The transition from residency or fellow to private practice marks the beginning of a new and rewarding journey in medicine. The move also opens up new financial options, as salaries will be significantly increased as part of the transition.
After years of low pay, the pay increases associated with the transition are definitely welcome for recent medical residents. According to her survey of 2023 graduating medical students conducted by the Association of American Medical Colleges, respondents had a median medical student debt of $200,000. But higher incomes can come with a financial risk known as “lifestyle creep,” or lifestyle inflation. Read great expert advice on steps new practitioners can take to avoid excessive spending that creates an uncertain financial future.
live like a resident
live like a resident
If you're a recently completed training physician, you've likely spent the better part of a decade living on a shoestring budget through medical school and residency. Balancing your finances as a young doctor can be difficult given the delayed gratification after years of training, but most financial professionals continue to “live like a resident” after training. ” is recommended.
If you can maintain a similar resident lifestyle and budget for a few more years, you'll be able to prioritize your financial goals, such as paying off medical student loans and other debt. It's understandable to start spending based on a new paycheck with a large mortgage, expensive car payments, and other expenses that can eat up your entire paycheck, but luxury items are a monthly expense. Once it becomes a part of it, it becomes difficult to get rid of it.
After just a few years of maintaining your household and budget as if you were still a resident and continuing to pay off your medical student loans, you'll have the financial stability and freedom to live the life you've worked so hard to achieve. You may enjoy the style.
Understand medical student loan debt
Understand medical student loan debt
A plan to repay medical student loan debt efficiently is very important for young doctors.
“Having a plan to deal with medical school debt may seem daunting at first, especially when the average doctor graduates with more than $200,000 in student loans, but it may seem daunting early in your career. It's one of the best things you can do in stages,” Caitlin Walsh-Epstein said. , Chief Marketing Officer at Laurel Road, a financial services company specializing in working with physicians.
“We have been working with residents since the beginning, and one of the pitfalls we have seen is the tendency to postpone planning for student loan debt. It could mean you are missing out on a clemency program or defaulting to clemency or deferment, which may not be your best option.The first step is understanding all your options. and make sure you're on the right path to managing your debt.”
make a budget and stick to it
make a budget and stick to it
As a physician, in addition to large medical student loans, you may have additional non-negotiable items in your monthly expenses, such as disability insurance and term insurance. Whether you've just finished training or are progressing through your career in private practice, your budget should reflect not only your current situation, but also your future financial goals. Finding the time to budget can be difficult, but it can be helpful to find a type of budget that you can update regularly.
One of the easiest methods to follow is to divide your budget into a “50-30-20” budget. Divide your after-tax income into three buckets. Bucket 1 covers essential needs. Put what you want in bucket 2. and bucket 3 for savings. And whether you use a simple spreadsheet or a budgeting app, budgeting doesn't have to be complicated or time-consuming. The most effective method is a budget that you can maintain on your own schedule.
“It's important to know how to allocate, spend, and manage your budget – what you're spending your money on. ” Dr. Chirag Shah, an anesthesiologist who works as a consultant at Laurel Road, says:
“You owe it to yourself to spend an hour a month, and sometimes an hour every few months, to understand where your money is. Just deposit a check in your bank account and then pay it either way. But it's worth the effort to stop and think about where your money is going and how you can set yourself up for success in the future.