CREATING YOUR PERSONAL SPENDING PLAN AND BUDGET

What is a personal spending plan and why is it important to you?

Similar to a budget, it shows you where you're earning your income, and documents your expenses to help you save for your financial goals. As you know very well, your dental hygienist salary is important. If you're not putting aside money into savings already, it's never too late to start. Here are some tips that you can use to create your plan, save more and invest in your future.

Create Your Personal Spending Plan

First, you want to identify your regular living costs, such as house payments, car payments, utilities, etc. Review your previous bank statements from last year and audit what purchases you made.

After evaluating fixed costs, how much money do you have left over and what costs are adjustable? Make a list of things you want and how much more you would need to save to pay for it, and to really get to the heart of your budget, ask yourself these questions:

• How much do you spend on eating out, going to coffee shops and other similar activities? Make sure you know the hidden costs of activities, such as going to the movies and then buying popcorn and sodas (the refreshments usually cost more than the movie tickets!), or eating out for lunch every day instead of brown bagging it. Do you have a gym membership that you never use? These costs can add up unnecessarily.
• What are you spending on clothes and shoes? Yes, sometimes we love those items, but is it worth spending the money on them if you are only going to wear them occasionally? Or is it better to save and budget so you can buy the clothes and shoes you need in your life and for special occasions.
• Do you need those impulse buys? Everyone has those little things they grab on a whim, like a magazine at the grocery store or a lip gloss that looks cute in the moment. This is where the willpower comes in. Make a list of what you need to buy and stick to it, so you can keep with your plan. Extra money can be put aside just by not spending it on things you don't really need. Ask yourself: "Do I really need this or do I just want this?"
• Are there ways to cut down on your bills? Household items, such as cable and phone service can be bundled to save money. Call your provider and see if there's anything they can do to help you cut the costs.
• Are you using your credit cards judiciously? If you buy something, can you afford to pay for it with cash? Do you have to use a credit card? If you do choose to use a credit card, can you pay it off that month when the credit card statement comes in? Try to pay off the balance each month to avoid paying interest.

Start Saving Early

Retirement may seem far away when you're just getting started in your career, but the earlier you start thinking about saving for your future, the easier it is. Saving money is a disciplined action and isn't easy for many. The Center for Retirement Research at B estimates more than 50 percent of Americans won't have enough saved to enjoy their current lifestyle by the time they reach 65. The earlier you start saving, the better as your investments are more likely to grow with time.

Consider setting aside a portion of your pay each month and invest it into a retirement portfolio, such as a 401(k) established by your employer or one you set up, like an IRA. To know what is best for you and what is allowed under current regulations, one option is to consult a financial advisor. Yes, it takes discipline to do this, but you may be able to have the deduction come out of your paycheck automatically to make things easier. It might not seem as though you have the money to spare out of each paycheck, as some months every penny counts, but little sacrifices (like making your coffee at home instead of buying it every morning, or sticking to Netflix instead of heading to the movie theater every weekend) can add up quickly. Once you start to take a look at your actual spending, it can be quite eye-opening to discover places to easily cut back.

Invest in Yourself

As dental hygienists, you need continuing education to maintain your license, so that is an additional expense to plan for. You may be lucky enough to have an employer pay for it, but many people are responsible for the costs themselves. What if there is a conference you want to attend? How do you budget for it? First, figure out the cost of the time off, the cost of the flight and hotel, and your costs for the conference itself, meals and entertainment. Take that number and divide it by your daily salary. For instance, the total estimated cost of a conference is $1,300. If your daily salary rate is $320 ($40 an hour). $1,300 / 320 = 4, you will need to work more than four extra days to pay for this trip with the exact amount depending on your tax rate. If you plan accordingly, such as four months ahead of time, you could work an additional one day per month to pay for this conference. If you work on a bonus system, make sure your dental hygiene schedule is productive at all times. Making sure patients have re-care appointments is a priority. Are sealants and fluoride properly indicated for the appropriate patients and is whitening offered to those who are interested?

Takeaways

• Calculate how much you can save by cutting want-based items vs. need-based items.
• Review 401(k) and IRA plans to determine which one works best for you.
• Plan ahead for dental conferences and continuing education costs.

Why It's Important

It is never too early to start saving! Review your current spending habits and plan ahead for future expenses, so you can be smart about your money and be prepared for retirement.