If you are a resident like I was, you probably feel a bit stuck financially. You don’t make a lot of money. You are working constantly. It seems like there are no finance plays that will move the needle.

Looking back, I now realize that there were a lot of things that I could have done as a resident to put myself in a good financial place, both in training and beyond.

Below, I share a series of tips to help you make over $1 million throughout your investing career.

1) Pay down your debt.

You need to make this a priority as a finance savvy resident! No matter what your situation is, use every spare dollar that you can to pay off your debt while in training. Every dollar that you pay down your debt results in an immediate guaranteed increase in your net worth.

Then, work to develop a long-term debt pay-down strategy. This is the current strategy I use.

2) Use the retirement accounts available to you — even if it’s only a small amount.

You usually will have retirement accounts available to you as a trainee. Even if you are contributing what seems like a small amount each year, the magic of compound interest is working in your favor to make you money. When you are on call in the ED all night, at least you can then imagine the money that your money is making for you. That makes things seem not quite as bad!

Assuming you are paid on a biweekly basis and average a 7% yield on your investments, let’s say you save $192 from each paycheck and put it in a retirement account of your choosing. Let’s say you do this for every paycheck over seven years. This amounts to saving $5,000 annually. Not much. But at the end of your training, that would be $43,270.11! Now, let’s have that compound for 30 more years … it’s now over $800,000 for retirement.

3) Contribute to a Roth IRA.

In addition to contributing to a retirement account, work really hard to contribute to a Roth IRA each year. Roth contributions are taxed when you make the contribution and never taxed again. Therefore, you are taxed when you are in the lowest tax bracket you will ever be in … i.e., as a resident.

As soon as I started learning about Roth IRAs at the end of my training, I gathered all of the money that I knew I would not need for at least 20 years, opened a Roth IRA at Vanguard, and invested it. It wasn’t much money but it’s already grown over $600 in a short time. 

4) Create a finance anti-budget.

Budgeting gets a bad name. And that is mainly because we all think of it as being very restrictive. A budget tells us how little we have and what we can’t buy — right? I would challenge you to re-imagine a budget as being permissive. It tells you what you can buy while still meeting your financial goals. 

Your budget will also help teach you to pay yourself first and create a savings rate. Your goal throughout your career will be to create a savings rate of at least 20% of your pre tax, gross income. This is hard to do when you are a trainee. However, even if you create a savings rate of just 1%, you are building the habit that will serve you well and lead to financial freedom in the future.

5) Limit credit card expenditures.

Commercial credit card interest is the highest interest out there. It’s way more than even your student loans. I urge you, then, to minimize your credit card use. If you are going to use a card, pay off the whole balance each month. Even if there are great rewards, the amount you will pay back in interest will dwarf any points you get back.

The only exception to this rule in my mind is if you need to pay for board or exam fees and absolutely cannot do it another way. These are necessary expenses for your career. 

6) Rent your home, don’t buy.

As a trainee, I strongly recommend that you rent your house or apartment. The real estate market is a bit like the stock market in that it tends to rise safely over the long term. However, in the short term, it is quite volatile. If you are planning to buy a property with the hopes of selling for a profit when you finish training, you are gambling. Don’t gamble.

Further, if you have trouble selling when you need to move, you will become a reluctant landlord. You didn’t buy this property as a real estate investor, you bought it as a consumer. So, chances are this property doesn’t function well as a rental. And you now are stuck trying to manage it. 

7) Read one finance book a year.

Your financial success is directly related to your financial knowledge and education. You can make your financial education a priority by making it a goal to read at least one personal finance book each year of your training. 

Here are some resources to get started. Pick one book and just try to read 10 pages a day — starting with the day that you actually get the book in your hands. You’ll be hooked in no time. 

8) Do your own taxes.

Your taxes as a trainee are generally not that complicated. I always had an accountant do my taxes. I paid them about $400 each year. It was totally unnecessary. 

My last year in training I finally decided to do my taxes myself. I got a better refund than usual. This was partly due to a new kid but also due to me taking an interest and making sure things were filled out right. Remember, no one will take care of your money like you will. Also, I saved $400 that I no longer needed to pay the accountant. I paid off a small student loan with this $400. Imagine that I did this each year for seven years. That would have been $2800 in savings and $24,080 ($2800 x 8.6) in opportunity savings had I used all of that money to pay back loans.

Even if you have an accountant do your taxes when things are more complicated, you should always be watching over their shoulder. Again, no one will take care of your money like you will.

9) Bring your lunch and minimize takeout.

I love Paula Pant and her blog, Afford Anything. She always talks about how silly it is to focus on financial advice such as “Don’t buy your daily latte.” She argues that these small moves don’t really help. We need to be focused on bigger things like increasing our income or investing more wisely.

In general, I agree with her. We should have an abundance mindset with money, not a restrictive mindset.

Still, in the specific circumstances as a finance-limited resident, I really do encourage you to bring your own lunches and minimize eating out/ordering takeout as a trainee. Remember, each $1 not paid to loans becomes $8.60 after seven years of training. 

Is that $20 takeout really worth $172 in negative future net worth? A cafeteria lunch at my hospital usually cost about $9. Let’s say you work 25 days a month as a resident and buy lunch each day. That’s $2,700/year. That becomes $23,220 in opportunity savings if used to pay your loans.

In this case, it does make a difference. Try to keep this in mind.

10) Focus on becoming the best doctor you can be.

This is important.

Your job in training is to learn the skills and professionalism needed to be the best doctor you can be. That always is the focus.

I’m not saying you should divert that focus onto financial health completely. Instead, I hope these steps give you the high-yield information you need to create simple, automated habits that put you on the road to financial freedom!

If you’ve been keeping track, these very doable finance moves that you can make as a resident will easily add up to make you over $1 million in net worth over the course of your investment career. So go ahead, start now!

Which of these tips do you find most helpful? Share in the comments!

Jordan Frey, MD is a plastic surgeon in Buffalo, NY at Erie County Medical Center and the University of Buffalo. His clinical focus is on breast reconstruction and complex microsurgery. He is also the founder of The Prudent Plastic Surgeon, one of the fastest growing finance blogs. There, he shares his journey to financial well-being with a goal of helping all physicians reach financial freedom, practicing on their own terms.

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