Contract Series #5: Budgeting & Saving on the Road
Even When Your Income Isn't Stable
Let’s face it. Traditional budgets fail us traveling nurses. Every budget app or budget spreadsheet I’ve seen assumes steady pay, which we don’t have. Don’t fret — that’s not to say budgeting is impossible. The budget just has to maintain flexibility. And so do your expenses.
When it comes to budgeting for travelers, the goal isn’t precision. It’s resilience.
The Number That Matters: Baseline Expenses
Baseline expenses are costs that you must cover no matter what. They’re things such as:
housing
food
insurance
debt minimum payments
transportation
basic living
Since you’ve tracked your expenses since #2, you should have an accurate estimate for your baseline expenses total. If your lowest-paying realistic contract covers your baseline, you’re safe. Beyond the baseline living expenses, there are two other buckets that I budget for as a traveler.
How to Budget as a Traveler: Three Bucket Model
The Three Bucket Model of budgeting is a manageable system that differs from line-item micromanagement in that it’s simpler and more efficient to use and is easily adjustable based on travelers’ ever-changing pay. The money you make first gets applied to the top bucket (baseline living); extra income then goes to the next bucket (debt/saving targets). Finally, any other income goes towards the last bucket (flex/lifestyle).
Baseline Living: includes expenses that must be covered no matter what
Debt/Saving Targets: includes money you want to apply to debt paydown and/or saving; also included in this bucket is the intentional saving you will do for gaps between contracts, which I’ll discuss next. This bucket disappears only on low-paying contracts when you can only afford to pay for your baseline living
Flex/Lifestyle: includes completely discretionary spending such as theme park tickets, drinks with friends, expensive food, etc; it is the first bucket to disappear if you take a low-paying contract
Contract Gaps and Missed Shifts
Every travel nurse experiences a gap between contracts at some point. Many times, it’s planned, sometimes it isn’t. Either way, you have to be able to cover your baseline living expenses still, even though you’re earning $0 during the gap. What do you do now? If you’re only now thinking about it now that you’re in a gap, it’s too late. Preparation makes a gap go from an emergency to just another event.
While on higher paying contracts when you can cover baseline living and have money to spare, the extra income should be directed toward the second bucket: debt/saving targets. Enough money has to be earned over the course of your current contract (and possible extensions) to cover gaps. For example, if your monthly baseline living expenses cost $4,500 and you plan on taking a week off between contracts, you’d want to save at least $1,039 to cover the gap.
If you have more money coming in, apply it in this same bucket to your other saving targets (remember your savings rate and related goals?) and/or extra debt payments. Any extra money beyond this can go straight to the final bucket, flex/lifestyle.
On a simpler note, if you miss a shift, do the hard thing and make it up. It’s the easiest way to get the exact amount of money you wanted to make back. Otherwise, you can extrapolate the above example to a daily/hourly gap.
Using the Three Bucket Model and applying the gap saving to it is one of the easiest and most effective ways you can budget while also making sure you don’t form an obsession. Exceptional tools you can use with the TBM are spreadsheets, tracking/budgeting apps, notebook paper, etc.
Now that you understand your budget and expenses need to be flexible, it’s time to learn about investing without blowing up flexibility.