12 Best Financial Tips for Interns and Residents

In case you missed it; I have recently decided to create a series of posts around the best financial tips for each stage of medical training.  If you want to start from the beginning, then make sure to check out the 11 Best Financial Tips for Pre-Med and Medical Students.  That post was a great entry point for individuals in undergraduate education or early in their medical school careers.  However, this post (as the title suggests) is primarily targeted at those in internship and residency training.  For individuals who recently graduated medical school, congratulations!  As you begin your post graduate training it is vital that you acquire the skills necessary to offer appropriate medical care.  However, it is also critical that you keep your financial house in order.  It is unlikely that you will receive any formal personal financial education during your time in residency.  However, I am here to fix that.  Here are the 12 best financial tips for interns and residents. 

1. Create an emergency fund

An emergency fund is something that I harp on constantly.  It is imperative that any individual receiving an income keep a fund set aside to shield against the unexpected.  An emergency fund is essentially a readily accessible amount of money you strategically save specifically for emergencies. 

As I have written about previously, I recommend this fund to be approximately 3-to-6 months’ worth of living expenses.  I advocate fiercely for an honest and transparent budget because that will help you determine how much you spend on a month-to-month basis.  Then you can multiply this by three or six to determine how much you need to save. 

For individuals starting their internship or residency, your salary will likely be in the upper 5-figures.  If you are working to live below your means, then putting a little bit of money away each month should help you reach your emergency fund goals.  No one expects to get in a car accident, have their HVAC fail, or become unemployed…unfortunately these things happen.  I hope you never have to use your emergency fund, but inevitably you will.  Do your future-self a favor and save now!  This is the most important tip on our list of the 12 best financial tips for interns and residents. 

If you want more information on emergency funds, check out Emergency Funds: Your First Financial Goal!

2. Start paying off your debt now

Ahh educational debt.  Get comfortable with it.  No matter how you proceed to pay it off (PSLF or refinancing, etc.) you will be dealing with your student loans for a number of years.  Statistically, the majority of medical school graduates exit their education with some amount of student loans.  It has been published that the average graduate carries approximately $203,000 of educational debt!  This is no small number. 

Determining how you will proceed with debt repayment starts now, in residency.  It may seem daunting to think about loan repayment as you are flooded with clinical responsibilities during your training.  However, for those pursuing Public Service Loan Forgiveness (PSLF), the sooner you can get in a qualifying repayment plan and make certified payments, the sooner you work towards getting the remainder of your loans forgiven (after 120 certified monthly payments). 

It is also important to understand that there are options other than pursuing PSLF.  Yes, for the right individual, PSLF is a very powerful strategy to rid yourself of your educational debt, but debt elimination is not ‘one size fits all.’  Take the time to research both PSLF, as well as other means of loan repayment.  If you can, speak with a professional and discuss what options may be best for your financial situation as well as your professional and financial goals. 

3. Moonlight (if you can)

Look, we are all looking for avenues to supplement our income (as long as it does not burn us out.)  Moonlighting, or working extra clinical shifts, can help you achieve that.  For certain residency programs, as long as you are in good standing with the program, moonlighting opportunities may become available to you.  If you have the time and mental bandwidth, consider it. 

Moonlight serves two purposes.  First and foremost, actually, it offers you a pathway to continue to hone your clinical acumen.  Moonlighting will allow you to grow as a provider because you will gain more experience as well as more autonomy.  As you work towards a long and prosperous career, the sooner you master your clinical skills, the better.  Secondly, moonlighting does (often) reimburse well compared to your post-graduate salary (I suspect).  My residency program did not allow moonlighting, however during my time as a fellow I was able to moonlight as a nocturnist and two extra 12-hour shifts a month would double my monthly income. 

If moonlighting is available to you, and you feel you have the time and energy to do it, then it is worth your consideration.  The experience you gain as well as the income can help in multiple ways.  If you want to know more about moonlighting, make sure to check out Get Started Moonlighting! 

4. Live below your means

This financial tip will likely make the list for every stage of medical training, however for this post it is number four on our list of the 12 best financial tips for interns and residents.  Living on less than your take home, after-tax pay is simple, but not that easy.  I feel like I am on a soapbox when I write about this topic, but it is such a pillar of strong finances that it always needs reiterating. 

Living below your means is a habit that you need to harness now, in residency.  There is a reason that one of the most quoted lines for early career physicians is ‘live like a resident.’  Find comfort in your current lifestyle while you are grinding through the most grueling years of your medical training.  This way, as you exit residency, you avoid significant lifestyle creep as your salary quadruples (or more)!

