You’re ready to start on your journey to financial independence as a nurse, but there’s a lot of information out there and you’re not sure where to start.
We get it and we’re here to tell you that it doesn’t need to be hard.
In this post, you’ll learn three simple steps you can take right now to start on your journey to financial freedom.
Let’s get right into it.
Pay off your debt…but don’t let that be a stumbling block
You’ve probably heard this popular piece of advice somewhere: pay off your debt if you want to be financially independent.
While we agree that getting rid of all debt is an important pillar to building wealth as a nurse, paying off debt doesn’t have to hold you back from everything else. You can pay off your debt while you begin to invest in the stock market for instance.
Student loan debt tends to be one of the biggest financial burdens for nurses who typically graduate with between $20,000-$50,000 in student loan debt.
For paying off your student debt, nurses might want to look at:
- Employer-sponsored debt repayment programs. Starting a new role? Find out if your institution has this as a sign-on bonus.
- The Public Service Loan Forgiveness program that helps nurses who work in public service or community roles.
- State-level student loan forgiveness programs
- Military loan forgiveness programs will provide up to $120,000 to repay student loans for nurses if you enlist and serve for a minimum of three years.
Use the Lume app to learn about your best options for loan repayment and financing.
Learn about your employer-provided 401K account
If you don’t know anything about the retirement benefits available to you through your work, now is the time to find out about it.
We agree that your nursing paycheck is nice but we find that it is common for people not to think about their 401K account at all, especially early on in their career. Don’t make this mistake.
The best people to contact regarding your 401K or other employment-related investment account is the HR department for your organization. They will be able to provide you with the information you need to sign in to the accounts that hold your investments.
If you have an employer-matched 401K account, it is important for you to know that between you and your employer, you can contribute up to $18,000 per year to your 401K.What this means is that, if your personal biweekly or monthly contributions don’t yet add up to around $9,000 per year (your employer will contribute the other $9,000), you should increase your contributions.
A $750 monthly contribution will bring you up to the $9,000 per year mark.
Start investing right now
Apart from contributing on a regular basis to your employer-matched 401K account, there are many avenues for you to invest privately.
You might consider opening a Roth individual retirement account (IRA) for instance.
A Roth IRA is an individual retirement account that offers tax-free growth and withdrawals as long as you have owned the account for five years and start withdrawing money after you turn 59.5 years old.
You can contribute to a Roth IRA even if you have an employer-provided 401K account provided you don’t exceed $6000 per year in contributions or $7,000 per year if you’re above 50 years old.
You might also consider opening a regular (non-retirement) investment account. You might be able to open such an account with your bank or financial institutions like TD Ameritrade and Fidelity.
With regular investment accounts, you can contribute as much money as you want and withdraw that money if you need it. It is important to note however that because the US government considers the money you earn on your investments, income, any growth of your money in the stock market is subject to federal taxes.
Furthermore, in these accounts, you can invest in individual stocks or into index funds.
An individual stock represents a single share in one company (e.g., you buy one share in Amazon or Facebook). An index fund on the other hand is a collection of stocks with fractions of various stocks. An index fund may contain fractional stocks of Amazon, Facebook, Google, Apple alongside shares from other companies.
It’s a good idea to have a mixture of individual stocks and index funds to ensure that your investment account grows steadily over time, providing you with the best possible returns.
It’s common for people to feel some fear when it comes to investing in the stock market. This is why we built Lume. Lume is built specifically to help nurses build wealth through smart banking. Sign up for our waitlist to download the Lume app.