As a doctor or dentist, your financial journey often looks different from that of your friends and family who aren't in healthcare. While many people in their early 20s are starting their careers or getting married, you might still be in school. Once you earn your M.D. or D.D.S., it can be a significant step towards a potentially higher income. Once you earn your M.D. or D.D.S., it can be a significant step towards a potentially higher income.
Here are three tips to help you balance responsible spending and saving, so you can enhance your financial well-being and live a fulfilling life.
- Set a Budget and Pay Yourself First
Gone are the days of ramen cups and PB&J, but undisciplined spending can lead to new challenges. According to the American Medical Association, the average medical student graduates with around $200,000 in loan debt. While paying off loans quickly is often wise, it shouldn't come at the expense of contributing to retirement, investments, and savings. Treating yourself to a new car or home theater can also be counterproductive, especially when new doctors and dentists carry an average of $5,000 in credit card debt.
Paying your future self-first is a great way to start managing debt and building wealth. Set up automatic contributions to your financial accounts and automatic payments towards loans and debts. Aim for realistic annual targets, like reducing your student loan debt by a certain percentage or maximizing your 401(k) contributions. Create a discretionary budget for the remainder of your paycheck to avoid unnecessary credit card use.
- Avoid Lifestyle Inflation
Comparing yourself to peers who started earning right out of college or to older medical colleagues can create pressure to "keep up with the Joneses." This can lead to mortgages, vehicles, and vacations that you can't truly afford—yet.
Your time for enjoying the fruits of your labor will come. Don't let FOMO derail your financial plan or prevent you from appreciating this stage of your life and career. Focus on learning and personal growth. Instead of rushing into a house you feel you "should have," consider what truly brings you joy and fulfillment. Budget for vacations you can afford, even if it's a quick weekend trip with friends or a cross-country visit to family. Spending and saving on your terms will set you up for success and a more fulfilling life.
- Start Now
Extended schooling and delayed earnings often lead young doctors and dentists to postpone financial planning. Some may feel overwhelmed by debt and unsure where to start, while others might be relieved to finally pay bills and enjoy some leisure without realizing the importance of early financial planning.
Our Balanced Wealth Blueprint is designed to guide you in managing your money effectively. It also expands your personal and professional options, allowing you to live and work the way you want. Meet with one of our advisors to create a plan that balances enjoying the present with securing your long-term future.