Hot Money-Saving Tips for Newly Minted MDs
Follow these money saving tips to help manage and save your money.
Start a Budget!
Becoming a full-time MD after graduating from medical school can be a difficult transition, especially financially. For most recent graduates, this will be their first paycheck and they may be tempted to spend it unwisely. Therefore, the first priority should be to plan for main expenses (such as food, transportation and housing). Don’t forget to also set some money aside for professional development, including conferences, society memberships and networking costs.
Start Saving Your Money!
Financial security should be a priority when planning your long-term goals. Should an unforeseen event occur, it pays (literally) to have some money saved up and readily accessible. If you can, save at least one-quarter of your pretax income for retirement and other long-term goals.
Start Investing Your Money ASAP!
Open a 401(k) retirement account and start putting aside just 2% of your salary into that plan. Increasing that percentage as you are able to.. Compounding will make your savings grow dramatically, especially over the decades it is in the account.. Use retirement calculators to gauge the amount you will need to fund your years ahead.
Start Paying Student Loans Early!
As soon as you can, pay off loans with high interest rates (ex. 5%-6%). If you start whittling down these loans early, rather than paying them off slowly and steadily every month, it will save you money in the long run. In the current economy, these loans actually cost you much more than what your savings can earn.
Start Planning Ahead Before Starting a Family!
Adjust your monthly expenditure so that you can set aside $1000 each month.. This represents the average cost of a child per month, using the average income of a married couple and the average expenditure for a child during its first 2 years of life. Starting off financially secure reduces some of the stress of being a new parent — and allows you more of a chance to enjoy your new baby!
Start Giving Back Wisely!
As doctors, we feel as if we need to donate to all worthy causes. However, don’t forget that donating your time is just as valuable as donating your money. In addition, look into “giving circles,” where you and a group of friends or colleagues collaboratively donate to a specific cause, rather than just donating money sporadically to different organizations.
Find a Financial Advisor!
It’s important for physicians to have a professional financial advisor to counsel them how to protect their assets from potential lawsuits or malpractice claims. This is especially critical for doctors whose field of practice is likely to involve specific insurance and legal issues. Avoid a possible conflict of interest by sticking to fee-only advisors. Also consider extra insurance, such as disability or life insurance, for additional protection.