Are you serious about living within your means and maximizing your resident physician salary? Here are 15 tips to get you moving in the right direction! 1) Determine what you’re working with In our area, the first year resident physician salary is around $50K/yr. Make sure to subtract federal, state & local taxes and other payroll deductions when calculating your take home pay. Use an online calculator like this to help… Don’t forget to subtract your payroll deductions like health insurance and other benefits. Most residents making $50K/yr will take home around $3K/mo. This is your starting point! 2) Plan out where your resident physician salary will go You have a $3K budget! Where will it all go? Cash Flow is king! Use this system to track where your money is going each month. Leave no $’s unaccounted for! If you want to save while in residency, carve these $’s out first otherwise they will not be left over. Then work through fixed expenses such as housing, autos, and debt payments. And then variable expenses like personal care, necessities, and entertainment. Don’t forget to budget for unexpected expenses, major purchases (next 1-3 yrs), and insurance. 3) Keep your priorities straight Do not make any major financial decisions, like buying a home or car, until you have performed the above exercise. This is commonly overlooked and the main reason residents get into financial trouble. Establish your priorities and live by them. Always keep your spouse in the loop! 4) Get organized Track your cash flow monthly to make sure you’re staying on track. Use cash flow as your heart monitor to keep a pulse on your financial health. When cash flow gets off track, dig into expenses to come up with your solution. Take inventory of your net worth at least annually (assets minus liabilities equals net worth). Document all your insurance and investment holdings. 5) Seek guidance from others Money and life decisions are super emotional even for the most logical people. Run your numbers by someone you trust (ideally an expert) who will provide unemotional, informed and objective advice. 6) Rent your home! Far to many resident physicians purchase homes when they should be renting. Buying a home is certainly not bad if approached correctly. Most residents simply cannot manage the downside risks and other baggage associated with home ownership. When in doubt, rent your home. Don’t let the marketing machine of the US real estate market influence your opinion. More importantly, don’t let your emotions drive your real estate decisions.Instead, take the logical approach to deciding on whether to rent vs. buy during residency. 7) Drive old, reliable cars When you start residency, the hospital should automatically issue you a 10 yr old Honda Accord to be used during your time in training. Even these cars have been known to die and if this occurs don’t buy a nice replacement car. Go straight back to the Honda classifieds and look for 10+ yr old cars with low mileage. 8) Cut cable TV When you are pinching pennies, cable should get the axe. You won’t have any time to watch tv anyway. Everybody talks about cutting cable and often can’t follow through – take the lead on this one. 9) Live like a student Most people get into trouble trying to keep up with the Jones’. Don’t try and live like an attending or even a typical resident physician. Live like a student! 10) Utilize an income-driven repayment plan for student loans Income based payments are nice in residency because you have little income. Also, if you’re going for PSLF, you want to get those qualified payments going asap. Don’t get overly ambitious and try to pay off your student loans before you do anything else. Avoid forbearance if at all possible – It’s a terrible financial decision! 11) Use cash If you’re having trouble budgeting, stop using credit cards! Even if you’re grandfathered into the best credit card rewards system known to man – when working to live frugally, cash works best. Cash runs out quickly, and when it does, stop spending! If you can’t imagine going all in with cash, start small. Go to all cash in your weakness area (like dining out or shopping). 12) Meal plans work great Plan meals out ahead of time and use it to build your grocery list. While at the grocery, limit purchases to those on your list. This saves a ton of money and limits waste. Also, you are less likely to go out to eat when meals are planned out. 13) Your spouse must be on board For those married residents, your spouse must be 100% on board with the plan! If not, work through your differences. 14) Be cautious moonlighting Is your resident physician salary not going to cut it? Moonlighting income can cause more harm than good if managed incorrectly. Do not moonlight if you don’t already have great control over your money. Often the additional income does not correct the underlying problem (lack of control) and you revert to spending what you make. If you are going to moonlight, do something productive with 100% of the income (like give, save or pay off debt) otherwise it’s a bad idea. It’s not like you have tons of free time to work more, so when you get a rare break, go do something fun or hangout with your family! 15) Control your money (don’t let money control you) Don’t forget to have fun! Ultimately it’s about controlling your money and using it as a tool to live your best life. Controlling your money doesn’t mean saving every penny. It’s about confidently and intentionally spending in areas most important to you (aka your values). How aligned are your spending and values? Values and spending awareness will naturally improve alignment. Having this alignment will serve you well in life! Source
