Money matters

Taking control of your finances after graduating from med school

Now is the time to start thinking about your loans and getting your finances in order while you spend the next few years learning how to be a doctor.


Disclosure: I am not a financial expert, and the following are my own personal thoughts and opinions. I attribute most of my information to The White Coat Investor and The Financial Feminist; however, this is not a sponsored article and I (and the AOA) have no financial incentive to mention them or the companies mentioned below in this article.

The Match is over, medical school graduation is now behind you and hopefully you had some time to spend with family or check some travel destinations off your bucket list, because now is the time to get ready for residency! Unfortunately, now is also the time to start thinking about your loans and getting your finances in order while you spend the next few years learning how to be a doctor. Doing this now prior to your first day of orientation can help you focus more on learning how to be a great doctor during residency rather than worrying about your finances.

Before you know it, you will be graduating residency. You can come out of residency in great financial shape as you begin your career. I knew absolutely nothing about finances until a few months prior to residency starting – I am still learning and continue to read books and listen to podcasts on a monthly basis.

Here are some tips on how to start getting your finances in order after medical school and what you can start doing now:

Make a plan for paying off loans

Take some time to look at all of your student loans – this may be scary and intimidating, but you just have to do it. I encourage you to make a table with each individual loan – I like to rank by highest interest rate. Doing this puts things a bit more into perspective as far as how much you owe and what is accumulating with each interest rate.

Next, consider all your payment options – you can always opt for Public Service Loan Forgiveness (PSLF) and you can opt out if need be once you graduate residency. Regardless, you will have to choose a repayment plan (most people will start with REPAYE). I am personally opting to go for PSLF at this time and will reassess after graduation. If I end up pursuing a fellowship at an academic institution that continues to count toward PSLF then I will continue that route, but if I end up getting a high-paying job as an attending that is in a community hospital which is not eligible for PSLF, then I may pivot and start paying off my loans aggressively and as fast as possible.

Please also refer to other sources such as your school’s financial advisor (who still may be available after graduation like mine was), The White Coat Investor or for more information on PSLF and tactics for paying off your student loans.

Create a plan for paying off additional debt

In addition to student loans, you should tackle a plan for paying off high-interest debt (>7%), such as credit card debt. Paying off high-interest debt should probably be your No. 1 priority, whereas paying down low-interest debt is arguably not as important as funding your retirement accounts.

I also recommend that you consider paying for everything via a credit card that you pay down in full each month. Thanks to the Financial Feminist, I no longer use a debit card. Now, this may sound dangerous, but if you use them properly, credit cards can be very advantageous. For starters, you get points back by paying with your credit card. Additionally, if you limit your credit utilization and pay off all your payments in full and on time, then it can also be beneficial for your credit score. However, you will need to be very careful.

Set up savings (if you haven’t already)

Once you have figured out a plan for paying off your loans, start setting up your other funds, such as a High Yield Savings Account (HYSA). Ideally, your first priority after paying off high-interest (7%) debt should be setting up an emergency fund that is worth about three to six months of your income. This money can be used for any emergencies, and I recommend placing it in a HYSA where it can grow with some interest. You can review some HYSA options online, but it should not take you more than five minutes to pick one – they are all relatively the same.

I will say, I never liked the idea of saving money for an emergency fund, but I like to view it as an account that I can potentially use for travel or other long-term investments if I reach a threshold of money in the account and do not end up using it for an emergency. I support whatever psychological tricks you need to help save money.

Look ahead to retirement

If your program offers you a retirement match, use it! If it doesn’t, you should opt to open a Roth IRA and start contributing a part of your residency income toward it. Personally, I put a portion of my paycheck toward a Roth IRA each month and aim to max it out within a year (the max contribution is $6,500 for those under 50 years old). Once I max out, I will start contributing toward my 403(b) that is associated with my program.

Knowing that I have set aside money for my future that will continue to accumulate interest is a great feeling. For those going for PSLF – you may consider just contributing to a tax-deferred account for reduced income benefits. No matter which one is the better fit for you, you can rest knowing you’re helping out your future self.

Taking on moving costs

As you are likely moving to a new city or state for residency, you might be considering whether to rent or buy an apartment or house. Unless you plan to live in that location after residency, it may be wiser to rent; otherwise, be aware that being tied down to a mortgage can limit your fellowship options and future practice locations. I am thankful that I rent an apartment and can email a maintenance request that can be taken care of while I am away at the hospital as well. Nobody has time for that in residency!

Automation can be beneficial

Automate everything – loan payments, credit card payments, Roth IRA, bills, etc. Have all of your necessary spending, including your retirement accounts and HYSA, be automated so that you don’t even have to think about it. I never mentioned the breakdown of how much to contribute to each account, but I typically spend about 50% of my income on necessities such as bills, groceries and rent, 20% on savings (including HYSA and retirements accounts) and 30% on everything else. It is a nice feeling to have that 30% of leftover money that I can finally use for myself on whatever I want, guilt-free.

Which leads me to … residency is tough, so buy what gives you joy with whatever money you have leftover – whether it’s the expensive cold brew coffee that gets you through the day or home decor that makes your place relaxing and cozy to come home to. You deserve it.

Editor’s note: The views expressed in this article are the author’s own and do not necessarily represent the views of The DO or the AOA.

Related reading:

Good websites for physicians exploring personal finance

Start strong: Financial do’s and don’ts for med students and early-career physicians

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