How to Develop a Financial Plan for Early Career Physicians

It makes perfect mathematical sense that the sooner you start saving money, the better your finances will be. However, as a medical student, you likely didn’t have the resources, from time to money, to set aside emergency or retirement funds.

Now that you’re early in your career, you know it’s time to start the planning you wish you’d done years ago. But, developing a financial plan looks different for a physician than for most other career individuals.

With the right resources and strategic actions, your healthy financial path awaits! Use these tips to develop the habits leading you to the future you’ve worked so hard to attain.

1. Establish Goals For Future Milestones

Many people have plans for the near or distant future. However, when you’re dealing with your finances, you must consider both now and later, as well as the intervals in between. 

Here’s the logic in this type of thinking. If your goal is to save for retirement, it’s easy to say you have plenty of time to tackle that target, and it will sneak up on you before you know it. On the other hand, if you only consider the debt you currently have, you’ll put all your funds toward paying that off, neglecting the benefits of compound interest and long-term investments.

The trick is to balance your near-future finances wisely while also setting aside enough money to begin making passive income through a diverse portfolio. We’ll explain this more shortly, but if you would like a deep-dive into the world of physician-friendly investments, check out this article by OJM Group.

Take some time to think about where you want to be financially in one year, five years, ten years, and beyond. What kind of retirement livelihood would you like to create for yourself and your family? Those goals will drive your next economic steps.

2. Tackle Your Spending Habits and Debt

Healthy finances start with control over your debt and future spending habits. Chances are, you already have a hefty student loan and credit card debt from your years at med school. You don’t want to add to this right now unless you absolutely must.

It may be tempting to take up all the creditors offering you fast cash now that you’re a bonafide doctor. But you’ve put off that big house and fancy car thus far; you can wait a little while longer until you can afford to buy it with the cash you saved from a good income and no debt.

Instead of getting into a massive mortgage and other monthly payments, use your new income to pay off existing high-interest debt and build an emergency fund. This could free up hundreds or thousands of dollars a month to put toward the things you want to buy without accruing more debt.

3. Land a Side Job

You work hard and are investing more hours into your career than you’d like, but having a side job early could be a way to quicken your path to a work/life balance. 

No, we’re not talking about delivering food on your off-hours, although there’s nothing wrong with that. Yet, as a doctor, your medical degree affords you better paying, flexible options, such as:

● Expert medical witness in court cases

● Telehealth practice

● Independent claims reviewer for insurance companies

● Attending physician in a hospital setting

● Acting locum tenens for clinics in your area

Each of these side jobs has its own set of pros and cons, but they all pay very well. Use these extra funds to sock toward paying off debt or put them straight into your portfolio. When you’ve reached your goals and are comfortable with your net worth, you can let go of these extra jobs. 

4. Establish a Diverse Portfolio

Retirement plans (think: 401[k]), disability insurance, Roth IRAs, and hedge funds may or may not sound like Greek to you right now, but they’re all parts of a strong financial portfolio. 

If you’re not sure where to start, talk to a financial advisor who specializes in physician planning. These experts understand that your economic needs will change as your debt decreases and risk tolerance increases. 

Planning for your future today ensures that your investments in the market can outlast the volatility of ups and downs and allow your money to work for you.

Spending time today to develop your financial goals helps ensure a more stable economic future. From your money habits to your portfolio, each strategic move you make puts you in a healthier space later. 

But just as your patients should come to you for their medical needs, you should discuss your financial plans with an expert advisor who can offer you unique advice suitable for your goals and situation. Get started now, and take control of your finances before your debt is out of control.

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