Reaching the end of my final year of medical school, suddenly money has become very important. My student debt levels are reaching their maximum, but I'm about to start earning a real salary for the first time since I left my previous career to start medical school four years ago. With that comes a chance to move on to the next stages in life, as well as an obligation to start contributing financially to society at large, after having largely been a sponge for my life up until now.
Education on medical trainee finances, despite being rather unique and complex, is still largely lacking, and mostly coming from people who have a financial stake it your decisions. Most advisers are reasonably honest and up-front about the rationale behind their recommendations - true shysters get driven out of the industry fairly quickly - but sorting out what's best for you isn't always easy. Here's what I've found out so far.
Debt Management
Naturally, this starts in or even before the first year of medical school, when debt starts to build. Just a quick reminder of the basics, the ideal approach is to maximize scholarships/bursaries/grants first (free money!), then maximize government loans (usually come with no interest while studying, many have grants attached), then rely on private loans in the form of a line of credit (LOC) specific to medical students. Once residency comes and government loans start generating interest, usually at a higher rate than LOCs, it's best to roll the entire sum of the government loans into the LOC, unless you qualify for certain governmental debt-relief programs that require you to leave a balance in those government loans to take advantage of them. There are some individuals who, through bursaries or other outside funding, can get through medical school with just government loans.
Some money can be earned by working in medical school by working. Since government loans and grants get reduced by personal income, however, there are significant diminishing returns on getting a job. Some jobs - such as research positions - can be worthwhile even if they were paid nothing, and so earning money from them is just a small extra benefit. Jobs that are taken just for the money may not be worthwhile, however, as it's not hard to be in a position where a student is working for far less than minimum wage once lost governmental grants are taken into account.
Once in residency and earning a real salary, debt can start to be paid down, though it does not have to be. Depending on personal circumstances, some people will build on their debt, some will keep it stable by paying off any generated interest, others will reduce their debt significantly. For the most part, however, now is when debt-paying habits can start in earnest, even if it is just covering the interest. Automatic transfers are ideal, since it's very easy to upgrade lifestyle to match income if that money is perceived to be available. Developing these habits now is mostly important to carry on into post-residency life, as debt-repayment strategies are pretty much identical to the basic savings strategies which define whether a physician is financially secure or has constant money troubles.
Throughout medical school and into residency, the best thing a trainee can do for their debt is to keep it low by controlling spending. Living a modest lifestyle, even when you can technically afford more, makes future financial decisions significantly easier. Living in a smaller place, eating out less, forgoing nice but unnecessary luxuries, and ultimately, budgeting to keep costs low is how to succeed financially. As with debt repayment, forming the habit that spending is to be deliberate and well below one's means is the most critical aspect. Many physicians have financial troubles and for 99% of them, it's a problem of uncontrolled spending. Learning how to avoid those problems early on, in medical school and residency when it still has a large impact on overall debt load, is an important skill.
There's a lot more financial stuff on my mind these days, but this post started getting a little out of hand, so I'll split it into parts. Best advice I can give to those looking to revamp their finances is to get informed and tailor their approach to their own situation. There's some good advice there, but rarely a one-size-fits-all approach. Money management is not something that can be outsourced, medical students, residents, and physicians need to take an active and informed role in their own finances.
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