Should Nurses Put Money Into 401K?
Putting money aside is something all nurses should be doing, regardless of what stage they are in their career. Nursing is a stable career, and if you are smart with your money, you can retire a millionaire as a nurse without picking up every extra shift under the sun! Here are some common myths about 401ks and why some nurses choose not to put money into them.
Myth #1. The market is going to crash.
It is true that the stock market is a confusing and hectic thing to figure out. Stocks go up and down on a daily basis, and at the time of this writing 01/03/2019, the stock market took a huge dive because of the poor sales of Apple products in China. Recently another loss hit the stock market because Tesla had a poor fourth quarter, and investors are pulling their money out of the electric vehicle company. While it is smart to question the reliability of the stock market, not putting your money into your 401K at work could end up costing you a lot of money.
The stock market has ups and downs, and it is true that in the housing market crash in 2008 a lot of people lost a lot of money in their 401k. The truth is that investing in the stock market is still a good thing to do, but remember to not put all of your eggs in one basket. If you put all of your savings into high risk investments, you have the possibility of losing more money. You have the chance of making the most money off of high risk investments, but you need to remember to put your money into different accounts. This way, if Apple tanks, but Tesla surged you would lose money in one account, and gain in another. So remember that the stock market might go up and down, but it is still better to put money into your 401k and keep money in several different investments that have a mix of high risk and conservative risk.
Myth 2. I need to put in a lot to get a lot back.
You do not need to put in a lot of money every month in your 401k to make it worth it. If you are a Dave Ramsey fan, he advises people to not put money aside until you are debt free. This is a great tip, and if you are struggling to pay your bills because of all the debt you have racked up, then you really do need to focus on getting out of debt before investing. But if you can afford to put away just 2% every paycheck, and your employer will match your contributions, you can potentially put away a good amount of money in a year.
The money taken out of your check is taken out of the gross sum. This means that if you make $2000.00 in a pay period, and your check is $1500.00 after taxes and insurance and other fees are taken out, you will put in $40.00 into your 401k. If your employer matches your contribution you will then have $80.00 saved into your investments. For a two paycheck month you will have saved $160.00, which will add up to around $2000.00 by the end of the year. This means that even putting in a tiny portion of your earnings into a savings account will add up to the same difference as depositing an entire check a year into your 401k that will hopefully accrue interest and be worth a lot more by the time you retire.
Myth #3. It's too late for me to put money in a 401k.
If you are a young nurse in your early twenties and have started saving, good job, and you will be very wealthy if you continue to put money aside. If you are a veteran nurse who is close to the age of retirement, you may not be able to make as much money off of interest, but it is still a good idea to save money into a 401k. There are different programs for people in their later fifties, or sixties that have different rules on when you can take money out, and what stocks you are able to put money in.
There are plans where you can put money in that has very low risk, so if you are concerned that the stock market will crash soon you do not have to worry. Some of these plans are designed specifically for people who are close to, or at retirement age. Remember that it is great to start saving young, but if you haven't started to save, now is the time. Don't rely on a social security check to get you by for retirement. Work hard to get out of debt, put money into a 401k, and enjoy the life of a retired nurse when the day comes.
401ks are complicated, and it would be extremely time consuming for you to read everything you need to know in one short article. The purpose of this article is to motivate you to start saving, and putting away money for retirement. Talk to your HR director at work if you are not already set up on your companies 401k plan. When that is set up, continue to learn as much as you can about investing. Nurses make good money, that is stable and reliable income. You have the opportunity to have peace and comfort when it comes time for you to stop your nursing career and enjoy a different phase of your life.
For more information, the two books recommended by RnMindset are Dave Ramsey's Total Money Makeover, and Tony Robbins Money Master The Game. You can buy these books off Amazon, rent them at your library, download them on audible, whatever your style, these two books will help you build a good foundation of how to save and put money aside into a 401K.
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To find the best price for Dave Ramsey or Tony Robbins, click on the links here and search for used, new, or download a kindle version. Either way you learn the information you will become more knowledgeable in your finances, and learn how to become truly wealthy.