How to Successfully Budget your Money like a Nurse
As nurses working in today’s healthcare climate, we have to be versatile and ready for whatever challenge is presented to us. Since we cannot clone ourselves, we often have to do the work of two, maybe even three nurses! Do you remember having to plan and prioritize while going through nursing school and even studying for the NCLEX? Nurses learn to prioritize and plan because they are limited in what they can do. We have to budget our time because let’s face it, we don’t have the luxury of accomplishing everything we want to most days.
In that same sense, we need to apply the mindset of planning and prioritization to money because it is a finite resource. Some people might have more money than others but at the end of the day, there is a limited amount. Wealthy people are not excused from this; I'm sure we all have seen those tv specials of wealthy people who went broke. A Lot of that stems from a lack of budgeting and knowing where exactly your money is going. Because of that, we have to learn how to successfully budget our money by prioritization.
There are many different ways to do this but I’m going to lay out a very simple way to get started, based on a one-month interval:
How to Successfully Budget your Money- Step 1.
Figure out what your income is for the month. You need to count all forms of income that you receive. So, for example, a paycheck from work, child support etc. Keep in mind this also includes investments, businesses and side hustles that you have.
How to Successfully Budget your Money- Step 2.
You need to figure out what your expenses are. List out your expenses. Put them into major categories. You could break them down into detailed categories but to begin with, just break them up into major categories until you get more used to doing a budget. For example food, car payments, utilities, cable etc.
How to Successfully Budget your Money- Step 3.
Order those categories based on priority. The starting point in your budget should be food, water(utilities) and shelter(rent/mortgage).
How to Successfully Budget your Money- Step 4.
Once you have those listed out in order, assign values to each expense. Some of those are fixed (doesn't really change every month) such as rent/mortgage. Others are variable (can change from month to month) such as utilities. But you would want to assign an amount of money that is your expected bill. The easiest way to do this would be to look back and see what your previous month's expenses were. So that basically means you need to figure out what is a reasonable amount to spend on food. How much are you spending on your rent/mortgage? Do you have a car payment? How much do you spend on gas or transportation? After the essential expenses, you can start working your way down. After the necessities would be non-necessity items such as cable. If you are new to budgeting this may be difficult; don’t lose heart! Keep an eye on that particular bill so you can assign a more accurate estimate for future budgets.
How to Successfully Budget your Money- Step 5.
Add up the numbers that are in your income category. Then add up the numbers that are on your expenses categories. You might start feeling multiple different emotions depending on how the numbers look.
How to Successfully Budget your Money- Step 6.
Income > Expenses
Step 6a. If your income is greater than your total expense than that means you are moving in the right direction
Step 6b. Analyze your expenses. Do you have a category in there for savings? What about retirement? Do you have any other short or long term goals? Based on those things you might have to revisit your expense category to see if you can lower any of your expenses to make some of those goals possible.
Income < Expenses
Step 6a. If your expenses is greater than your total income than that means you need to go back through your expenses. If it was set up correctly from Step 3 then you have to start from the bottom of your expense column and work your way up. This is where pain can comes into play. What can you live without? Netflix… eating out… gym membership (are you actually making use of it)? Sacrifices can be painful for the moment, but ultimately knowing you will not run out of money at the end of the month is worth it!
When you do your budget if your expenses are consistently greater than your income than that means that you are most likely charging the extra. While this might not seem like such a big deal but in the long run it is intenible.
Step 6b. If your expenses is more than your income, you could look at your income category to see how you can increase your income. Short term this might be more difficult to accomplish but long-term that might be the best plan.
Short term the best bet is to manage expenses but overall the long term focus and push of this site is to build up your income!
How to Successfully Budget your Money- Step 7.
The goal is to track your expenses throughout the month. Try not to go over your allotted amount for each category. If you go over your allotted amount is it because you misjudged it or is it something else? If you go over your budget in a category, what other category are you going to pull the money from?
How to Successfully Budget your Money- Step 8.
Analyse what went right and what went wrong. Look at ways to improve your budgeting and your spending.
How to Successfully Budget your Money- Step 9:
This is a simple guide to get you going. It’s simple, not complicated. It requires work, thought and prioritizing your actions...sound familiar? It will probably take a couple months to start getting the hang of it.
What works to help you successfully budget your money?
Keep a look out for “How to invest like a nurse.”
Do you want to stay up to date on all the new posts by NurseMoneyTalk.com? Click here to sign up for our newsletter.