budgeting during residency
I’m going to start off by saying that I’m really freaking passionate about financial wellness in medical training. This is the first of hopefully many posts related to finances - budgets, student loans, investing - so stay tuned for more.
No one ever teaches us these skills in medicine. Yet with the constantly evolving pay structure (within academic medicine in particular) it is so important that you have your financial shit in order.
The first step in this - and hence the first post in this series - is finding out where your money is going.
Anyone who has learned about budgeting before has heard about the 50-30-20 rule. That is, 50% of your take-home pay goes to your essentials or needs, 30% goes to your wants, and the remaining 20% goes in to saving/investing. This is a great place to start, but for a few reasons this framework doesn’t always fit perfectly in the medical trainee world.
For starters, residency and fellowship are a short part of your career and are not reflective of your expected earnings when you hit attending-hood. In most cases, your attending salary will increase 3+ fold over your ending trainee salary, and even more than that in surgical subspecialties. So, if you follow the 50-30-20 rule in residency and assume a salary of $70k, you would be saving around $9-10k per year or close to $30k over the course of a 3-year-residency. Using the 50-30-20 rule as an attending in internal medicine, it would take you less than one year to save this same amount of money. Could you have earned interest on that money during residency? Yes. My point here is that in the medical profession it can be easier to catch up on your savings.
Second, residency is freaking hard. You will be working a lot and will have very little free time. You want to be able to use your free time to do the things you love - whether it’s a beach vacation, going to that concert post-call or enjoying the food in your city. With that being said, we at Making It Through Medicine recommend a 60-30-10 rule. This split acknowledges that residencies tend to be in large cities with higher rents and that most trainees will need to pay some amount of student loans during training while also not sacrificing the things that make you whole.
So sit down and use our budget calculator and fill out your needs and wants and see what you have left for saving and investing (we’ll get to that in another post ☺️). For each monthly expense - Marie Kondo it and think to yourself “does this bring me joy.” If it does, we can find a way to work it into your budget.
The TLDR for you all - know where your money is going, spend your hard-earned money on things that bring you joy, and save the rest.
