A painful truth about residency is that you won’t be raking in the dough, meaning you’ll need to figure out how to pay the bills while living on a shoestring budget. One of the silver linings of managing your finances during residency is that you are so busy working you barely have any free time to spend money.
When I was in residency, I cooked at home and bought only the necessities. I saved a certain amount of money each pay period into a “vacation savings account” to avoid accruing credit card debt, and I made sure my housing expenses were affordable. These are just some of the ways I was careful with my finances during residency. It’s so important to learn what works best for you to set yourself up for a strong financial future.
We asked residents about the “most helpful approach to managing finances during residency.” Here's what they had to say.
Seek physician-specific financial resources
Vignesh Ramachandran, MD: “The most helpful approach to managing finances during my residency has been the knowledge I gained from reading "The White Coat Investor" before I began. This resource provided a comprehensive foundation on financial literacy specifically tailored to medical professionals, which was immensely beneficial.
“The book helped me understand the unique financial challenges physicians face, such as managing student loans, planning for retirement, and making informed decisions about insurance. Additionally, it emphasized the importance of living within one's means and saving early, principles which I've tried to adhere to during residency.”Related: From ramen to riches? Surviving and thriving on a residents' salary
"By setting a solid financial foundation early on, I knew I could navigate the financial aspects of residency more confidently."
— Vignesh Ramachandran, MD
Create a budget and minimize debt
Carla Saoud, MD: “Establish a realistic budget considering your income, expenses, and financial goals. Prioritize expenses like rent, utilities, groceries, and student loan payments. Allocate a portion of your income toward savings and emergency funds. Avoid the temptation to overspend or accumulate unnecessary debt. Maintain a modest lifestyle and be mindful of your spending habits.
“Differentiate between wants and needs and make responsible financial decisions. Try to pay down high-interest debts, such as credit cards, and make timely student loan payments, exploring options for loan forgiveness or income-driven repayment plans.”Related: Medical school debt? The latest news you need to know about student loan forgiveness
"Familiarize yourself with the financial benefits offered by your residency programs, such as retirement savings plans, health insurance, and tax advantages, to secure your financial future."
— Carla Saoud, MD
Take advantage of resources available to residents
Jake Jacob, MD: “One of the most helpful approaches to managing finances during my training has been budgeting and living within my means. With the relatively modest salary of a resident, it was crucial to create a realistic budget that accounted for my essential expenses such as rent, utilities, groceries, and student loan payments. By tracking my expenses and setting limits for discretionary spending, I was able to maintain financial discipline and avoid unnecessary debt.
“Another helpful approach was to take advantage of the financial resources available to residents. I sought out financial literacy workshops and seminars specifically tailored for medical professionals. These sessions provided valuable insights on topics such as student loan management, investing for the future, and budgeting strategies.”Related: Expert take: Why index funds are a smart investment for physicians
"I also explored loan repayment options, including income-driven repayment plans and loan forgiveness programs, to optimize my financial situation."
— Jake Jacob, MD
Other financial management tips
Vasudha Kota, MD: "Sharing an apartment if living in a metro, staying close to hospital to reduce gas bills, and cooking at home when you can to stay healthy and save money."
Nikhila G, MD: “Assessing current finances every month helps budget for sound financial management.”
Zaheer Cheema, MD: “Spend wisely and try not to buy unnecessary clothing.”
Olivia Sutton, MD: “Read 'White Coat Investor,' open an IRA, invest in any matching programs the hospital has, and live below your means.”
Kelechi Acholonu, DO: “Managing finances has not been easy, but it has been doable with the help of moonlighting opportunities afforded to us by both internal and external means.”
Tina Yang, DO: “It’s very important to start a Roth as soon as possible and contribute the full amount each year. Also, set aside money for an emergency fund. Don’t overspend and live lavishly on a resident budget.”
The key to financial success during residency is living below your means, saving, and investing; thankfully, you can accomplish this in multiple ways. Most residents already have hundreds of thousands of student loan debt, so acquiring (bad) debt during residency should always be avoided.
My biggest regret regarding money management in residency was not investing in an IRA, 401K, or high-interest savings account. Additionally, the debate of renting vs buying a home is hotly contested among residents. Although many of my colleagues purchased homes, I was not ready to do this, as I was unsure where I wanted to live after residency and did not want to deal with the home-buying and selling process.Related: Navigating the housing market as a new physician
I don’t believe there is any right or wrong answer regarding what to spend money on during residency, but I advise you to focus on paying off high-interest debts and investing a small portion of your paycheck in an IRA, 401K, and/or high-interest savings account.
Every medical resident has a question to ask and a story to tell—a comical moment, a prickly patient encounter, or a hack for staying sane during residency. We survey medical trainees for their best questions and answers and bring them to you in this column. Engaging, enlightening, and entertaining—from resident to resident!