Happy Halloween! It’s the season for autumn color, pumpkins, ghost stories, haunted houses, costumes, and trick or treating. It’s also the season for the annual GoBankingRates savings survey released earlier this month. The results are scary! 58% of Americans have less than $1,000 in savings even more spooky is that 79% of Americans have less than $10k in savings. I have a difficult time believing this is representative of the American adult population. We live in a culture of excessive wealth yet only 21% of Americans have more than 10k in savings?
Those who responded to the survey self-identified two major obstacles to savings. The first obstacle is living paycheck to paycheck. A second obstacle is low salary. A majority of people also identified cutting their discretionary or unnecessary spending as the way to boosting their savings. I love when a study or survey gets to the heart of matter!
Paycheck to Paycheck Nightmare
A family or person may have difficulty breaking the paycheck to paycheck cycle. Living paycheck to paycheck should not be normal nor is it financially healthy. Often people end up living this way because they don’t know anything different, and this is how their parents and family have always lived. This type of person often learns a bit about money and hear about a different way and are able to correct course with some effort.
Many others though, end up living paycheck to paycheck as a result of multiple factors often outside of their control including accidents, illness, or other unfortunate events. Getting off the paycheck to paycheck cycle is much more difficult. Often having a low salary contributes to this second type of paycheck to paycheck person.
Low Salary Nurses?
Most nurses do not face the second major obstacle of having a low salary. This would mean most of nurses do not have a great reason for living paycheck to paycheck. There are definitely exceptions so forgive me if you feel helplessly trapped in the paycheck to paycheck cycle due to your salary or other uncontrollable circumstances. The average RN salary in 2016 was $68,450 according to US News Money while the median income for a full-time worker was $49,791 in 2016 according to the Census Bureau.
We nurses make quite a bit more than the average full-time American worker, so I would expect nurses to have fewer reasons for living paycheck to paycheck. I would also think that nurses would have more saved up. There are no current surveys that I’m aware of that examine nurses and their money habits. I would guess that nurses save pretty similar to the average American.
Almost Guaranteed Job?
Nurses are an interesting group when it comes to having an emergency fund. If you have experience as a nurse, you pretty much have a guaranteed job almost anywhere in America. If you’re fresh out of nursing school, it doesn’t feel like there are lots of jobs, so the game is a little different for new grads. As a new grad, you usually have to take the first job you’re offered even if it is not quite a perfect fit. An experienced nurse probably doesn’t need a large emergency fund due to job security. People are always getting sick and experienced nurses are in high demand. Yet every nurse should have emergency fund savings.
Why an Emergency Savings Fund?
You need emergency savings because you never know when you might have a huge, unexpected expense. Cars break, we get hurt, kids get sick, spouses lose jobs, taxes are due, roofs leak, and natural disasters happen. Having an emergency fund helps buffer you against life’s unexpected events and prevent you from having to take on soul-draining debt.
The Smart Nurse
The financial world’s rule of thumb is you should save 3-6 months of expenses. I dislike rule of thumb because it’s based on intuition and mystery rather than research and hard facts. Much of the rule of thumb is based on how long it would take for you to find a job if you got laid off. This is not a major concern for nurses since they are currently in high demand all across America.
So how much should you have in your emergency fund? That is something for you to think and discuss. We keep a little over $10k in a high-yield money market account, but that is more an arbitrary number that helps us sleep at night rather than something we researched out. If you’re not living paycheck to paycheck, you also have an additional built in buffer. We live on last month’s income, so we in effect have a month of buffer before we would be forced to use our emergency fund for our living expenses.
An important step in increasing your savings and creating an emergency fund is tracking your expenses and knowing how much money you currently have. We use an older version of YNAB for tracking our expenses and a free Personal Capital account for tracking how much money we have. If you’re ready to break the paycheck to paycheck cycle and be an above average financially, cut your unnecessary spending today and start creating a new financial way.