It’s 2022, and many of us want this year to be better than last year. Instead of just hoping this happens, let’s make some realistic goals and put steps in place to achieve them. Here are some of my 2022 financial goals as a resident and how I plan to see them through:
1) Continue to invest at least 10% of my physician salary in retirement accounts. Investing money gives me the opportunity to allow my money to grow. Because of inflation (the rising cost of goods and services) money sitting in a savings account is actually losing buying power by the day. In order to prevent this, I keep a certain amount of money in an emergency fund and make a habit to invest the rest. Since I know I can’t be relied upon to actively put the money into investment accounts each month, I make it automatic by having 10% of my paycheck automatically invested into my 403(b), which is similar to a 401(k), before the money hits my bank account. I also have a set amount automatically invested into my Roth IRA. You can do the same thing. The amount you choose to invest is up to you, but having automatic contributions into your 403(b) or Roth IRA will allow you to start building wealth long before you retire, which will create more options for you in the future.
2) Make more money from side hustles. As a senior resident physician who is starting fellowship next year, I haven’t gotten the “big bucks” just yet. I make more than I did as a first-year doctor, but I still haven’t gotten that attending salary boost. Although I’m anxious to get paid more, I refuse to put my life on hold until that time comes. While many people choose to moonlight (work extra shifts as a physician) to supplement their income, I’ve always been concerned that doing so might cause me to burn out from medicine. So I've tried to increase my income in a different way. For me, that means monetizing my hobbies and increasing passive income. I’ve made tens of thousands of dollars doing that as a resident physician and would encourage other doctors to consider passive income ideas or to monetize some of their hobbies as well.
3) Avoid accumulating consumer debt. When I first started residency, I had lots of credit card debt. Most of it I accumulated before I went to medical school. I was unable to pay it off while getting my degree, so when I graduated and started residency, I still had it. My credit card interest rate was 10%, which means I was being charged extra money every single day I had debt. It didn’t take me long to realize that the sooner I paid off the debt, the more money I’d save in interest fees. When I got my first job as a doctor, I prioritized making large credit card payments and paid off the debt in a little over a year. I’m still credit card debt free, so my goal for this new year is to avoid accumulating more. It can be so tempting to use a credit card to book flights, pay for vacations, and purchase other items on sale, but resisting that urge has served me well.
4) Save money for future vacations. In order for me to avoid accumulating credit card debt, one of the things I do is plan ahead. I save money in advance for large expenses like vacations, holiday gifts, and friends' weddings so that I don’t end up charging these expenses to a credit card. I also have a percentage of money from each paycheck deposited into an entirely different bank account. I use the money in this bank account to save for future large expenses. Having these automatic deductions in a separate bank account prevents me from having to rely on my memory or self-control.
5) Carve out time for self-care. As a senior resident physician who will be starting fellowship next year, life is busy and occasionally stressful. One of the ways I plan to decrease stress and improve my own well-being is by investing in self-care. For me, that means reading more books, finding time for rest and relaxation, having periodic therapy sessions, and maintaining healthy eating and exercising habits. Life can be hectic, but making the time for my own self-care and happiness is better for my overall mental health and longevity, and can benefit my future financial success.
The first step in becoming money savvy as a resident is to clearly define what you want and set some goals that you can work toward while you are in training. This year, I plan to increase my passive income, continue investing in retirement accounts, save more money for big purchases rather than collecting debt, and dedicate even more time to my own self-care.
As a clinician, what are your financial goals and the strategies you'll use to achieve them?
Illustration by Jennifer Bogartz