6 Essential Steps To Your 1-hour A Month Money StrategyOct 02, 2022
In the last lesson, I told you a bit about me. I let you in on how to turn your nursing salary into financial independence. Also how to use that to make a big impact on the healthcare system.
I told you how I went from $200,000 in debt to financially independent 6 years later. Then how I purchased a home in cash. Today I’m going to show you the exact money plan I use each month to do this.
Before getting to that, I want to review why this is so important.
I suspect you’ve spent a good part of your life, maybe even your entire lifetime, working towards becoming the nurse that you are. If you’ve been in the industry for a bit, you’ve probably already realized that being the very best nurse isn’t enough to guarantee your future in nursing.
What if it becomes true that you can’t make it as a nurse…
You decide you’re done with the toxic work culture
...or done working like a dispensable commodity?
You're done with the constant emotional output,
...the extreme stress or fatigue,
...the wear on your mental health?
What if you don’t decide for yourself, but an external circumstance decides for you?
- You get injured or assaulted
- You make a medical error that lands you on administrative leave
- Your license gets suspended or revoked!
I’ve thought about this many times for myself, and I know about the what-ifs because I’ve played them all out in my head. Some I’ve even lived through.
They all come back to one thing…a loss of livelihood.
You know what I’ve never heard a nurse say to me? “I love working as a nurse so much. I definitely intend to work until my traditional retirement age in this career.”
Nope. The conversation goes a little more like this, “Nursing is fine for now. I’m glad I can get a stable income and help others. This work is too hard to be able to do it for a lifetime.”
It hurts because at some point, you realize that your employer and HR aren’t there for your benefit. They are there to make money and to protect their organization. To them, you are another worker who will come and go.
You know what this means? Being an excellent nurse isn’t enough. You have to think harder. Be smarter about stewarding your money than other types of professionals. You have to care for yourself by planning for these worst case scenarios every day.
This is why this work on your finances is so important.
I’ve figured out a way to do both– be an excellent nurse and be unstuck from my job. I’m prepared for anything and I want you to be too. That’s why I’ve created this for you.
So I can show you exactly what I did.
So here it is. Here’s the exact plan I use each month. The plan that freed me from $200,000 of debt. Allowed me to buy cars in cash, my home in cash, and take 5 years off from work before returning to nursing for 10 hours a week.
6 Essential Steps To Your 1-hour A Month Money Strategy
1. Spending I&O
The very first thing you want to do each month is your Spending I&O.
First, I want to warn you that setting up your Spending I&O is the most complicated money management task. Yes, even more complicated than investing. It’s also the most important if you want to get good with money!
It took me 5+ years to perfect my tool and strategy but it worked. It’s a tool that I’ve used every month for the last 15 years now!! So the time spent setting it up is totally worth it.
It gives crystal clear understanding about what is actually happening with my money. I’ve tried using apps, butI don’t get the same clear understanding.
So if you’re ready to set up your tool, here’s exactly what to include:
Take your income and subtract your expenses.
Make sure you put every earned dollar (total income) toward a current or future expense. You will know you've done it right if, in the end, you have zero funds left over.
Take your less frequent expenses and make a plan for them. Set aside a small amount each month that will have you 100% ready for the bill when it's due. For example, your car insurance costs $600 every 6 months. Set aside $100 each month.
Determine how much you need in your emergency fund. This depends on your risk capacity which I’m going to get to in a minute. If you’re starting out make this easy by aiming for 1 month expenses saved in a savings account. Then increasing it to 3-6 months of expenses saved.
Look up all your annual percentage rates (APRs) on your debt accounts–credit, mortgage, loans. Write them in your Spending I&O sheet.
A general rule is that bad debt means an APR >7% and good debt is an APR <7%. It’s fine to invest with good debt, but advisable to focus on debt paydown if you have debt above 7% APR.
When putting all these steps together, you’ll have a rock solid cash flow plan. Each month money is going to flow in and out of your account effortlessly. You’ll never scrape to pay a bill ever again!
What does setting up your own version of the Spending I&O get you?
- Short term financial independence
- Unstuck from the paycheck to paycheck cycle… and your job
- Smartest debt payoff strategy
- Finding money you have to invest already - no extra work!
- Elimination of money stress - never again worry that you won’t have enough
2. Net Worth
The second step to your monthly money strategy is to calculate your net worth. To do this you subtract what you owe from what you own.
In financial jargon, you’ll hear people say it like this:
What you owe = liabilities.
What you own=assets.
Or subtract your liabilities from your assets.
Yes, this equation is simple. The work comes with creating a system to track your calculations each month. Also interpreting what the data means.
This exercise tends to bring up feelings about how you are doing with your money and these can be crippling. So don’t stop here.
Knowing your net worth is how you can track your data to see if your plan is working.
Interpreting your net worth
You’ll have a negative net worth if your debt is more than your investments and vice versa.
