Hi All,

I wanted to talk about the 6 key steps to money management for physicians.

Here you go!

Step 1: Start. Are you a student or a resident? Perfect. It is important to start when you are young to make sure you have freedom and flexibility to make the choices that work the best for you during your career.

Step 2: Create a spending plan.

The first step to managing your money during a career in medicine is to create a budget. This involves identifying your sources of income, your monthly expenses, and your financial goals. There are a lot of tools you can use to help with the process. You can use spreadsheets or a budgeting app to track your spending and monitor your progress towards your financial goals. There are a lot of options available so take a look and see which one you think would work best for you. If it doesn’t seem to be helping feel free to switch it up and find something that does work for you.

Step 3: Decide how you want to approach debt repayment. 

Student loan repayment is probably the first thing to think about with a career in medicine. How much do you have? What is the interest rate? Does it make sense to find a position with student loan forgiveness? Does it make sense to refinance or consolidate? If you choose refinancing or consolidating make sure you know what effect that could have on student loan forgiveness programs. 

Do you have credit card debt? It’s a good idea to prioritize their repayment. Consider consolidating them or refinancing them to take advantage of lower interest rates. Make extra payments when possible and pay more than the minimum amount due to reduce your overall interest payments.

Step 4: Build an emergency fund

An emergency fund is essential for financial security. Having the ability to cover unexpected expenses without using credit card debt is very freeing. One never knows what will happen in life. Is something going on at work and it is time to find something new? Is someone in the home ill and requires a lot of care? Is there an expensive home or auto repair?  Aim to have 3-6 months of income saved in a separate account. Consider setting up an automatic transfer from your checking account to your emergency fund to make saving easier. 

Step 5: Invest for retirement

There are a lot of options for retirement savings. If you are employed, it is important to take advantage of the 401(k), 403(b) or Thrift Savings Plans offered by your employer. Make sure you are contributing enough to maximize your employer's match. It is also important to look at the options provided in these retirement accounts. Make sure you are choosing mutual funds with low management fees. Many retirement specialists think index funds are your best option to maximize your returns over time. They also recommend rebalancing your investments at a minimum every year. It is typically simple to set up an automatic rebalancing in these types of retirement accounts so see what your options are. 

Also check into Roth 401(k), 403(b) or TSP accounts, is this an option with your employer? You may want to consider when would be the best time to take out taxes. Now or when you retire? Maybe a mix of both options would work best for you. Individual retirement accounts (IRA) are also available. Be aware that for high income earners the IRS no longer offers a tax write off. It may be smart to look into a backdoor Roth IRA to maximize tax free retirement funds in the future.

Are you self-employed? You have even more options. Talk to your CPA and decide which type of account would work the best for you and your employees.

Step 6: Seek professional advice

Managing money can be complex, so it's important to seek advice from a financial professional. Consider working with a financial planner who specializes in working with physicians. They can help you create a personalized plan for achieving your financial goals and help you navigate complex financial decisions. There are many types of financial advisors available.  It is best to find one that will keep your interests at the forefront while planning your retirement.  Typically, a financial fiduciary is the way to go and you may want to consider one that is paid on a fee for service basis rather than as a percentage of your assets.

Talk soon!

Heidi