For most residents, managing finances is a top priority. Medical student debt combined with a limited income, housing costs and other bills can be stressful to manage when you’re so busy working. Fortunately, the major financial goals recommended for residents are fairly simple to understand. Read these five goals.
A recent article in the AMA Alliance magazine Physician Family discusses the top five financial goals for residents and fellows that are not only simple to follow, but can be incorporated into your busy lifestyle:
- Understand your loan repayment plan. Make sure you know the type of loans you have, the length of your grace periods if you have them, the date you must begin to repay your loans and other time-sensitive details. Learn more about loan repayment and forgiveness programs.
- Get the insurance you need. In addition to health, auto and home or renter’s insurance, physicians should consider additional insurance policies. For example, disability insurance will protect your income if you ever are unable to practice.
- Start saving now. Use your bank’s automatic transfer feature to routinely move money from your checking account to your savings account. Residents and fellows typically aren’t offered 401k plans through work, but you still can start a retirement savings plan. You may be eligible to start a Roth IRA, an individual retirement account to which you contribute after-tax dollars. If you have a non-physician partner or spouse, see whether you can put money into his or her employer’s 401k.
- Prepare for the expenses of practice. The transition from residency to practice generates many costs, including office set-up expenses, legal fees, board and certification exams, medical license fees and the possibility of relocating or buying a home. If you are joining a hospital or practice, find out which costs your new employer will cover. If you are planning to open your own practice, carefully calculate your potential expenses. With moving and credentialing, be aware that you may have a period of time with no income. Plan accordingly by saving enough money to cover your expenses for at least a month or two.
- Stick to a budget. Practically every financial planner will tell you that a budget is the first and easiest tool to plan your finances. Use online resources to make your budget, or consult an expert.
See more information about financial goals for residents and fellows in the fall 2014 issue of Physician Family, published online four times a year with especially helpful advice for physicians’, residents’ and medical students’ loved ones.