Avoidining money potholes Judith McNiff, CFP


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


Q:


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


A: For some people, fi nancial decisions are based on emotions. To take emotions out of the equation, put a fi nancial plan in place so you have a guide to follow. Be sure to pay yourself fi rst 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 fi nancial 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 increase over time. By the time you’re in your 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 employer match, you


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


Q:


How can nurses become more confi dent when it comes to personal fi nancial planning?


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


Q:


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


A: You need to be ready when life happens. A sound fi nancial practice is to save up three to six months’ worth of living expens- es in an easily accessible account in case of a fi nancial emergency — for example, a job loss or major home or car repair. Then you won’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, fi nancial ser- vices, for OnCourse Learning, offers suggestions for ad- dressing what he views as the top three fi nancial 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- fl ation and decreasing Social Security benefi ts, a signifi cant 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 benefi ts of dollar cost averaging, nurses can signifi cantly 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 benefi ts in both up and down markets. Work with a fi nancial adviser you trust and invest for the long term.


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