Throughout the past seven to 10 (or more) years, you’ve learned the art of living frugally while working for a fraction of your worth during all those years of training. Then, the end of training nears. You are about to embark on a new journey with greater responsibilities…and a much larger paycheck.
You likely won’t receive much sympathy from your non-physician peers or family as you face this reality; a significant increase in income sounds like a good problem to have. In fact, it doesn’t actually sound like a problem at all. The reality is that the sudden influx of cash can be quite daunting and stressful, and for young physicians, it often leads to lessons learned the hard way.
One major issue is that any formal education relating to finance or other business topics didn’t exist during all your years in training. The amount of medical knowledge crammed into your training years leaves little to no spare time for non-medical topics. However, with so many financial variables prevalent in both your professional and personal lives post-training, this lack of exposure to basic financial principles during training is troubling.
While many of your closest friends from high school or undergrad have already been in the workforce for a decade with the ability to start their long-term financial planning and investing strategies, odds are that you have been moving in the opposite direction: increasing your debt via student loans. In addition, few forces have as big of an impact upon your wealth as does the length of time you’ve invested.
Fortunately, you have the ability to earn a higher paycheck than most, which can help offset some of your delay into saving and investing. Unfortunately, the temptation to purchase items that were unrealistic during training (luxury cars, large house, etc.) can be overwhelming. You are certainly entitled to reward yourself for the years of training you’ve endured. But the good news is that, by exercising some common sense and restraint in your immediate spending, you can help make up for a portion of the aforementioned lost time. Maintaining the resident/fellow lifestyle (or allowing only a modest increase) for only one or two additional years could provide you a significant jumpstart versus assuming the attending lifestyle immediately.
Creating a budget is a great idea for two reasons. First, it will give you an idea of how much you will be spending on necessities - the things you need to live. Second, it will determine your discretionary income or surplus after your necessities. For example, if you create a monthly budget to include all fixed monthly expenses, it can even help determine how much you can realistically afford to allocate toward items such as a mortgage or car loan.
Consider working with a professional adviser. Similar to the medical profession, the financial industry offers an array of designations. The term "financial adviser" can be used to describe a very diverse field of individuals. It is best to educate yourself on these designations and the requirements and training needed to obtain.
Jeff Hinds, MHA, is president at, LLC Premier Physician Agency, a national consulting firm specializing in physician job search and contracts.