Last week our financial advisor sponsor, Bobby Scott, hosted a virtual event highlighting financial issues relevant to doctors in training. If you were unable to attend, but curious about what was discussed, this blog post is for you! I wrote up a summary of the topics he addressed along with some of the advice he offered.
The most important issue to tackle is your financial habits. The habits you have now will follow you after training. What you do with $100 is the same as what you will do with $1000 from a percentage standpoint. While it might be hard to imagine how your lifestyle on a resident’s salary will transition to one on a practicing physician’s salary, the fact of the matter is the choices you make now are a good predictor of how you will handle your finances in the future. Consider what works best for you when making financial decisions. Do you need a strict budget to follow? Would it work better to ‘pay yourself first’ and have more flexibility? Furthermore, as evident in this moment in time, income is not always guaranteed. What does your reserve of emergency cash look like? How can you work on building this amount to ensure you have something to live on if it was needed?
Next, plan to manage your risk. Our employer provides some life insurance, but you might want to consider if you need an additional plan. Specialty-specific disability insurance is especially important for the nature of our spouses’ jobs. If you need help finding the best fit, Bobby is able to offer advice from a conflict-free point-of-view as he does not get paid a commission by any outside companies for products, such as insurance. Additionally, as a physician family, consider a liability umbrella policy through your auto insurance.
Debt management is an especially important factor for doctors in training considering the number of years that go into their education and training. High interest debt should always be knocked out first. It is worth considering if equity from your home should be used. Also, consider how to manage your federal and private student loans. You might qualify for public service loan forgiveness if you have federal loans. Finally, consider refinancing your loans as you should always be asking if your interest rate can be less.
When you are coming to the end of your training, understanding the terms of your contract with your future employer will be very important. There is a very high chance you will change jobs within the first two years of employment. Even if it seems you have found your dream job, until you begin working it is hard to know if you have found the right fit for you and your family. Non-compete clauses and non-solicitation clauses will be especially important to consider. Additionally the termination clause and responsibility of tail coverage can result in a very expensive liability depending on the contract. Finally, considering how to structure a signing bonus is an important factor as it could impact your future tax bracket.
The last topic discussed was how to invest your money. First focus on maxing out qualified plans. A ROTH IRA is a retirement savings account that residents should consider opening up and saving in now. You will lose this option after becoming a high income earner. Currently, you and your spouse can each contribute up to $6,000 annually into a ROTH IRA. If you have additional questions about investing, a third party advisor might help you make decisions to get the highest expected return for the lowest risk.
Ultimately, the biggest return on investment is you and your spouse and focusing on your career(s). At the end of the day, no investments can make up for a life style that is not within your means. If you have any questions about these topics, or something that was not addressed, do not hesitate to reach out to Bobby ([email protected] or 319-512-3925)! There are no charges for his services while in training, so ask him advice get on track to meet your financial goals!
The most important issue to tackle is your financial habits. The habits you have now will follow you after training. What you do with $100 is the same as what you will do with $1000 from a percentage standpoint. While it might be hard to imagine how your lifestyle on a resident’s salary will transition to one on a practicing physician’s salary, the fact of the matter is the choices you make now are a good predictor of how you will handle your finances in the future. Consider what works best for you when making financial decisions. Do you need a strict budget to follow? Would it work better to ‘pay yourself first’ and have more flexibility? Furthermore, as evident in this moment in time, income is not always guaranteed. What does your reserve of emergency cash look like? How can you work on building this amount to ensure you have something to live on if it was needed?
Next, plan to manage your risk. Our employer provides some life insurance, but you might want to consider if you need an additional plan. Specialty-specific disability insurance is especially important for the nature of our spouses’ jobs. If you need help finding the best fit, Bobby is able to offer advice from a conflict-free point-of-view as he does not get paid a commission by any outside companies for products, such as insurance. Additionally, as a physician family, consider a liability umbrella policy through your auto insurance.
Debt management is an especially important factor for doctors in training considering the number of years that go into their education and training. High interest debt should always be knocked out first. It is worth considering if equity from your home should be used. Also, consider how to manage your federal and private student loans. You might qualify for public service loan forgiveness if you have federal loans. Finally, consider refinancing your loans as you should always be asking if your interest rate can be less.
When you are coming to the end of your training, understanding the terms of your contract with your future employer will be very important. There is a very high chance you will change jobs within the first two years of employment. Even if it seems you have found your dream job, until you begin working it is hard to know if you have found the right fit for you and your family. Non-compete clauses and non-solicitation clauses will be especially important to consider. Additionally the termination clause and responsibility of tail coverage can result in a very expensive liability depending on the contract. Finally, considering how to structure a signing bonus is an important factor as it could impact your future tax bracket.
The last topic discussed was how to invest your money. First focus on maxing out qualified plans. A ROTH IRA is a retirement savings account that residents should consider opening up and saving in now. You will lose this option after becoming a high income earner. Currently, you and your spouse can each contribute up to $6,000 annually into a ROTH IRA. If you have additional questions about investing, a third party advisor might help you make decisions to get the highest expected return for the lowest risk.
Ultimately, the biggest return on investment is you and your spouse and focusing on your career(s). At the end of the day, no investments can make up for a life style that is not within your means. If you have any questions about these topics, or something that was not addressed, do not hesitate to reach out to Bobby ([email protected] or 319-512-3925)! There are no charges for his services while in training, so ask him advice get on track to meet your financial goals!
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