Physician Financial Checklist for 2024
I cannot believe I am saying this, but it is already that time of year again to prepare for the new year! It is cliché to say, but the year does fly by. Between the Christmas holiday and the New Year, I tend to begin to get my ‘financial house’ in order. With 2024 around the corner, I created an article reflecting some of the essential things on my financial checklist. This list is not comprehensive but targets some of the most important tasks to complete each year. So get your ‘To-do’ list ready because here is the Physician Financial Checklist for 2024. Enjoy!
Table of Contents
Physician Financial Checklist for 2024
1. Review Your Financial Plan
This may seem like a no-brainer, but for many, it isn’t. Most people believe preparing your budget is the first step in tackling the new year. With this post, I wish to argue that, nay, it is circling back to your financial plan.
See, it is critical that each individual or couple have a financial plan that outlines how they will prioritize their spending, savings, investments, debt repayments, etc. My wife and I wrote our own a while back and shared it here on the site. You can find it here on How to Write a Financial Plan. It is a comprehensive guide on creating your financial plan using ours as an example.
If you already have an established financial plan, perfect. That makes this part easy. Start the new year by reviewing your plan so that as you progress to ‘budget preparedness’, your plan is reflected in how you allocate your money.
If you do not have a financial plan, stop here, go no further, and create one now. This is vital for your current and future success. A well-written financial plan acts as a roadmap for your expenses and savings. Check out How to Write a Financial Plan and get started.
2. Prepare Your Budget
OK, now that you have reviewed your financial plan, it is time to tackle the budget for 2024. If you do not have a budget, subscribe to our newsletter, and I will send you a FREE Microsoft Excel Spreadsheet budget that I have created. This is the same budget that I use to manage our household.
Generally, I started with my fixed expenses (i.e., mortgage payment, childcare, utilities, etc.). From here, I review the prior year’s budget and update it accordingly. Did we get a pay raise? Did our insurance premiums increase? How much can I reasonably put towards student loans this year? These are the questions I often ask myself to have my budget reflect my values without putting myself in the red.
Make sure your budget is comprehensive, thorough, detailed, and overwhelmingly reflects where your expenses are going. A well-prepared budget can help you enter the new year with a sense of ownership of your income and expenses.
3. Replenish Your Emergency Fund
Anyone who regularly reads our site knows I always jump at an opportunity to discuss our emergency fund. This article is no different.
An emergency fund is a cornerstone of financial security. Having an easily accessible fund of money to help guard against unexpected expenses is a must. I generally advocate for physicians to keep at least three months of living expenses and then build from there based on their comfort level. When I write ‘living expenses,’ I mean everything. Generally, this means going back and reviewing your budget for the past six to twelve months, determining all the expenses you average over three months, and keeping a fund with that amount that is rarely touched, except for emergencies.
However, it is important to know that times will arise when this fund should be used. Unexpected damages to your home, urgent need for A/C repair or replacement, a new car, unemployment, etc. These all constitute emergencies. These, too, are not uncommon. As such, you may use a portion of your emergency fund each year. Following its use, it should be prioritized to replenish what was used. This is easier said than done.
The new year can be a great time to replenish your emergency fund. For those who feel three months of living expenses is insufficient, the new year can be a great time to increase the budget further. No matter your comfort level, an emergency fund is always essential. For more information, check out Emergency Fund: Your First Financial Goal.
4. Review Your Student Loan Repayment Plan
This is always an important part of the annual checklist. With so much information out there recommending pursuing Public Service Loan Forgiveness (PSLF), refinancing, etc. Where is one to begin? Your loan repayment plan is already set in stone for many of you. No matter your loan repayment plan, the new year is a great time to double-check the details.
As most in the physician finance niche will advocate, you should always consider pursuing PSLF first and foremost before you decide to pursue anything else. I advocate for this, as does Physician on Fire, The White Coat Investor, Student Loan Advice, and many more in the field. However, even if you are already well into your loan repayment process with PSLF, the new year is as good of a time as any to check in and make sure you remain in the correct repayment plan, consider the new SAVE plan, and that all payments are certified payments that contribute to your 120 required monthly payments.
For those who are not pursuing PSLF and are rapidly paying down their debt, the new year is also an excellent time for you also! Since you will already be reviewing and updating your annual budget, use this momentum to see how much more you can put toward your debt. Can you modify your expenses to optimize your debt elimination?
No matter what you are doing about your loans, the new year is a great time to reevaluate, reflect, double-check, and confirm. If you need a bit of motivation, check out our latest update on our loan repayment progress!
5. Get the Employer Retirement Contribution Match
This one always makes the list. Why? Because you are leaving money on the table if you do not prioritize contributing enough to reach the employer retirement contribution match. This amount likely varies between employers, but generally ranges between 5-9%. This means that if you contribute this amount to your employer’s retirement plan, the employer will contribute a portion of their money to your retirement account.
In simpler terms, you will get paid to save for your retirement. This is a no-brainer! It should always be a top priority. Even before we advocate for maxing out your retirement contributions (and we will), you should always ensure you are getting every free penny offered. If you are still determining if you are meeting the minimum requirement to receive the match, often you can log into your retirement account online or contact the human resources officer at your respective employer. They help you navigate the process of increasing your contribution.
