• Get your finances under control with a fast, practical approach.
• Use a budget to track your spending.
• When done right, consolidation and automation of your finances can relieve some of the stress you’re under as a doctor and set a strong foundation for your financial future.

As a medical resident or fellow, you are working an incredibly difficult and demanding job. Your free time and financial resources are both under significant pressure. We get it. As doctors, we’ve been where you are — trying to master the impossible balancing act of work, free time, and money.

Between patient care, social obligations, and education, it is easy to let your finances slide. But, as you know, sorting out your finances is vitally important – not only for your peace of mind, but also for your long-term financial well-being.

In fact, cultivating healthy financial habits now can help you prepare for when residency ends, you become an attending, and go into practice. When that happens, you’ll want a solid foundation for buying a house, buying into a practice, having kids, insulating yourself from financial risk, and enjoying life — and the earlier you start, the better.

#1 Consider Consolidating Existing Loans

One of your biggest expenses is going to be any debt you have accumulated to get to this point in your career. This debt will most likely be from high-interest credit cards and/or student loans.

We get it, because we had to do it as well. Those credit cards you took out in school were, unfortunately, probably a necessity to get by at the time. But now there is a better solution…

Benefits of Credit Card Consolidation

Toxic debt is commonly accumulated from credit cards. Consolidating this debt under a single loan can have several benefits:

• Simplifying your finances and record-keeping with one payment
• Lowering your monthly payments with a reduced interest rate
• Ensuring you know exactly how much interest you will pay back with one fixed payment
• Enabling you to pay more each month if you have extra income at the end of each month, which can reduce the time you need to repay and help you save more on interest 

Learn more from “What You Need To Know About Credit Card Consolidation For Doctors.” Explore credit card consolidation options with Panacea’s PRN Personal Loan.

Consolidating Your Student Loans

At the time of writing, federal student loan payments are still paused following the COVID-19 pandemic. They are set to resume in the coming months, so having a clear plan for how to proceed is important. Here’s what to know about the end of the student loan forbearance period.

If you wish to consolidate your student loans while in residency, you may prefer to do so using a single public loan holder. Many residents and fellows will qualify for the Public Service Loan Forgiveness (PSLF) program, so making qualifying payments while in residency or fellowship could shorten your time to forgiveness. 

Consolidating under a private lender may be the right solution in specific situations as well; however, you will lose access to federal forgiveness programs. Weigh the options of different student loan-related decisions here.

#2 Create A Reverse Budget Based On Your Actual Spending

Creating a budget based on what you think you’ll spend can be a problem, as many of us don’t estimate our spending correctly. In fact, while around 80% of us think budgeting is important, only 40% of us actually follow one. As a resident or fellow, you don’t have much time, so it’s often easier to create a budget based on what you actually spend, rather than a hypothetical.

How to Create a Reverse Budget

1. Look through your bank, credit card, and other financial statements for the last three to six months.
2. Calculate the average amount that you make and spend per month.
3. Put each of your expenses into a category such as groceries, utilities, investing, etc.
4. Determine how much you’re actually spending in each area.

The easiest way to put together a budget like this is by using a tool like Mint, You Need a Budget (YNAB), Tiller Money, or Money Patrol. You can connect these to your bank and other financial accounts, and they’ll import all of your transactions so you can understand and assign them.

#3 Track Your Spending & Eliminate Unnecessary Costs

You want the confidence of knowing your spending is under control. Therefore, tracking what you spend needs to be as friction-free as possible.

How to Track Your Spending and Cut Costs

1. Sign up for one of the budget tracking apps we mentioned above.
2. Sign up for daily balance updates from your bank, credit card, and other accounts.
3. Spend 30 minutes to an hour each month going through your spending and taking note of anything that’s not necessary.

Benefits of Tracking and Controlling Spending as a Resident or Fellow

• Get an at-a-glance look at your most important finances.
• Get early notifications of account transactions, so you can spot anything unusual.
• Learn where you’re spending unnecessarily and cut it out.
• Avoid any financial surprises.
• Have money available to pay down toxic debt, for surprise expenses, or to start saving for your future.

#4 Automate Expenses – and Savings

When you’re in the middle of a hospital shift, you don’t want to worry about whether you’ve paid the electricity bill or be distracted by your upcoming car payment. Automating payments in combination with tracking expenses keeps everything running smoothly.

Automating your savings, even if it is just a small amount, can help keep you on track with your goals. If the money is going straight into your savings account, you’ll be less tempted to spend it on something else.

How to Set Up Automatic Payments and Savings

1. Log into your financial accounts and set up automatic payments.
2. Go to your providers’ websites for utilities, internet services, etc. and set up automatic payments there as well.
3. Pay a little more than you need to on your loans and credit cards, which can help reduce the interest you pay over time.
4. If you can afford to save or invest, put a small amount into an account every month. You probably won’t miss it, and over time, it will make a big difference. Take advantage of current high interest rates by utilizing a high-yield savings account.

Make Your Finances Simple

Another benefit of developing healthy money habits is stress reduction. There is already enough pressure and stress in the practice of medicine – these recommendations can help mitigate some of the financial stresses that develop.

Furthermore, these practices will help you build a strong financial foundation and healthy money habits for the next stage of your career. 

For more residency-focused resources, check out our Resources page or one of our curated articles below:

• Tips For Budgeting, Benefits & Expenses During Residency From Physicians
• Renting Vs. Buying & Other Tips For New Residents, From Physicians
• 10 Tips for New Residents

Panacea Financial, a division of Primis. Member FDIC.