payments (after your minimum payments). This may be where you put away savings to pursuing another degree or pay down nursing school student debt faster with additional payments.
What does this look like? If you make $4000 a month after taxes, $2000 would go toward essentials, $1200 toward discretionary spending, and $800 toward savings. Try out our budget calculator below to see how your budget stacks up.