As a medical student, you are thrilled to start your residency and to put your four years of studying and clinical rotations to the test. Now the time has come to begin earning a paycheck. This is the beginning of the financial stages of physicians.

As an attending who has transitioned into practice, you may be stressed and wondering if you are on track to meet your financial goals. You are asking yourself, colleagues or family how to organize your finances and what you should do with your money.

You may not realize it, but you have already been making financial decisions all along. It is important to articulate your short-term and long-term goals, so you don’t look back in few years and wish you had made a plan sooner. Practicing physicians go from $55,000 annually in residency to $200,000-$400,000 annually as an attending. Quite a big jump, right?

The truth is: more money doesn’t make planning any easier. The more money you are making, the more “big ticket” items you can buy, along with larger loan sizes lenders will offer you.

What you are rapidly discovering is these four financial stages in the life of a physician, from medical school to grandchildren.

Training

Those four exciting years of undergrad quickly come to an end. You find yourself going through another four years of medical school where you may have a few hours a week for a part-time retail or serving job. An unpaid medical internship could introduce you to valuable connections, but it won’t grow your bank account.

When residency begins, you finally have an income. Unfortunately, it’s not a significant amount — and additional student loans, along with credit cards, can bring stress.

Protection is typically the theme of this stage for physicians, to position yourself for success after residency. You may have different goals depending on your family or relationship status. Either way, sufficient cash flow, and adequate insurance coverage is a goal for most. Take advantage of your employer retirement matches that are available.

In addition to insurance, creating a budget is important and there are lots of resources to help you find the right budget that works for you. The tricky part is sticking to it. The fancy apps and Excel sheets take time to track your spending. Make it simple and remember cash flow is key.

Transition

There is an abundance of unknown and lots of what ifs during the transition stage for physicians. Many medical specialties require another year of education through a fellowship. Depending on where your fellowship is located, you may have to move to a city far away for the year.

Upon completion of your training, you now must decide where to practice. Should you start your career at a non-profit hospital or take your skills to a private practice? There are costs associated with traveling to interviews and settling into a new home, while still factoring your medical school debt in your budget.

Practice

At last, after 12 (or more) long years of preparing to enter your career as a physician, it can take time to fully adjust from transition to practice. You are even more likely to be married and starting a family. With a family, comes more financial responsibility.

You may be ready to buy a home for your family, and your larger paychecks are becoming more of a reality. But, it’s also time to focus on paying down your student loans and maxing your 401k contribution. Review your asset protection policies before you go for the luxuries. Also, consider the type of school you plan for your kids. How will you pay for your children’s tuition during grade school and college?

Financial success is defined differently by many. Shedding as much debt as possible can offer a sense of freedom. But, deciding the best strategy around student loans, your mortgage, cars, and credit cards can be confusing. You are also feeling the need to finally begin to accumulate wealth: an important strategy to carry out during your mid-thirties to sixties. Know the difference between a traditional IRA and a Roth IRA. These two retirement options have differing benefits, so you will want to take advantage of both.

Retirement

You have reached the end of your career in medicine. If you have had a solid plan all along, you should be able to live the retirement you want. Three factors that will affect your financial situation now include your income, living expenses, and savings. After working hard to take care of your patients and family, you have time to yourself. Do you want to travel to see the world, volunteer, be there for your grandchildren’s milestones or a combination of those three?

No matter what stage you are in now, or how well you have navigated to this point, it’s never too late to improve your future.

John Dameron is a financial planner and partner, Spaugh Dameron Tenny. He is the author of the Residents and Fellows Financial Survival Guide. He is a registered representative of and offers securities, investment advisory and financial planning services through MML Investors Services, LLC. Member SIPC (www.sipc.org). 4350 Congress St., Suite 300, Charlotte, NC 28209. Spaugh Dameron Tenny is not a subsidiary or affiliate of MML Investors Services, LLC, or its affiliated companies. CRN202011-239152

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