Trust me, it is challenging to approach your early thirties and only then reach your income potential.  The medical professions ask you to find comfort in delayed gratification.  However, far too many physicians and high-income earners in the healthcare field receive their first attending paycheck then expand their lifestyle to meet their new income.  Because of this, you will find individuals making 6-figure incomes who are living paycheck-to-paycheck.  They are shackled to their careers so that they can support their expensive lifestyle.  This coined the term ‘golden handcuffs.’  Do not be another who is bound by them.  Work hard to find comfort in the lifestyle you have as an intern or resident, then continue to live like that for a few years after completion of training and you will set yourself up for financial success. 

5. Decide if fellowship is right for you

It is not surprising that internal medicine remains one of the most chosen specialties.  Internal medicine is the gateway to pursuing so many other medical subspecialties.  For surgical specialists, this is akin to general surgery.  However, as the medical profession becomes more specialized, many in residency training will be faced with the decision to pursue a fellowship.  There are a few factors to consider when making this choice. 

It is important to acknowledge that there are individuals who have a passion for a particular subspecialty of medicine.  If you are head-over-heels for cardiology, oncology, infectious disease, etc. than that enthusiasm should play a large role in your decision.  If you cannot see yourself practicing anything other then a particular subspecialty, then the decision may already be made for you!

One must also consider, however, the opportunity costs of pursuing fellowship.  Understand that there are subspecialties of medicine or surgery that require more years of your life without the benefit of higher earning potential.  We see this commonly with pediatric subspecialties.  Secondly, during the years you are in fellowship training, you are giving up 1-3 years of attending income to pursue that specialty.  That particular opportunity cost could amount to $500,000 or more depending on your current specialty.  However, for individuals pursuing higher earning sub-specialties like cardiology, interventional radiology, pain medicine, etc., there can be real benefits to your salary that make these opportunity costs less painful. 

6. Apply to multiple jobs

Just as it was with medical school applications, applying to multiple jobs or fellowships is equally as important.  Make sure you cast a wide net, if able.  There are a handful of benefits that come with applying to multiple locations.  First and foremost, the more interviews you obtain, statistically the higher your odds of securing a fellowship or attending position.  It’s simple math.  Another benefit from multiple applications is that you gain the experience of seeing how similar positions vary from location to location.  This affords you options as you consider what lifestyle and practice you wish to have following residency.  Lastly, having multiple offers makes you competitive.  This is important because it can help you negotiate a better contract (more on that later). 

As you approach the end of residency, make sure you understand the importance of applying to multiple locations.  If you are pursuing a fellowship, you will (likely) be subject to the Match process, thus dissolving negotiation potential.  However, this will still afford you the benefit of variety and choice.  If you are pursuing an attending career after residency, then do yourself a favor and interview for different positions.  It will open the door for many opportunities.      

7. Understand the cost of location

Understanding how cost of living will affect your finances is another financial tip that is applicable at every stage of medical training.  I spoke of this in the 11 Best Financial Tips for Pre-Med and Medical Students, but given that everyone will pursue careers following residency, it is equally as important in this post.

Some of you will be subject to the Match process as you pursue fellowship after completing your residency.  Many others will be pursuing employment.  No matter your situation, understand that geographic location will have a significant influence on your finances.  Cost of living means that there will be variability with many standard living expenses based on where you migrate next.  For this reason, I advocate for applying to multiple locations (see above).  I also think it will serve you well to reach out to individuals at your various interview locations and discuss the cost of living in that area.  It is a reasonable question, and locals should have a better idea.  Large urban areas often correlate with high costs of living compared to more rural areas. 

For those looking to maximize their money, strategically practicing in a location that has a low cost of living can boost your earnings.  Couple this with a high income and you will be in a solid position to optimize your financial success.

8. Continue your financial education

No matter where you are in your medical profession, just like continued medical education, you should continue your financial education as well.  For me, I work to read one or two financial books a year.  This feels like enough to enjoy the education and to not burn out on personal finance.  Further, I have found great enjoyment following a handful of personal finance blogs and websites. 

For those who have not checked out some of my previous posts, here are 5 Physician Finance Books I Recommend.  If you are looking for a paperback book (or e-book) to sink your teeth into, then I suggest you start here.  Secondly, I have created a list of the best physician finance blogs as well as the best personal finance blogs (in my opinion).  Though it is important to follow bloggers who understand the nuances of physician finances, hearing the advice of those outside of our profession can prove beneficial too.  Here are the Best Physician Finance Blogs as well as the Best Personal Finance Blogs.  Each of these blogs have newsletters and regular content that I have found most helpful.  Make sure to check them out as you continue on your financial educational journey. 

9. Write down a financial plan

Tip number nine on our list of the 12 best financial tips for interns and residents focuses on the creation of a financial plan.  I alluded to this in our prior post for pre-medical and medical students, but a well written financial plan is much more applicable for individuals in residency. 

