As healthcare professionals, we tend to focus on physical and mental well-being, forgetting another essential type of health– financial health! As a new nurse, one of the greatest things I learned is how to set myself up for the future by making smart money decisions. Now, as you begin your journey into the field of nursing, I’m here to pass on a few of the most important pieces of advice so future you will look back and thank twenty-something you.

Start Investing For Retirement

I know you’re just getting started and retirement is a literal lifetime away, but what you do now will have an incredible impact on your life in 30 or 40 years. The simplest way to start investing is in your employer’s retirement plan, whether it be a 401(k), 403(b), Roth IRA, etc. These retirement plans automatically deduct and invest your contribution with each paycheck into various funds. Over time, your investments may gain and lose money, but historically the stock market has always recovered from slumps to reach new highs (see below).

Its never too early to start contributing to your retirement because the earlier you start out, the more your money will work for you. That’s right, your money will work for you! Albert Einstein once said “compound interest is the eighth wonder of the world. He who understands it, earns it… he who doesn’t… pays it.” Compound interest allows you to not just make money on your initial investment, but also the interest it gains. It enables your wealth to snowball over time and makes it easier for you to reach your financial goals. Keeping all of your money in a savings account to gain 0.25% or less is just not enough to survive on in retirement.

So how much should you be saving? Investopedia interviewed a number of financial advisors across the country and found that the recommended contribution rate is at least 10% to 15%. The most important thing is to at least contribute enough to take full advantage of your employer’s contribution match. The employer match may vary across institutions, but let’s say your employer will match a 4% contribution. You only need to contribute 4% of your pay for them to add an additional 4% for free.

Avoid the Post-Grad Spending Spree

It’s inevitable. You and your friends will graduate, begin earning a real income, and you will see many of them buy big-ticket items like a new 4-door Jeep Wrangler or an entry-level luxury car. Just wait for the posts on social media… This is known as rapid lifestyle inflation. In other words, as our income improves, we spend more on things we may not necessarily need– a brand new car or a pricey apartment, for example. There are many expenses you will incur as a new-grad nurse without making it more difficult for yourself. You may have to pay for new scrubs, a stethoscope, and other supplies while also covering rent, utilities, commuting expenses, etc.

Instead of blowing your first few paychecks immediately, resist splurging and spread out your purchases so you can build up emergency savings. Most financial advisers will say your emergency fund should cover at least three to six months worth of expenses, but financial expert Suze Orman insists an emergency fund should cover close to a year of living costs. Yes, this is a lot of money and will take you time to accomplish, but that’s the point! You need to be serious about monitoring your habits and keep track of your income and expenses to achieve financial security.

In his book “How to be Richer, Smarter and Better Looking than Your Parents,” Zac Bissonnette details common mistakes and misconceptions when buying a car:

• Buying a used car these days not mean driving a vehicle with 100,000 miles and severe maintenance issues
• Used cars are not only cheap but safe to drive too
• Buying a used car for just a couple thousand dollars in cash will save you from the depreciation of a new car the moment you drive it off the lot
• You likely won’t need theft or collision insurance because thieves are less likely to steal older cars

So, avoid the brand new car and do some research to find a reliable, used car you can pay for in cash. It may be tempting to finance a vehicle and stretch out the loan to keep your monthly payments low, but you will end up paying much more than the value of your car by the time it is paid off! Bottom line: if you do not need a new car, save yourself the money and get as much as you can out of what you have or take public transportation.

Now that I covered the basics, here are a few more tips I’ve learned over the past few years that can help you accomplish your financial goals:

• Paying off your student loans should be your number one priority! Make the minimum payment on loans with the lowest interest rate and pay extra on loans with higher interest rates.
• Don’t rely on credit cards to get by. Use credit cards to help build a good credit score by paying off the card before interest is applied each month. If you’re close to or are maxing out your credit card, you’re living outside your means and need to review your budget.
• Invest in yourself. Whether it be graduate school, advanced certifications, or conferences, make a continued effort to improve your worth. Pursuing further education will increase your earning power and open up opportunities for advancement. If your employer offers continuing education and tuition assistance, take advantage of that valuable benefit!