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Hey Travel Nurses. I wouldn’t be your trusted travel nurse financial advisor if I didn’t tell you that saving and investing does not equal having a financial plan.
If you’re in your first or second year of travel nursing you probably have recognized by now that just making more money doesn’t mean your life is necessarily more easy.
A lot of financial complications are probably coming up about now.
You didn’t realize how being in a higher tax bracket affected how much you actually took home every week in your paycheck. Now you’re asking yourself and I know you’re asking your friends:
“How do I make sure that I get more money back after I’ve worked these 50, 60, 80 hour work weeks?”
Now, you’ll probably be getting a lot of bad advice like: “Just claim that all of your income is exempt.” Bad advice - because if your income is not exempt come April 15th you’ve got a huge tax bill.
Or you probably have heard some more un-encouraging commentary like, “Hey you work, taxes get taken out. Sucks to be you but at least you’re making a lot of money.”
Also not the type of answer I want to hear!
You're probably "I want to find out how I can keep as much money in my pocket that I’ve earned as possible."
On the other hand, you might be feeling comfortable for the first time in your life going from a staff nurse position to now potentially making anywhere from $2,500 to $8,000 a week!
It certainly is another feeling in the world to see your bank account grow from a couple thousand to quickly six figures in a matter of months.
But the truth is that people who just save or only invest, invariably end up making their retirement more expensive to fund than it really needs to be. Or, they end up losing a ton of money to taxes, investment fees and inflation.
Depending on the type of person you are, if you’re just saving and investing without a solid financial plan the chances of your feelings taking over your logic is pretty high.
And I’m talking about high in both directions, from fear-based to greediness.
Some of you might see what’s going on in the stock market and think, “Oh man I need to get in. I need to buy GameStop I need to buy AMC, so on and so forth.
But that’s your greed talking.
That’s not you having a solid financial plan about what you need to live a good life, and then calculating how much that’s going to cost, and then selecting smart investments that match with that plan.
It's you having investment FOMO and trying not to miss out on a potential gain even though it's not in your plan.
On the flip side, there are those of you who have never experienced so much wealth as you are building now and you’re afraid that it’s going to slip away. So instead of investing it you’d rather see it sit in your bank account and watch the balance grow. But, if your money is not growing exponentially, it’s losing value.
That’s the fear side of investing, or rather - not investing.
Here’s the thing travel nurses: the reason why you shouldn’t feel comfortable with just saving or investing without a financial plan is because saving and investing don’t address all of the variables that surround how you make your money, how you will spend your money and more importantly, how much money you get to keep.
You know about Roth IRAs and traditional IRAs and how one is pre-tax and the other is after tax. One allows you to take the money out tax free, and the other allows you to grow tax free but then when you take it out it’s taxed. So you know those basics.
Few of you understand the tax laws that govern these instruments.
For example, I was just talking to a nurse the other day and she’s been putting into a Roth IRA. Here’s the thing though. A Roth IRA starts to phase out how much you can save in it once you hit a certain income threshold.
That income threshold for single people is $124,000. A lot of you travel nurses are making well north of $150,000 a year which means there’s less that you’re able to put aside.
The problem is these financial institutions don’t keep you from adding money into it, but come tax time when it shows that you’ve over contributed to your Roth IRA, you have to pay taxes on the over contribution.
So just having the knowledge of the existing investment vehicles doesn’t mean that you’re using them appropriately.
Another issue that comes up all the time is that most of the travel nurses I talk to don’t understand the complexities of what happens to your wealth after you die and what that means to your family. How wealth can be passed on and how just a few changes can make that a smooth transition.
Last summer I worked with a couple that had an investment portfolio north of $2,000,000. They were about seven years from retirement, but the one thing that they didn’t have was a financial plan.
After meeting with them I discovered that they didn’t make any plans on how to fund medical costs in retirement. Medical cost is the highest expense that erodes away at your retirement savings.
After determining what their lifestyle goals were in retirement and what their expectations were, I was able to add back 1.1 million dollars of value into their financial plan.
Based on using specific strategies to help them mitigate and fund their medical expenses so they wouldn’t have to take it from their investment portfolio.
That’s the power of a financial plan! That’s why you, as a travel nurse, need a goals-based, data-driven financial plan that not only helps you achieve the goals that you have for yourself but also uncovers and helps you and satisfies the financial needs that you didn’t even know you had.
A financial plan makes your money more efficient and you might just realize that you may need a heck of a lot less money to live the type of life that you want than you did without it.
Marlon is a licensed financial advisor at weshfinancial.com and is known as "The Travel Nurse Financial Advisor". Marlon specializes in helping travel nurses crush their financial goals by helping them optimize taxes, accelerate retirement savings, and maximize their investments.