A financial plan is a roadmap that you create to keep you on track as your work toward reaching both your short-term and long-term financial goals.  It is meant to be a document that you return to with regularity as you reach different financial milestones.  From organizing how you will pay off your debt to saving and investing, this document houses it all.  Now that you are in residency, you are at least starting to make some income as a physician.  This income pales in comparison to your future attending salary, but it is a start.  Given that we have harped so heavily on the importance of living below your means after training completion, a financial plan can offer accountability as you make that transition. 

Take the time to sit down at some point during your residency training (with your significant other if applicable) and create a financial plan that you (both) agree on.  If you need a place to start, look no further!  I have created a comprehensive post on How to Write a Financial Plan.  If you need even more guidance after reading that post, then often it can be helpful to consult a professional.  As you navigate the challenges of physician training and finances, having a document that outlines your plan of action and your goals can prove important to keeping you on track. 

10. Get disability and life insurance before you graduate

This tip is important.  I doubt I am the first person to advocate for this, and I will definitely not be the last.  There is a reason so many push for you to get your disability and life insurance squared away prior to you completing residency.  First, you will never be as young and healthy as you are now.  I understand that not every individual who is currently an intern or resident has a perfect bill of health…but age will undoubtedly bring more issues.  Often with disability and/or life insurance, there will be a thorough physical, including blood work.  Getting this done as early as possible helps you demonstrate to the insurance providers that you are healthy and that your premiums should be low. 

Secondly, if you obtain disability and life insurance during training, you can often lock in lower rates.  There are many nuances, as you want to get ‘own-occupation’ disability insurance, as well as many other particular riders that allow you to increase your disability coverage as your income increases.  Often, depending on the terminology in your contract, these riders and coverage increases can be obtained later without repeating physicals or blood work.  So, do yourself a favor and obtain long-term disability insurance and term life insurance before you graduate. 

Disclaimer: I generally recommend you avoid whole life insurance.  Whole life insurance is complicated and couples investments with your life insurance coverage.  This interweaving causes conflicts of interest.  Personally, I recommend term life insurance.  If you want to know more, I have created a few helpful posts:

• Individual Disability Insurance for Doctors
• 6 Things to Ask About Your Disability Insurance Policy

11. Hire a contract negotiator

Tip number 11 in our list of the 12 best financial tips for interns and residents involves negotiating your contract.  For residents pursuing fellowship, this tip is less applicable to you.  However, residency is the first medical stage where we have individuals graduating to their attending roles…and thus their income potential.  For this reason, it can be important to have an experienced individual review your contract and be your advocate. 

Contract negotiators can help negotiate reimbursement, moving expenses, signing bonuses, cost of living adjustments, weekend coverage, call shifts, etc.  These may all seem like monetary issues, but they can often drive quality of life improvements as well.  As you begin to receive offers for employment, make sure to have a trained eye in your corner.  The cost of a contract negotiator is well worth it if they afford you better wages or a better quality of life. 

12. Cultivate skills to prevent burnout

With each chapter of your medical career there will be new challenges.  In residency it may be adjusting to the work hours or managing your budget.  For fellows, it may be harnessing your subspecialty skill set, or navigating the right job.  As an attending, your income will increase, but there are challenges that come from this too… more money, more problems.  Cultivating skills that help you cope with the physical, mental, and emotional stresses of your profession can (literally) save your hundreds of thousands of dollars. 

As I continue to write my series on the best financial tips for the various stages of medical training, I will always end with this.  In a post-COVID pandemic world, our professions (and other healthcare professions) are seeing astronomical rates of burnout.  Physicians and nurses alike are leaving the profession in droves.  This, unfortunately, coincides with the baby boomer generation reaching retirement age and becoming more reliant on healthcare.  I do not see the stresses of modern healthcare going away. 

That is why now, more than ever, it is important for individuals in healthcare to learn the skills necessary to combat burnout.  Be it through better wages, more remote work, protected administrative time, etc.  For me, I also advocate for the pursuit of side gigs and passive income.  These are avenues where one can cultivate multiple streams of revenue and become less reliant on their career.  I want to work because I enjoy it, not because my lifestyle dictates that I have to.  Diversifying your income, and working on skills to prevent career exhaustion can help.  It is far more costly to quit your career than to learn to cope successfully. 

Take home points

Internship and residency are busy times in a physician’s life.  The work hours can be long and the schedule difficult.  With all of the clinical responsibilities, it can prove difficult to find the time to focus on your personal finances.  However, those who are able to tend to their expenses now will set themselves up for success as they navigate their early career.  Live below your means.  Apply to multiple locations.  Get a financial plan.  Negotiate your contract.  Take care of yourself.  Learn the skills necessary to navigate the stresses of a medical career.  Your finances will thank you!  As always…

Stay motivated!

The Motivated M.D.

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