Physician Finance Minute

We spend a lot of time talking about student loan debt. But if I had to guess, I would bet that student loans aren’t the only type of debt you are carrying. Many physicians just starting out also carry a balance on their credit cards. It’s not surprising. Your income is tiny, your debt is gigantic, and sometimes you need the plastic in order to buy groceries or for your interviews.

You know how the federal government loves to use acronyms. And that’s definitely the case when it comes to talking about federal student loans and different types of repayment plans available. Since it’s likely that as a physician you are already living on a shoestring budget, I think you may want to hear about this one. Have you ever heard of the term PAYE?

What if I told you that you actually don’t need a three to six-month emergency fund? Now, before you completely dismiss my idea as ludicrous, just hear me out. Truthfully, if you are a resident and still in your training, then you should absolutely have some sort of contingency fund- preferably enough to cover three to six months of living expenses should some big emergency arise.

Today’s medical education not only includes undergraduate work, med school, residency, and potentially fellowships, but a big part of it also includes student loan debt. And unfortunately, no one is teaching you in how to manage your finances while trying to balance your work and personal life. But truthfully the early years of your medical career are a perfect time to set yourself up for financial success down the road.

You hear me mention the “B” Word quite often. I’m talking about everyone’s favorite subject- BUDGETING. But there’s a reason why it’s discussed so often, and that’s because it truly is a useful tool as you’re navigating through both your medical career and financial path. Many physicians hear the word ‘budget’ and they want to run the opposite direction.

Asking an insurance agent just how much money they’re making off of you might make some of you cringe. While it’s not the most comfortable subject to broach with someone you’re doing business with, it’s a question you should definitely be asking. Doctors have quite a bit of insurance needs, from term life insurance to disability insurance to umbrella.

We know you have a lot on your plate when it comes to learning new terms and definitions. And yes, I’m about to add one more thing I would like you to take time to consider. As you have been working towards a repayment plan for your student loans, have you ever come across the term “income driven repayment plan?”

The moment you’ve been waiting for has finally arrived. You’ve survived the grueling residency program, managed to scrape by on the measly salary, and now you’re beginning the medical career you’ve always dreamed of. Oh but wait, there’s one slight issue.

If you’re in your residency then most likely you have one singular goal and that’s to survive the week in front of you. It’s understandable that during this time in your career it’s hard to focus on other goals. But regardless of where you are in your career, one thing I encourage you to consider is to set aside a dedicated amount of time and really think about your financial goals.

I’m taking a chance and giving you financial advice that’ll probably make you uncomfortable. We’ve already discussed that establishing a budget, analyzing your spending habits, and contributing to a retirement fund are great first steps to financial health and wealth. But there’s another thing you should consider if you want to get yourself on the right track financially speaking. The biggest step you can take is avoiding lifestyle inflation.