5 Common Financial Challenges During Residency And Ways To Handle Them
In contrast to the average worker, physicians see a significant increase in pay between medical school and their first position following residency.
During their post-graduate training, doctors frequently earn a reasonable salary. Choosing how to spend your money wisely, pay off your debt, and set aside money for a social life is an intricate balancing act.
This can be challenging because it can be tempting to make costly lifestyle adjustments to match a big wage.
Managing finances may get even more difficult with a demanding job and the stress that comes with it.
5 Prime Financial Challenges During Residency
Throughout your residency, you may encounter a few typical difficulties as you learn how to handle your funds. This article outlines these difficulties and provides suggestions for countering them.
#1. Medical School Debt:
Repaying medical school debt is one of the most common challenges that medical professionals face. This is primarily because young professionals often underestimate their debt.
Choosing the right terms and payment arrangements during residency is crucial to ensuring that repayment will be feasible.
Choosing government loan programs over private ones can reduce the cost of debt on a monthly basis. In some cases, lending programs specifically designed for doctors are available.
#2. Lack Of A Budget:
Creating a budget when you start earning may not seem desirable, but it is essential for financial security.
A budget helps to develop discipline and guarantees that your funds are under control. Determine your income first, then list all your necessary expenses. Don’t forget to include sections for your debt and savings.
Next, set aside a budget for each and make an effort to stick to it. You should also set aside some money for leisure and entertainment. Properly allocating cash and sticking to it can streamline your income and allow you to enjoy your money without adverse consequences.
#3. Not Having Emergency Funds:
Given the large payment doctors anticipate earning after completing their residency, an emergency fund may not be top of mind for them. While residents won’t often suffer an unexpected job loss, it’s impossible to anticipate the future.
Additionally, residents may have to deal with out-of-pocket conference expenses, including registration, travel, and housing, which can take some time to pay.
Having an emergency fund for these activities can help you stay afloat. The amount doesn’t need to be a sizable portion of your salary; it can be small and manageable until it equals three to six months of living expenses.
#4. Managing Insurance Needs:
A physician’s work is dangerous, necessitating extensive insurance coverage, which some residents might not consider.
You will most likely obtain insurance coverage from your employer during your residency. These benefits might not be sufficient to cover your individual insurance needs. You should consider your family’s financial objectives and ensure that they are adequately covered by insurance.
Physicians can visit LeverageRX to consider purchasing disability, malpractice, and life insurance to protect themselves from the dangers associated with their work.
#5. Not Saving Or Investing Money:
Physicians must find the correct investment possibilities to build wealth and establish security. Being a doctor entails a great deal of danger and is regarded as a career that is subject to lawsuits.
To reach financial objectives and even early retirement, it’s crucial to keep investments and savings in perspective.
In some circumstances, it may even enable you to take a break, as working in the healthcare industry might eventually result in burnout.
Discipline and sound money management are prerequisites for building wealth and reaching financial freedom. Physicians can keep themselves on track to accomplish short- and long-term goals and avoid living paycheck to paycheck despite having a high income by deliberately spending rather than responding on impulse.