The Anesthesia Record

Dollars and Sense

The annual arrival of tax season brings with it an acute awareness of one’s financial situation.  As full-time students, our bank accounts may not be as robust as they once were but thankfully this won’t always be the case.  We will soon graduate and gain employment as CRNAs, where in all likelihood our earning potential will far exceed the number printed on our previous paychecks.  While we should enjoy our newfound and hard-earned salary, our long-term financial health demands that we construct debt-repayment, savings, and retirement plans as well.  

Jeremy Stanley, a Certified Financial Planner and Wealth Advisor at LPL Financial, has graciously agreed to serve as this month’s guest columnist.  Through his work with numerous CRNA clients over the past decade as well as his participation in SRNA financial management training, Mr. Stanley is well versed on the financial opportunities available to those in our profession.  He presented this information to students and practicing nurse anesthetists at the annual meeting of the North Carolina Association of Nurse Anesthetists last September.  Here, he addresses the unique monetary challenges faced by SRNAs and outlines specific financial goals designed to position nurse anesthesia students for financial success following graduation.

Guest Columnist Jeremy Stanley, LPL Financial

Working with CRNA’s and SRNA’s for many years has given us a clear understanding of the financial constraints of going back to anesthesia school.  Making this transition is a good long term financial decision but can cause financial hardships in the short term. (Going back to anesthesia school can present a unique financial challenge.) 

Many of our clients have found that a financial plan helps them to crystallize their goals and prepare for the lifestyle of which they dreamed.  There will undoubtedly be roadblocks and speed bumps along the road, but a plan will help you steer through them and get back on track.

Although each one of the following areas can be a page long in itself, the following is a brief understanding of areas that will be important to you as a CRNA. Even though each of these objectives may not be at the fore front of you mind now as a SRNA, they will be as you transition to a CRNA.

The most important for most SRNA’s will be debt management:

Debt Management 

For many SRNA’s, debt management is often a major obstacle. Student loans, credit card and car loans can quickly overload a budget; the key is to have a debt reduction strategy.

Here are 2 debt reduction strategies which you can try out for yourself.

Snowball method: This is where you pay off debt starting right from the lowest outstanding balance to the highest. Here's how it works.

·         Determine how much additional money you can pay monthly toward your debt

·         Create a list of all your debt accounts from lowest to the highest balance.

·         Pay the minimum on all your debts.

·         Increase the payment towards the lowest debt balance.

Once you pay off the smallest bill, take that payment plus the increase and pay towards the next higher balance and repeat the same for all your bills.

Debt Avalanche: This is a reduction plan in which you start paying off high interest debts first and then move on to the ones having low interest rate. Here's a step-by-step approach.

·         Determine how much additional money you can pay monthly toward your debt

·         List your debts in order from the highest to lowest rate.

·         Pay the minimum towards each account.

·         Increase the payment towards the highest interest account.

Once the highest interest debt is paid off, start paying extra towards the account with the next higher rate and repeat the same for other accounts as well.

Insuring Your Future

Although most of us are aware of the need for health insurance coverage when determining our risk-management needs, many of us fail to consider the possibility that we could become disabled. A disability income insurance policy can help replace income lost because of an injury or illness. In the event that you become disabled and are unable to work, the benefits provided by disability insurance can help replace a portion of your earned income.  Keep in mind that not all disability policies are created equal, know what is covered before you purchase.

Today, virtually all heads of families should carry life insurance. Most financial advisors also recommend automobile, health, homeowners, personal liability, professional liability and/or malpractice, disability, and long-term-care insurance. 

Plan to Save

Investing is a lifelong process, and the sooner you start, the better off you may be in the long run. The first part of that process is developing consistent savings habits. Regardless of whether you are saving for retirement, a new house or that once-in-a-lifetime vacation, you will need a dedicated focus on saving. Regular contributions to savings or investment accounts may help with this process; and if you can automate them, they are even easier.

Once you begin saving on a regular basis, you’ll need to start making important decisions about how to invest your money. Regardless of the financial stage of life you are in, you will need to consider what your investment objectives are, how long you have to pursue each objective and how comfortable you are with risk.

All investing involves a certain amount of risk. In determining the amount of risk your investments should carry, consider weighing your ability to tolerate price fluctuations against your need to earn a certain rate of return. Keep in mind that time plays an important role in this decision. For a retirement that is 30 years away, you can probably tolerate more risk because you have the time to make up any losses you may experience early on. For a shorter-term investment, such as saving to buy a house, you probably want to take on less risk and have more liquidi liquidity in your investments.

Planning for Retirement

Retirement may be the end of your working years, but it’s just the beginning of what should be the most important phase of your life.  When will yours begin … at age 55, 62, 67?  What kind of lifestyle do you want to have?  Will you spend more time traveling, visiting family, volunteering, exercising, painting, writing … teaching?  How can you prepare for this stage, and when should you start?  Wouldn’t you like to know if you are on track to make this happen?

Most people focus on the day-to-day activities.  Few people realize that they should plan for their retirement as if they were preparing to take a long vacation.  You can expect to spend from 15 to 30 years or more in the retirement phase of your life.  What will you be doing?  Where?  For how long?  How much will it cost?

You make travel arrangements weeks or even months before taking a trip, so you can get the flights, car rentals and hotels that you want.  You plan where to go, how long to stay, what clothes to bring, and how much it will cost.   

Make travel arrangements at the last minute and you will surely sweat the details.  It works the same way in planning for your retirement years.  Creating and implementing the right plan can make your life less stressful and more enjoyable, because you will have taken out a lot of the uncertainty about the future.  There will be roadblocks and speed bumps along the way, but a plan will help you get through them and back on track.

A Disciplined Strategy and Your Financial Advisor Can Help

One of the hardest things about investing is to discipline yourself to save an appropriate portion of your income regularly so that you can meet your investment goals. Also, if you are not fascinated with investing, it is probably difficult to force yourself to review your financial situation and investment strategy on a regular basis. Establishing a relationship with a trusted financial advisor can go a long way toward helping you practice smart financial management over your lifetime.

Jeremy Stanley is a Wealth Advisor with LPL Financial.

Securities offered through LPL Financial, Member FINRA/SIPC.