It is never too early to begin saving for your needs, but as a young physician, it may still be several years until you are able to save a large portion of your income. It is common for young medical professionals to put off saving and budgeting, and they often regret it. If you wait until residency or after to start saving, you will be behind, and catching up might be difficult. Luckily, there are a few ways you can start planning now.
Get the Insurance You Need
You don’t always know what’s going to happen in life, and having the right insurance can protect both you and loved ones. Life insurance is not that expensive, and it can give both you and your loved one’s peace of mind. Term life tends to be more affordable than whole life, although it usually covers you for only a certain amount of time. You may wonder if it is worth getting term life insurance.
Don’t Burn Out
Burnout is one of the most common challenges doctors face because they get caught up in the hustle and bustle of the demands of their jobs. Working long hours is almost required, and you might not feel a passion for the positions you work in. Even though you may not have much control over your schedule, you should still make time to care for yourself so you can protect your earnings potential.
Burnout is more common than you may realize, and many doctors end up losing their passion for medicine and pursue something else, which might not be as lucrative. Of course, your health should come before your money, but there are still ways to protect yourself. Work toward a role that will be rewarding and meaningful to you and remind yourself of why you are in medicine in the first place. Know when to reach out for help if your burnout and stress are reaching unmanageable or unsafe levels.
Live Below Your Income
When you start moving up in your medical career and begin making a higher salary, it is hard to resist the temptation to want to celebrate. If you have spent many years on a lower income while balancing student loans, it can be tempting to go out and treat yourself to everything you have denied yourself. However, giving in to this temptation can sometimes lead to poor habits, like overspending, during the rest of your life. Take steps to prevent lifestyle creep so you stay on track. A higher salary won’t do you much good if you are not using the income to pay off your debt and save and invest. Consider sticking to the same monthly budget, even as you see your salary increase.
Work with a Specialized Planner for Your Practice
Medical practices have very specific needs compared to other businesses. Much of the time, you will spend your time with patients instead of working on the business side of things. You might not be looking at the amount of money that flows in and out of the business as closely as other business owners. A staff member or practice manager is likely the one handling the day-to-day aspects. It’s a good idea to have a specialized financial planner who understands how medical practices are run because they can help everything go smoother.
Manage Medical School Debt
Becoming a physician is a long and expensive process because of how expensive medical school is. During your early years of residency, you may not be earning that much money, making it hard to make much progress toward paying back your loans. Because of the demands young physicians face, it is often hard to pick up any supplemental jobs to pay back the balance sooner.
It’s important to take charge of your money as soon as you can. Prioritize necessary expenses and savings, even if you don’t feel you have a very high salary. Managing your finances can help you get on top of your debt so you can focus on future needs.
Try to Continually Increase Your Earnings
Always looking for ways to increase your earnings will greatly improve overall cash flow. When you have a better cash flow, you will find it much easier to contribute toward savings and to pay off debt. If you do not know where to begin, try to pursue a different job in the medical field or get a higher salary. It’s a good idea to negotiate your salary, especially early in your career, which will ensure you are getting compensated the way you need to be.
If you have the time, you could monetize something you already do in your spare time or set up a stream of passive income. Take every contract you receive seriously. Consider having an attorney review the contract because the first contract you receive will establish a baseline for everything from bonuses to future compensation to other perks.