How Should I Save My Money? – Some Thoughts for Senior Residents About to Graduate

 

If you’re like most docs graduating from residency, you’re a little overwhelmed with amount of income you’re suddenly making. You don’t know how to deal with this income. Unfortunately, most medical schools and residencies do not give you any significant guidance on the subject. I intend this brief post to get you started on that journey. It’s a start, not the end, but I think it will get a lot of people started in the right direction.

I recommend the following steps when considering what to do with your money:

Make your (or your family’s) budget. Figure out how much your costs are. In these costs, include what you can reasonably predict in the foreseeable future. Compare this to what you will be earning. The money you have left after your costs are what you have to save, spend, or invest for the next steps.

Save for an Oh S&^t! fund. See my previous blog.

Plan for retirement. Clinical medicine can be a tough job. You won’t be able to work forever. Most people won’t want to work forever. So start saving for retirement as soon as you’ve got a reasonable Oh S&^t! fund.

Educate yourself on your options in personal finance. Some physicians are interested in personal finance and become pretty savvy very quickly. Some physicians have no interest or aptitude in personal finance and don’t want to be bothered. Others fall somewhere in the middle. Whichever group you fall into, you’re a quick study… you had to be to make it to this point in your career. Read a couple of books on personal finance, watch a few videos online, and read a few articles on the topic. Use more than one resource to educate yourself. There’s a lot of potential material to cover, but you’re used to learning quickly thanks to the process of medical education. Use the critical thinking skills you’ve developed in medicine and you will quickly be able to follow a professional’s advice.

Hire a professional if you do not want to manage your money yourself. This is a individual decision based on your time, comfort, and interest. However, if you’ve educated yourself on personal finance, you will at least be able to follow, make sense of what the professional advisor recommends, and question when something doesn’t make sense. This is analogous to informed consent in clinical medicine… the better-informed patient can better coordinate with their clinician in choosing the option that is best for that patient. Be that better-informed patient.

Follow through with your savings plan. There’s no use in having this plan if you don’t use it.

These are only steps to start getting you organized. You have a lot of details to fill in and quite a bit of work to do, but to make it this far you’re already used to learning and work.

Note: For the purposes of this post, I’m not endorsing any particular resource for physicians to educate themselves on personal finance.

About me: I’m an emergency physician currently practicing in New York City. I manage my own, personal finances. I’m also the author of The Handbook of Medical Charting and A Guide to Clinical Decision Making.