As a medical resident, you’re probably used to sticking to a budget and spending wisely. Your income as a practicing physician will seem substantial after being a resident, but don’t start spending it all just yet.
These five top tips from the AMA Resident and Fellow Section’s (RFS) “Succeeding from Medical School to Practice” resource can help you prepare for financial life after residency.
- Consolidate your medical education loans. Under the Federal Direct Consolidation Loan Program, you can consolidate your loans into the longest repayment period and at the lowest interest rate possible. Doing so will allow you to pay the lowest current monthly payment.
- Fund retirement plans to the maximum possible. Given the tax incentives to fund retirement plans, contributing to your retirement plan may be as important as paying off your medical school loans. Have your contribution deducted from your paycheck directly into your retirement plan so it doesn’t feel like giving up expected income.
- Avoid or eliminate credit card debt. Credit cards have benefits, but the unpaid balance is revolving debt and can be bad debt if you use the card to purchase disposable items, such as clothes. Paying off the entire balance each month is a great goal but may not be realistic for you. Research a credit card that meets your needs, and use it smartly.
- Buy disability insurance first, then term life insurance. Disability insurance is crucial to physicians. Focus on obtaining that first, then buy life insurance if you have dependents. If you are single without dependents, don’t have co-signers on your loans and don’t have debts that would burden other people, you may not even need life insurance.
- Make tax-deductible investments in your practice or investments in your training. If you become a practice owner, spending money on marketing or revenue-producing skills will have benefits. You can take coding training or other courses for high returns on investment, too.
Find more information about transitioning from medical school to residency to practice with resources from the AMA-RFS.