6. Max Out Retirement Savings
After you confirm you are contributing enough to receive the employer match, the next step is to max out your retirement contribution completely. This will largely increase each year, and for individuals over 50, there is often a ‘catch-up’ contribution that can be made to expedite your retirement savings. To the best of my knowledge, here are the updated retirement contribution maximums for 2024:
- 401(k) contribution limit: $23,000
- 401(k) catch-up contribution limit: $30,500 (for ages 50+)
- 403(b) contribution limit: $23,000
- 403(b) catch-up contribution limit: $30,500 (for ages 50+)
- 401(k)/403(b)/401(a) total contribution limit: $69,000
- 401(k)/403(b)/401(a) catch-up contribution limit: $76,500 (for ages 50+)
- 457(b) contribution limit: $23,000
- 457(b) catch-up contribution limit: unique rules, consult your plan administrator
- Thrift Savings Plan (TSP) contribution limit: $23,000
- Thrift Savings Plan (TSP) catch-up contribution limit: $30,500 (for ages 50+)
Use the new year to make sure your retirement contributions reflect the new maximum limits for 2024.
7. Max Out Healthcare Spending Account (HSA) Savings
Maxing out your HSA is another crucial financial priority as you enter 2024. For those primarily with High-Deductible Health Plans (HDHP), you are generally offered an HSA. These are great because their savings roll over year after year. Further, suppose you do not spend the money you save in your HSA or plan not to spend it. In that case, you can use it as a Stealth IRA and make penalty-free withdrawals once you are over 65.
Maxing out your HSA contribution is an integral part of the 2024 checklist. The maximum contribution limits for an HSA for 2024 are as follows:
- Single HSA contribution limits: $4,150
- Family HSA contribution limits: $8,300
- HSA catch-up contribution limits: $1,000 (for ages 55+)
Want more information about HSAs? The White Coat Investor has previously written a great article called 7 Reasons an HSA Should Be Your Favorite Investing Account, and it highlights all the ways an HSA is a strategic investment.
8. Complete Backdoor Roth IRA Contributions
The new year can be a great time to get your backdoor Roth IRA out of the way. For those who have never completed a backdoor Roth IRA, I created a simple guide called How to Do a Backdoor Roth IRA Conversion.
Put simply, high-income earners can often not contribute to a Roth IRA directly. However, you can put money into a traditional IRA and then convert it to a Roth IRA. It is often recommended to complete this conversion quickly before any interest accumulates in the traditional IRA account to avoid the ‘pro rata’ rule.
For 2024, the backdoor Roth IRA contribution limits are $7,000 (i.e., put $7,000 in a traditional IRA and then convert to a Roth IRA). If you wish to learn more, check out the article linked above. Backdoor Roth IRAs are a great after-tax investment vehicle for high-income earners to save and withdraw tax-free in retirement (because you were already taxed).
9. Save Monthly for The Holidays
I don’t know about you, but this time of year always weighs heavy on the budget. Though my wife and I have a sound approach to holiday expenses, they seem more expensive each year. One of the first articles I published on this website was about how we save throughout the year for the holidays. This means that when the gifting season arrives, we have money set aside to prevent impacts on our monthly budget. If you wish to reach that article, follow the link here!
However, to summarize briefly, we put aside enough monthly to pay for all the ‘other’ expenses that creep up around the turn of the year. Here are a few examples:
- Holiday gifting
- Christmas cards
- Homeowners Association Dues
- Our annual insurance premiums (life, disability, umbrella, etc.)
- Annual bonus for our childcare
We retroactively reviewed our expenses the year prior and planned accordingly. We divide the amount we expect to spend during the holidays (including all above expenses) over twelve months. My wife and I contribute this amount to our ‘Holiday Fund’ monthly. This way, we can sleep soundly, knowing that our regular monthly budget will not be impacted by the excess spending this season seems to always bring.
I encourage everyone to approach big expenses or holiday spending this way. It allows you to know you are covered when gift-giving begins.
10. Create Achievable Financial Goals
Last but certainly not least, we should all create goals for the year. Whether large or small, goal setting is a crucial way to stay motivated and remain focused. If we set too lofty goals, we will likely set ourselves up for defeat. This deflation can hinder progress.
As you enter the new year, consider what you can achieve. Create a portion of your financial plan or budget that houses your financial goals for 2024. Return to the list as you accomplish these goals. Crossing a goal off the list as ‘completed’ can be a healthy boost of motivation and even a reason to celebrate. Maybe your goals entail some financial strategies mentioned above, like maxing out your retirement contributions, eliminating debt, or saving for the holidays. Perhaps they involve charitable giving or travel. No matter what your goals are for the new year, set realistic, achievable goals to keep that financial momentum going in the right direction!
Take Home Points
The new year brings in a metaphorical ‘clean slate.’ We feel revitalized to tackle what the new year brings. This often applies to our physical and mental health, career, and relationships. However, it can also be a time to get our financial affairs in order. Ring in 2024 with your budget prepared, your retirement savings maxed, and your financial stress at ease. Cheers and Happy New Year! As always…
Stay motivated!
The Motivated M.D.
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What made your checklist? Anything you would have included or deleted? In the comments below, let us know about Physician Financial Checklist for 2024! We love to hear from you.
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