The "Financial Vital" You're Not Tracking: Your Savings Rate
In Financial Literacy for Nurses’ Module 1, we "charted" a lot of "vitals"—Assets, Liabilities, Income, and Expenses.
Now, I want to give you the single most powerful "vital sign" for predicting your future financial health. It’s the one number that determines, more than anything else, how fast you will build wealth and achieve your goals.
It's called your "Savings Rate."
What is Your Savings Rate?
Your "Savings Rate" is the percentage of your "Net (Take-Home) Income" that you are keeping for your "Goals."
It's the opposite of your "Spending Rate."
Here is the simple "diagnosis" formula:
Total Monthly "Goal" Money / Total Monthly "Net" Income = Savings Rate
Total "Goal" Money: This is all the money you're putting toward your "20% Bucket" (from the 50/30/20 rule). It includes:
All savings (E-Fund, Sinking Funds)
All extra debt payments (above the minimum)
All retirement contributions (like your 403b)
Total "Net" Income: This is your "take-home pay" (what hits your bank).
Why is This "Vital Sign" So Important?
Let's look at a "prognosis" for two nurses, both with the same $5,000/month Net Income:
Nurse A: The "Low-Rate" Prognosis
Income: $5,000/month
Spends: $4,750/month
"Goal" Money (Savings): $250/month
Savings Rate: ($250 / $5,000) = 5%
Prognosis: This nurse will "tread water" for their entire career. At a 5% rate, they are barely out-pacing inflation. They are saving, but it will take them decades to build a significant E-Fund or pay off debt.
Nurse B: The "Care Plan" Prognosis
Income: $5,000/month
Spends: $4,000/month
"Goal" Money (Savings/Debt): $1,000/month
Savings Rate: ($1,000 / $5,000) = 20%
Prognosis: This nurse is on the fast track to wealth. They will build their $1,000 "STAT" E-Fund in one month. They will pay off their "acute" debt in quarters, not years. They are building a "wealth-generating machine."
The "Treatment Plan"
The entire goal of your "Care Plan" (which we build in Module 2 of the program) is to increase your Savings Rate.
This is why we "triage" your "Variable (OT) Pay."
By creating a "Base Budget" for your "Needs" and directing all "extra" pay (OT, surplus) directly to your "Variable (Goal) Plan," you are surgically increasing your Savings Rate.
Your "Prescription": Don't be discouraged if your "Savings Rate" is 5% (or even negative!) right now. We are in triage. Our "Care Plan" is the "treatment" to get that number to 15%, 20%, or even higher.
This is the number to watch. It's your real "vital sign" for "Financial Wellness."
If you have yet signed up for the Financial Literacy for Nurses, ENROLL here!