Nearly 50,000 new doctors will start practicing in America this year. That’s a lot of new doctors that have a great opportunity to achieve financial independence by getting started on the right foot. In this article, we’re going to look at five ways to achieve financial success as a new attending physician.
Live Like You’re a Resident
You’re rightfully excited about the massive increase in your income from resident to physician. After all, you worked your tail off to get it. Despite the desire to reward your hard work immediately, try to maintain your current standard of living and live like you’re a resident. If you can maintain this for a few years, you can start putting that extra money into debts, retirement, and investments. This early discipline will lay the groundwork for a solid financial future.
Pay Off All High-Interest Debts
The rule for determining which debts to tackle first lies in the interest rates. If you have a debt with an interest rate of over 7%, you should tackle those first. You’ll free up the interest and give yourself more to work with. For example, by paying off a 20% interest rate credit card, you guarantee yourself a 15% return on your cash. A penny saved is a penny earned. Once your high-interest consumer debts are paid off, you’ll have a lot more flexibility.
Plan Your Student Loan Debt Payments
Most new attending physicians are carrying a substantial amount of student loan debt. Any plan to knock those out is better than no plan. Your plan could change if your job situation changes, but you don’t want to still be paying off student loans decades later. Try pursuing Public Service Loan Forgiveness or the NIH Laon Repayment Program.
Start Investing for Retirement
It may seem strange to think about retirement as soon as you start working, but it will pay off when you’re ready to retire. Most doctors get a late start at the retirement savings game anyway. If you can manage to save at least 20% of your gross household income for retirement, you will be on a healthy track to retire at a reasonable age. Start by maxing out your tax-advantage retirement plans through work and your backdoor Roth IRA.
Get Sufficient Occupation Disability Insurance
Without your income, you’ll never be able to pay off debt, you can’t save for retirement or even a home mortgage. As a doctor, the most significant risk of losing your ability to work and earn an income is an illness or injury. Getting good physician disability insurance protects your income if you’re ever in a situation where you can no longer perform your medical job duties. If you already have health issues, there may be some policies available through your residency or fellowship program with minimal medical underwriting.
