Avoiding money potholes Judith McNiff, CFP


By Don Sadler Financial planning is a task that some nurses neglect—to the detriment of their personal financial health. Nurse.com spoke with author and financial adviser Judith McNiff, CFP, ofWells Fargo Advisors LLC, to get financial planning advice especially for nurses.


Q:


What is your main piece of personal financial planning advice for nurses?


A: For some people, financial decisions are based on emotions. To takeemotions out of the equation, put a financial plan inplace so you have a guide to follow. Be sure to pay yourself first by setting aside money for an emergency savings fund or for retirement. Finally, write down what you’re spending —make a budget.Running your household should be like running a business.


Q:


What are a few ways nurses can increase their savings?


A: It starts with setting savings goals and financial priorities—this makes it much easier to get started.For example, your goal could be to start out by saving 5% of your before-tax wages early in your career and then gradually increase this as your earnings increaseover time.Bythe time you’re inyour 30s or 40s, your goal could be to save 10% of your before-tax wages. Next, set up automatic transfers of


money from your checking account into your savings or retirement account. This way, you’re less likely to spend money you want to allocate to savings. Check your savings progress every month and watch your balances grow. Also, your employer might match your contributions to retir- ment accounts, which is free money. Even if you don’t receive an employermatch, you


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should still make regular contributions to your employer’s retirement plan.


Q:


How can nurses become more confident when it comes to personal financial planning?


A: A lack of confidence in financialmatters may lead to poor investment choices and performance, and thus failure tomeet your financial goals.Working with a financial adviser is one way to increase confidence and results. But don’t wait until you’re ready to retire to talk to a financial adviser. That’s like saying,“My house is on fire—I better go get somehomeowner’s insurance!” Instead,meet with an adviser early in your career to create a long-term plan that will helpyoumeet your retirement savings goals.


Q:


Why is it important for nurses to build an emergency savings fund?


A: You need to be readywhen life happens. A sound financial practice is to save up three to sixmonths’worth of living expens- es in an easily accessible account in case of a financial emergency—for example, a job loss ormajor home or car repair. Then youwon’t have to rely on credit or dip into your retirement account. •


Don Sadler is a freelance writer. TO COMMENT, email editor@nurse.com.


Michael McNulty, executive vice president, financial ser- vices, for OnCourse Learning, offers suggestions for ad- dressing what he views as the top three financial planning concerns for nurses today:


• Outliving your savings — Many Americans are living much longer today, but most retirement plans are not built to sustain this lon- gevity. When you consider the rising cost of healthcare and the combination of in- flation and decreasing Social Security benefits, a significant percentage of baby boomers are not prepared for the en- tirety of their retirement.


• Not starting retirement saving early enough—The average 60-year-old Amer- ican has saved just under $200,000 for retirement. However, normal withdrawal practices applied to this nest egg would supply only $7,000 per year of living expenses— this is simply not enough. By taking early advantage of the compounding nature of tax deferral and the benefits of dollar cost averaging, nurses can significantly increase their retirement savings.


• Not understanding your investments—The general public, including nurses, has been wary to jump back into investments since the dot-com bubble burst. However, there are myriad in- vestment products that offer safeguards and benefits in both up and down markets. Work with a financial adviser you trust and invest for the long term.


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