If you want a rough estimate about if you are wealthy yet. Your net worth gives you the ability to calculate:
- Multiply your age by your pretax annual income then divide by 10 to get your expected net worth.
- If your net worth is more than double the amount you calculated, then you are wealthy.
(Pssst… If you’re not there yet, you are going to be. You might not believe this for yourself yet, but I believe it for you!)
3. Portfolio Allocation
Now it's time to look at your portfolio allocation. This is especially important if you’ll be buying new investments this month.
You set your portfolio allocation after determining your risk tolerance and risk capacity. Don’t make the mistake I see so many others making and go by feel. This will lead you to picking the wrong investments.
You can calculate your risk tolerance by using an online tool called Risquiz. Then read up on risk capacity. See if you can adjust your tolerance based on your specific life circumstances.
For example, how employable are you? How likely is it you will lose your ability to work/earn income? How much savings/investments do you already have?
Once you have your portfolio allocation, then it’s your job to keep your portfolio balanced. You do this each time you add money to your investments…or once a year… whatever is sooner.
Now take the money you found you have available to invest from your Spending I&O and buy your investments!
This is the exciting part and the part that everyone is always ready to get to! I like to think of these different steps of money management like our health care institutions:
Spending I&O, Net Worth, and Portfolio Allocation is like the nursing staff on the front lines making the entire system work. Without them, there wouldn’t be a system.
Investing is the CEO who comes in, takes all the credit, and then leaves.
What I want you to see is that investing is hugely important to the organization’s health. But, without putting in the work, investing alone isn’t going to get you there.
What does it mean to “invest” anyway? It means to analyze, pick, and buy your stocks, bonds, crypto, real estate or any other type of investment. Your goal will be to find investments that match your risk tolerance & risk capacity. Investing is for the long-term… 5 or more years. Anything less, you should be putting that money into a cash account of some kind, maybe bonds.
You know what investing doesn’t mean? It does not mean picking an account. Here are some of the most common questions I get asked, “Angel, should I get an IRA?”, “Angel, should I move my money to an RRSP?” … for my Canadian friends🇨🇦. “Angel, should I rollover my account?”
My response is always,
- Have you already decided on what investments you will buy?
- Do you know your portfolio allocation?
- What are your short and long-term money goals?
If your answer is no or I don’t know yet, you are wasting time worrying about what account to use. What you should be asking yourself is how to I analyze and buy investments? How do I pick my portfolio allocation? How can I know my money goals and match those with my accounts.
It’s important to do that work to avoid serious problems since
You can’t pull invested money out whenever you want
Investing too much too soon could be a very expensive mistake
So here we go, I know nurses will understand… the work is what makes this institution operate. Not the CEO! So don’t fall into the trap of trying to invest before doing the work!
The good news is that learning to invest is something that you can learn quickly, definitely within a week if you set your mind to it. When you do that, deciding what accounts to use is easy.
5. Review Cross-over Point
If steps 1-3 are the nursing staff, and step 4 is the CEO, then the 5th and 6th steps are like the research arm of our healthcare organization! Here's where we anticipate when we will become financially independent. We can review what variables will impact our ability to do retire sooner.
Cross-over point is a mathematical equation. It shows you when the income from your investments will pay for your annual expenses. Yes, there will be a point in the future that this will happen for you! Imagine it, having enough money invested that you can pay for your life without going to work!
To get a fillable version of the N.I.F.W. Cross-Over Point Calculator add your email below.
6. Run AOC Simpli-FI-ed Calculator
Here's a tool that shows you how to account for other sources of income, inflation, and investment returns in your plan.
It gives you a very good ability to predict
- how long until you reach financial independence, and
- how long until you run out of money given different scenarios.
Bonus Step #7: Reward yourself!
When you’re getting started, it’s not realistic to expect to do all this in 1 hour a month straight out the gate. It’s going to take time, research, and tool building.
Extend patience to yourself! If you sit down for 1 hour a month and work on building out your strategy, you’re going to be miles ahead of the majority of the population. Most people don't bother doing any of this.
This is what’s going to get you unstuck from your job.
This is what’s going to end money confusion.
This is what’s going to give you financial freedom.
So congratulate yourself!
This is the strategy that has earned me hundreds of thousands of dollars PASSIVELY
Yes! That means this is how I get money I didn’t do any work for! I did not subject myself to a single patient assault,
...a single critical colleague,
...a single near miss,
...a single disagreement with an employer.
This strategy hasn’t only led money to flow into my life without lifting much more than a finger, it’s also reduced my STRESS!
Without a doubt, this is how nurses deserve to see their money work. Absolutely. 100%
I hope you’ll come back in the 3rd training where I’m going to show you some of the biggest mistakes nurses make. I bet you are doing at least one of them… but that’s next.
Before you leave here, leave a comment or question below! Hit the share button if you found it useful! Your support is greatly appreciated!
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