The majority of medical school graduates are carrying debt as they progress through residency. A 2014 report published by the Association of American Medical Colleges suggested that over three quarters of medical school graduates carry a debt burden over $100,000 dollars. Although most borrowers will pay off their student loans within 10 years of residency completion, some wish to alleviate their debt during residency. While it is difficult to simultaneously pay off student loans and monthly expenses of living, there are tactical solutions any resident can take to establish a steady flow of passive or active income.
Since graduating from medical school, I have developed a keen interest in the worlds of finance and debt management. There are numerous articles online purporting quick and easy ways to make additional income as a resident; however, most of these strategies are either gimmicky or are not suitable in resident’s lifestyle. For example, one could theoretically earn additional income by driving cabs for Uber on post-call days, but this isn’t a realistic option for most residents.
Instead, I’ve focused on several manageable strategies that can help a resident earn additional income while working full-time at the hospital. As with any opinion piece, I should mention that the topics listed here are purely my suggestions and shouldn’t be used as specific investment or trading advice.
For residents that performed well on their USMLEs and have an ability to convey information clearly and effectively, tutoring is a great way to earn extra income on your own time. There are several online companies that hire residents to tutor shelf exams, USMLEs, and specialty exams. They generally pay an average of $100 per hour. The hours are flexible and you can choose when to host a tutoring session. This can be a good option for residents with variable schedules and post-call days. It should be noted that most companies require USMLE scores > 240 or prior teaching experience. Residents with advanced degrees or graduates from Ivy league universities are also in demand. Basically, online tutoring allows you to work from home on your own time and make decent money in the process.
Moonlighting has stood the test of time as the main secondary income earning strategy for physicians in training. Residents can obtain internal or external moonlighting positions which can vary in hours worked and payment offered. The income generated can be substantial; for example, one 12-hour shift can often generate 20–30% of your weekly salary. However, in recent years, there has been increased scrutiny and restriction of moonlighting hours by the Accreditation Committee for Graduate Medical Education.
In addition, most residency programs have restricted moonlighting privileges of residents even further, which suggests this method of income earning may be rapidly falling out of favor. Therefore, the risk/reward trade-off is one that needs to be thoroughly considered.
Moonlighting has several significant drawbacks that are worth mentioning. In some cases, you will be covering a patient service that will be completely new to you. Therefore, detailed, effective, and timely patient hand-off is essential to avoid medical errors in this setting. In addition, there is always the possibility of litigation or disciplinary action taken against you if anything goes wrong during your shift. You need to be very careful and protect yourself at all times. It’s with these elements in mind that I do not recommend external moonlighting as an income strategy for anyone other than an experienced senior resident or attending. Unless you’re covering an internal shift with a service you know well (for example, a neurosurgery resident covering a 12-hour shift in the neurosurgical intensive care unit), you may be asking for a world of hurt. I only recommend internal moonlighting on a patient ward with which you are intimately familiar. I also don’t recommend cross- covering services that are not within your specialty.
For residents with the financial common sense and know-how to save money early in their careers, it can pay to park your hard-earned cash somewhere other than a savings account. While there is always a risk of losing principle, in most cases, investing in a mutual fund or exchange-traded fund with a proven record of steady returns can be rewarding. Again, I will stress the point that nothing is sure-fire in the high-risk world of finance, but residents who take the time to learn about stocks, bonds, and options will gain a valuable fund of knowledge. There is no better time to learn these fundamental concepts than during residency, when you’ are earning a steady income and have yet to strike out on your own as an attending.
Most residents don’t have the time to actively manage their stock positions; therefore, investing in mutual funds or exchange-traded funds which closely track the S&P 500 are medium-to- low risk ways to earn solid returns. Treasury bonds are also a good option for steady, low-risk returns. When examining funds or stocks that pay dividends, most online brokerages have dividend reinvestment programs that allow their clients to reinvest dividend income into additional shares of stock, commission-free. Assuming your stocks continue to gain value over time, compounding interest will lead to significant gains to your principle investment once you’re done with residency.
I highly recommend that residents learn more about basic investment strategies, individual retirement accounts (IRA), and general money management. I’m continuously shocked by the number of residents who live paycheck-to- paycheck with hundreds of thousands of dollars in student loans in forbearance and accumulating interest. This is a recipe for disaster.
Personally, I began my journey into investing through reading books about stock and options trading and gradually adding to that knowledge through educational material offered by my online brokerage (TD Ameritrade). While diving into the esoteric details of buying leveraged exchange-traded funds or selling iron condors on weekly options are beyond the scope of this article, below are links to several excellent sources I used to learn more about these topics.
My online brokerage, TD Ameritrade, also offers several excellent educational resources in the form of Investools® and thinkorswim®. I found these sources quite helpful in learning difficult financial concepts such as forex, bonds, and equity trading. They also have weekly live lectures hosted by financial gurus (Scott Connor and Kevin Hincks), who explain complex options trading strategies in a simple and easy-to-understand manner.
Selling Used Medical Textbooks
Do you have a library of textbooks from medical school that are collecting dust? If so, the tried and true method of selling items in online marketplaces such as Amazon, Etsy, and eBay is a solid way to make a little cash on the side. I’ve seen people get very creative and utilize arbitrage to earn a steady stream of income. For example, one could buy used medical texts from graduating students at a steep discount and then resell them for much higher prices on Amazon. Graduating medical students often don’t have the desire to transport old textbooks to their new residency program or have the time to list them for sale. Residents can purchase these texts for a fraction of the cost and sell them online or to other medical students.
The methods listed above are just a glimpse at the many different ways one could earn additional income while working full-time as a resident. Generally speaking, it’s difficult to earn a steady, reliable stream of secondary income with resident duty hours; however, anything is possible with persistence and hard work. My advice would be to invest your money wisely and try to develop a relatively easy “side job” to make some extra cash. I only recommend moonlighting if it’s done internally covering a patient service which you know well. Otherwise, the risk/reward ratio is not in your favor.
Good luck and remember to save your hard-earned money!