By Steve Allender, CRPC®
Women working in healthcare face unique financial challenges that are often overlooked. Despite being essential frontline workers, female healthcare professionals often face obstacles when trying to build and manage their wealth. At Acute WealthCare, we believe it doesn’t have to be that way. In this article, we’ll discuss the top five unexpected financial threats that female healthcare workers face and what you can do to overcome them.
1. Taking On Too Much Debt
One of the most significant threats to the long-term health of your finances is taking on too much debt. For healthcare workers, student debt is par for the course, particularly in specialized fields like nursing, pathology, and anesthesiology. Women are also more likely than men to take out student loans, and they tend to have higher levels of debt due to lower earnings and longer repayment periods. High student loan debt can delay major financial milestones such as homeownership, starting a family, and retirement savings.
This issue is often exacerbated by credit cards. It can be all too easy to turn to credit cards as a way to make ends meet early in your career, or supplement your lifestyle before you can actually afford it, but high-interest debt is the archenemy of financial health.
If you have substantial student loans or high-interest debt, consider working with a financial professional to create a repayment plan. High-interest debt, in particular, should be the top priority for repayment. If left to accumulate, it can be incredibly challenging to make progress toward your financial goals. Consider consolidating your debt or using the snowball or avalanche method to pay it off systematically.
2. Inadequate Emergency Fund
Could you comfortably pay an unexpected, major expense right now without jeopardizing your financial future? For most female healthcare workers, the answer is no. Whether you’re fresh out of school trying to make ends meet, or you’ve been working in your field for a while, not having an emergency fund is a financial pitfall I’ve seen many healthcare professionals fall into.
Like anyone else, healthcare workers can experience unexpected events such as job loss, illness, or a major expense that can derail their finances. But female healthcare workers may be at higher risk of experiencing emergencies related to their work, such as a workplace injury or exposure to an infectious disease. Without an emergency fund, these events can result in debt, missed bill payments, and other financial hardships.
Building an emergency fund can provide financial stability during times of uncertainty. Start by setting a savings goal and creating a budget to ensure you pay yourself first and set aside money regularly. It’s generally recommended to keep at least 3 to 6 months’ worth of expenses on hand in case of emergencies, but depending on your unique situation, it may be better to save 6 to 12 months of expenses. If you are the sole provider for your family, or have children depending on your income, it may make more sense to save toward the higher end of that range.
3. Not Contributing Enough to Retirement
Similar to not having an adequate emergency fund, many female healthcare workers are not contributing enough to retirement. If you have access to a 403(b) or 401(k) account, it’s crucial that you are intentional with your contributions and save more than just the bare minimum.
For instance, many healthcare professionals will choose a random contribution amount, like 4%, or stick to the auto-enrollment option of 3% of their salary. But what many women don’t realize is that there is usually an employer match up to 6% of salary, and the full contribution limit is often several times that amount, at $22,5000 for 2023 (or $30,000 if over age 50). Another strategy to consider: as you receive annual pay raises, increase your savings rate by 1% each year. You’ll be taking home more pay and increasing your savings—and it won’t feel like such a stretch.
Yes, contributing any amount is better than not contributing at all, but contributing at least enough to obtain the full employer match is a much better strategy, and maximizing your contributions is the best option if you can afford it. Not only are you building your nest egg for the future, but you are doing so on a tax-deferred basis, which can improve your tax liability in the current year and help you save even more for retirement.
4. Not Enough Time to Plan
Not having enough time to plan is another significant financial challenge female healthcare workers face. Working in the healthcare industry comes with long hours, irregular schedules, and high levels of stress, which leaves little time or energy for financial planning. Additionally, female healthcare workers may have to balance their work responsibilities with caregiving duties for children or elderly family members, further limiting their time and resources for taking care of their own financial health.
But not having enough time to plan can result in missed opportunities to save for retirement, pay off debt, or make investments that could improve your financial well-being. To overcome this challenge, female healthcare professionals can start by setting aside small amounts of time each week to review their finances, create a budget, and set financial goals. Seeking out financial education resources and working with a financial advisor can also be helpful in managing your finances, even with a busy schedule.
5. Forgetting About Your Estate Plan
As a healthcare professional, you’ve likely seen firsthand the devastating tragedies that can occur to families. The consequences of incapacity or loss can unfortunately be compounded without a proper estate plan in place.
The truth is there is so much more that goes into being financially stable than just how much money is in the bank. Estate planning is a crucial aspect of a comprehensive financial plan. You should have, at the very least, the basic estate documents in place, including:
- A Last Will & Testament: This document spells out your final wishes and names a person or entity to handle your financial affairs upon death. Most importantly, it will identify a guardian for your minor children should you pass away before they become legal adults.
- Healthcare Directive: This document outlines what type of life-saving intervention you would like and in what situations it should be used.
- Healthcare Power of Attorney: Identifies a specific person who is authorized to make medical decisions on your behalf.
Many healthcare workers often overlook the full scope of a comprehensive estate plan, and it can have devastating effects on both accumulated wealth and your loved ones’ long-term future. Making sure you are adequately covered now can save you time, money, and energy in the future.
Safeguard Your Financial Health Today
For many female healthcare workers, taking care of everyone else in their lives comes first. At Acute WealthCare, we are here to help you safeguard your financial health through comprehensive financial planning. If you’re experiencing some of the challenges in this article, it’s not too late to course-correct and plan for a brighter future. Schedule a 15-minute introductory phone call to get started!
Steve Allender is a partner and wealth advisor at Acute WealthCare, an independent, fee-based comprehensive financial services firm. Steve is a Chartered Retirement Planning Counselor℠ who spends his days helping women in healthcare professions build a secure financial future through investment management and financial planning. Steve loves building long-term relationships with his clients and helping them address financial burdens so they can focus on what they love and how they want to spend their time. While Steve has officially been in the financial industry for over 20 years, he became hooked on learning about finances as a child when his parents taught him the basics of saving, spending, and giving. Steve enjoys all the outdoor activities living in Colorado provides, and you can often find him backpacking, snowshoeing, rafting, mountain biking, fishing, and exploring old mining communities. His claim to fame is that he is a Colorado Trail thru-hike completer, covering 486 miles of the most beautiful country on earth. Steve also enjoys a good book about Lincoln and the Civil War and is committed to his community, mentoring through Save Our Youth and helping the elderly and single moms with household maintenance through the Minute Man Ministry. Learn more about Steve by connecting with him on LinkedIn. You can also register for his latest webinar on What We Do & How We Help.