Money Meets Medicine Podcast
The 7 Personal Finance Resolutions for the New Year Doctors Should Have
Are you thinking about making some New Year’s resolutions that involve your personal finances as a resident, attending, or physician?
Today we are talking about seven key financial goals for the New Year that one might have as a physician and how to start them.
Finance Resolution #1: Emergency Funds for Physicians
As a general rule we usually recommend aiming for 3-6 months of expenses inside your emergency fund. Now, with that said it does depend on life factors and where you are in your medical career. As a resident I saved about $5,000 in my emergency fund (and used a lot of it on car… mistakes one might say). But, Lisha had a lot of credit card debt (which we do consider an emergency) so she kept her fund lower at $1,000. The point is to have a cushion and maybe the best number is closer to $2,500.
As an attending with about $10,000 per month in expenses, we recommend an emergency fund of about $30,000 to $60,000.
If you have to dip into your emergency fund, then the next step is to build it back up before you get back to other financial goals.
If you do not have an emergency fund, this is a goal we highly recommend starting with in 2023 for all doctors.
Finance Resolution #2: Save More Money
Now every doctor wants to save more money, but there are some key questions to ask before starting on this goal. Because “saving more money” is not really a goal with more specifics around it. So start with the questions:
- How much do you want to save?
- Where will you save that money?
- What is the timeline for these savings (saving up for a house versus retirement)?
The reason the last question here is so important is because understanding if this is a short term or long term goal is important.
For example, if looking to save for retirement you want to work backwards. So what age do you want to be financially independent by? Where are you now and how much will you need to be financially independent by the age you want? Determining the answers to these questions will help you in your decision making to reach these goals.
Now, this could be cash savings or more investment savings. This is another important question to answer. Do you need this money soon? That means more cash. Or is this money for later? Meaning more investments.
Finance Resolution #3: Increase Your Financial Literacy
If you are just starting to look at this as a physician, then start with building your financial foundation. Reading or listening to books is a great place to start. There are some great books out there, and I will shamelessly plug my book The Physician Philosopher’s Guide to Personal Finance.
Once you have a foundation then there is the continuing education part, also referred to as Continued Financial Education (CFE). This could include blogs, podcasts (like Money Meets Medicine), courses and communities like Medical Degree Financial University (MDFU) where Lisha and I drop new content each month teaching you about the personal finance topics you were never taught in medical school.
In this podcast we often cover the “what” you need to accomplish financially as a physician, MDFU helps physicians with how to get these things done.
Finance Resolution #4: Increase Your Income
If this is a major goal of yours in 2023 as a physician, there are a couple different ways you can use your medical knowledge to increase your income. One option is to pick up extra shifts (this is how I paid off $200,000 in debt in my first 20 months after training). This could be at your current location or adding a secondary location.
I also want to point out that as a doctor you have a lot of transferable skills. Often doctors don’t believe they do, but that is just a thought. Your skills transfer to many different things.
You could use your skills to create a physician side gig. Some popular ideas include a real estate empire, online business, medical expert witness work, etc. There are so many options available to you.
Finance Resolution #5: Create a Student Loan Plan
You may be looking at 2023 as the year you get those student loans taken care of for good. Although the student loan pause has been extended to June of 2023, you still need to come up with a student loan plan. Looking to refinance, get your student loans forgiven or have your employer pay them off (make sure you file your Employment Certification Form done by the way)? Whatever you are trying to do as a physician to get your student loans paid, create a plan to do so.
Finance Resolution #6: Asset Protection
This is a short point, but if you know my backstory then you know how much I stress the importance of protecting your assets. Asset protection should be a goal for you in 2023. Make sure you get disability insurance, stop putting it off. And if you have anyone dependent on your income (spouse, children, etc) then you need term-life insurance (not whole or universal or permanent).
Finance Resolution #7: Create an Estate Plan
Spelling out exactly what you want to happen if you don’t have dependents is really important in case there comes a point where you are not able to make your own medical decisions. Often as physicians we do not consider this, but it is really important to plan ahead for.
If you have dependents and you have not yet created a will or a trust, you need to do so this year. Your death would be devastating enough for your family to deal with, you will not want them to have to go through all of the legal proceedings to be able to access assets. Why not help your family avoid the time and expenses of going through probate court?
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