Saving during residency and fellowship can be difficult – many training programs are in large cities where the cost of living, transportation, food and rent can be quite high. With each step, we continue our journey of becoming experienced doctors, however at some point we feel lost because we don’t receive much financial planning advice. With medical school debt on our shoulders and specialty training ahead of us, the ability to now generate an income and live life like our peers who joined the workforce after university that has been delayed for us for years begins.
Rule #1: take care of your most important financial asset – you. Take good care of your health and avoid getting hurt or ill – if you do, your training and ability to earn a living will be delayed. Yes, unforeseen illnesses and unexpected accidents happen, but while you can, maintain good healthy habits.
Make sure you have health insurance, even if you are between jobs and may have no coverage during that time. Activate it immediately. Disability insurance is also key. It provides a source of income if you become disabled for a long period of time, typically in the range of 50 percent of your annual salary. Although the odds of using it are hopefully low, in case something happens to you, you will be glad you have it.
Pay your debt as quickly as you can – any debt – from credit cards to medical school, try to pay it down. You may think to yourself, how can I achieve this? If you simply continued to live the life of a resident, you may think that the higher income post-training would surely be more than enough to handle this issue. After all, don’t you deserve it? Yes, you do, just be mindful not to spend too much.
Last but not least, start saving money. The easiest way is to set up an automatic withdrawal system where a percentage or amount is automatically deducted from your paycheck into a retirement plan or savings account outside of your usual checking account. When it’s out of sight, it’s not within our spending reach.
There has been much coverage in the media on how doctors aren’t particularly experienced at managing money and finances. Let’s not fall into this stereotype of our colleagues – we can do better! A memorable biotechnology professor once told me to make it a goal to save 10 percent of each paycheck. This is a reasonable amount while in residency. In summary, don’t wait – start saving as early as possible!
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