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A great idea for a resident is to make a financial plan now, so you know what to do with your soon-to-be increased income before your first attending position's paycheck.
As you are developing a financial plan in order to grow your personal wealth, you should consider budget, debt repayment, tax planning, savings and retirement planning, and catastrophe planning.
The first paycheck after residency will be a big change, but don’t let yourself get there without having a financial plan in place. So what do you do with all of that extra income? While it might be tempting to spend it, that won’t grow your wealth over the long term.
In order to make the most of your money and secure your financial future, you should put together a financial plan (including a budget) and make your money work for you.
When you’re considering your budget, keep in mind that you may have a higher debt burden than many others and are starting your retirement savings later.
However, that is offset by the fact that physicians earn higher salaries. So by making a budget, or a “road map,” you’ll have a plan of how to best reach your financial goals.
The average medical school graduate in 2015 owed $183,000, so debt repayment is a reality for many residents, fellows, and attending physicians.
Most new doctors have an uncomfortable amount of debt after training.
In fact, the average medical school graduate in 2015 owed $183,000, so debt repayment is a reality for many residents, fellows, and attending physicians.
It can be difficult to strike a good balance between spending, saving, and debt payments. A good plan to tackle debt repayment will remove a lot of the stress that arises from being in student loan debt.
We’ve put together a guide to the various programs and strategies you can use to come up with the best way for you to repay your student loans.
Honestly, your balance sheet is probably pretty unbalanced right now. You may have a lot of liabilities and few assets (except for your future earnings).
You may not have a lot of liquid assets, and probably little invested for retirement. As part of your financial plan, you should make sure that account for savings is an integral part of it.
Get into the habit of paying your future self first. Insufficient savings can force you to turn to debt, which is why you shouldn’t grow into your income.
It’s much harder to cut back than to never increase your lifestyle in the first place. Before you start making big purchases, you should have a cushion in a savings account.
Beyond saving cash, safe investing can have a hugely positive impact on your financial future. Investing today, thanks to the power of compound interest, will have a huge impact on your financial health later.
In 30 years, a $15,000 investment today at a conservative average 5 percent return will give you $67,225. A $30,000 investment will return you $134,450!
Choosing the right investments is critical, so if you aren’t sure or don’t want to spend a lot of time on tracking the health of your investments, working with a financial advisor can maximize your returns.
Investing is a great way to make sure your money is getting you the best return possible.
If you didn’t have time to learn about investing as a resident, now is the time to learn or to assemble a good financial advising team.
Between learning the difference between a backdoor Roth IRA or a 457 plan and finding the best ways to maximize your post-tax income, it’s time for a crash course in financial literacy.
If you don’t feel comfortable setting up a financial plan by yourself or don’t have the time to do so, finding a good financial advisor who will help you develop the best plan to achieve your financial dreams is an excellent idea.
From Health Savings Accounts (HSAs) to 401(k)s to Roth IRAs, there are various ways of both considering your tax burden while investing for your retirement.
When you are considering how best to invest, make sure you aren’t missing out on any tax deductions and that you’re adequately saving for retirement.
Catastrophe planning includes disability and life insurance.
Disability insurance is especially important to obtain as a resident, due to the discounts available to residents and the lower premiums offered when you are young and healthy.
This is a way to protect your future earnings, instead of being unprepared if you are injured in a way that would threaten your ability to work in your specialty.
Once you complete these four steps, you’ll have an excellent foundation to ease your transition from training to practice.