Living like a resident...Financially

Living like a resident means working 80 hours per week, snagging free food, and driving an old beater car.

When doctors graduate and become attending level status, we want to spend our hard-earned money.  For the most of us, this is a big mistake.  Why?

First, we have an ocean of student loans to pay off.

Second, we have little to no savings during our time as students and residents.

Third, we will get used to a "rich" lifestyle and may get stuck on the never-ending treadmill of having more.

So, what's the solution?  Continue to live like a resident until you have all loans payed off, maxed out on your savings, have a 6 month emergency cash reserve, and work as much as you can healthily handle.

Non-Medical Advice for Young Emergency Physicians

I was browsing through AAEM's Commonsense Journal (Sept/Oct 2012 Issue PDF) last week and came across a brilliant article by Dr. Andy Walker.  He is a mentor for young EM physicians and offers these points of advice:

Live beneath your means.  Save 15-20% of income if you are employed. Save 25-30% if you are an independent contractor.  Stay out of debt and pay off debt as quickly as possible. EPs should have at least 6 months of income saved, as ER jobs are inherently unstable.  Money may not buy happiness, but it does buy freedom - and freedom is pretty damn good.  Save your money.

Rent, don't own. There will be surprises and you will be in a stronger position if you can pick up and leave.  Especially, rent for the first year.

Insure wisely.  You absolutely need disability insurance, as you are far more likely to become disabled than to die early. Get "own occupation" disability insurance.  If you do get life insurance, get term insurance.  

Be a faithful and disciplined investor.  Start investing early and time will be on your side. Diversify widely. Educate yourself.  He recommends books by John Bogle, the founder of Vanguard. 

Participate in organized medicine. The biggest enemy of physicians is their own sense of hopelessness. But a difficult fight is not an impossible fight. Join your state medical society. Join AAEM today. 

I'd also like to add a couple of things:

Be happy now. You have arrived.  Stop getting trapped in thinking, "I'll be happier, once I get the BMW, house, etc."

Seek balance. Residency can be extreme and now is the time to focus on your health, family, friends, fun, leisure.

Top Ten Financial Tips for Graduating EM Residents

1. Save more than 20% of your income.

2. Have cash reserves for six months of expenses.

3. Automatically have savings deducted from check.

4. Take full advantage of employer's financial benefits, i.e. retirement, child care, advanced education, etc.

5. Max out your 401K, Roth IRA, or other retirement plan.

6. Review insurance policies (malpractice, disability and life insurance.)

7. Create an investment strategy based upon income, age, and risk tolerance.

8. Start an education plan for your children (529 or education IRA.)

9. Review estate planning and update your will or trust.

10. Start planning now to avoid income tax suprises next year.

Source: Lane Financial & Dew Wealth Management