Going into 2022 with a sound financial plan will help springboard your financial independence. Obtaining financial independence without a plan is practically impossible. Therefore, you need to spend a couple hours and determine how you are going to increase your income, lower your expenses, and pay off your debt. Do not float through life being clueless about your finances like the majority of Americans.
Did you know that 50% of Americans are a paycheck away from disaster?
Did you know 45% of Americans couldn’t even cover a $500 emergency in their life?
Did you know 40% of American households carry credit card debt month to month?
Did you know 56% of Americans have less than $10,000 saved for retirement?
Essentially, don’t be like the majority of people. I wish I knew the statistics within nursing, but from the consultations I have done, I suspect it isn’t that much better. Hell, it could be worse if you consider many nurse practitioners carry over $150,000 in student loan debt…
With that said, lets dive into a simple plan that you can begin to implement in 2022 to propel your financial health and wellbeing:
- It all starts with income generation. If you have no money, then you can’t become financially independent, pay off debt, etc… Generating income is the foundation to developing a strong financial plan. Are you working a W2 job? Have you seen a raise at all? Listen, inflation is REAL, it is WIDESPREAD, and there are LITTLE signs of it slowing down. You need to present this to your “boss” if you haven’t seen a wage increase. Negotiating a fair salary is something every employed nurse practitioner needs to become adept at.
- If you already don’t have a business, then you seriously need to consider opening a side hustle in 2022. You will NEVER make the kind of money working for someone else as you can with a business. It is IMPOSSIBLE. This was a revelation when it finally hit me. Show me a job that can pay you $10,000 a month working 6 hours a week while maxing out a self-employed IRA at $61,000 a year. You can’t. That is easily doable with a side hustle. If you want to become financially independent, you really need to have at least one business.
- Do you track your expenses? I bet most of you don’t. You cannot fix a problem unless you can measure it. If your spending is out of control or if you have nothing left over at the end of the month, then you need to look back at your credit card and bank statements over the past 3-4 months and determine where your money is going. We all are guilty of spending money on BS… Clean it up and see your savings increase. There are so many expense tracking apps out there, just download one and GO. Decreasing your expenses will increase your income!
- How much debt do you have? Do you even know? It astounds me at how many nurse practitioners don’t even know how much debt they are in. Look at all of your debts, add it up, and then vomit. Seriously. That is money you OWE someone and it will not just “disappear” and “fix” itself. Debt = slavery. You can NEVER be free and have a bunch of junk debt. There is GOOD debt and BAD debt. Understand the difference. Then make a plan to pay off the debt. Use the snowball or avalanche method of debt paydown. IT WORKS!
- Are you saving money or investing your money? Do you have anything saved for retirement? Do you have an emergency fund? You really need to take this seriously. Don’t expect our government to take care of you. YOU TAKE CARE OF YOU! If you aren’t maxing out your 401k, then you need to walk into HR on Monday and change your 401k contributions to where it MAXES out the 401k every year ($21,500). You will barely notice the hit in your paycheck as this is tax free money. If you have no emergency fund, then add up your expenses for 6 months, save that amount, and put it into a bank account that you NEVER TOUCH. You need to make 2022 a year where you begin educating yourself on investing. Inflation is happening folks, and every dollar you have in the bank has lost 7% of its value THIS YEAR ALONE! Put your money to work for you!
That is it guys. This is not rocket science:
Generate more income (raises, part-time work, or a part-time business).
Track and lower your expenses.
Begin paying off debt.
Begin saving for an emergency fund and/or begin investing your money the right way.
If you take these 4 ACTIONS in your life, you will be one step closer to financial independence and escaping the rat race for good in 2022!