If you’re heading into your last year of residency as a young doctor, congrats! Medical training is tough and you’re almost done. As you celebrate and start reserving your vacation weeks, don’t forget about some large expenses that may be coming your way. As a former senior resident who just started fellowship, there were quite a few large expenses I had that I wasn’t fully prepared for. I ended up having to make some extra money on the side in order to cover all the costs. Learn from my mistakes and plan ahead for these large expenses that may be coming your way:
1. Board Certification Exam
As you finish your residency, you will become eligible to take the board certification exam for your specialty. While some specialties like Ob/Gyn and Surgery have oral components that may take a lot longer to study or qualify for, almost all specialties require you to pass a written exam. In case you weren’t aware, that written exam isn’t cheap. I’m in family medicine and I paid around $1300. Yep, you read that right $1300. And yes, I had to pay the full cost before I was able to schedule the exam. Be sure to look up how much the board exam costs for your field. For some specialties and subspecialties it may cost over $2,000.
2. Full Physician Medical License
Residents in training usually practice medicine and see patients with a post-graduate training license. Once you finish residency, (whether you decide to do a fellowship or not) you are usually required to get a full physician license. This is not a national license. It is a state license which means you must have a full medical license in each state you practice medicine. Unfortunately, the cost of a full medical license isn’t cheap. I paid at least $500 in application fees for my initial Georgia license. Then I paid $230 a couple years later to renew it. Because I am doing a fellowship in California, I needed to pay for an initial California medical license along with the application fee which was around $1200. I also had to pay to get official fingerprints, medical transcripts, and USMLE scores sent to the state medical board. These costs were not cheap either. If you have already signed an attending contract, you may be able to get some of these expenses paid for by your new employer. Try to negotiate that into the contract or plan ahead so you have the money available for it.
3. DEA License
If you’re like me, you may be surprised to learn that getting a full physician license in each state you practice in, isn’t sufficient. You also need a license to prescribe medication, otherwise known as a Drug Enforcement Administration (DEA) license. The cost of this license isn’t cheap. I paid $888 for mine. If you’re a physician in training at a state institution or residency you may be able to get this fee waived, but there’s a caveat. Technically speaking, you need a DEA license for each state in which you practice medicine and you may have to pay for it yourself if your employer does not provide funds for this cost. I have a DEA license associated with my Georgia medical license and another DEA license associated with my California medical license. These costs can add up quickly.
4. Moving Expenses
Whether you are moving to a different state for fellowship or starting your attending job in a new area, most doctors-in-training move after they finish residency. In case it’s been a while since you moved, let me catch you up to speed: it’s expensive. I moved to California from Georgia and this cross-country move was not cheap. Simply traveling to California to look at apartments was costly. The cost of moving my clothes, transporting household goods, and shipping my car was expensive as well. Plus, there are other moving costs to consider too. You may need a new driver’s license and car registration which can lead to additional expenses and insurance fees. You may also need furniture or kitchen appliances. Once you account for these costs, you can easily spend $2,000 to $4,000 if not more.
5. Housing Costs
Many people finish residency and want to buy a home. We have so much delayed gratification in training that we finally want to accomplish the ultimate sign of adulting: homeownership. Unless you’ve been living under a rock, you know that inflation is through the roof and housing prices have increased over the last couple years. Many people are offering over the asking price and paying with cash which has made it more difficult and costly to find the home you desire. Be prepared. For those of us who plan to rent for another year, things may not be as good on our end either. Rent prices have gone up tremendously and many places still require a rather large security deposit. Whether you decide to rent or buy, beware that your housing costs may be higher than you anticipated.
6.Celebratory Vacation
Residency is hard. We were on call for over 24 hours at a time, worked nights and weekends while missing out on time with our families, and were drastically underpaid for the work we did. Finishing this training is quite an accomplishment and you deserve to celebrate. If you’re like most people, you will want to take a break before you start working as an attending. Most people take at least 6 weeks off to refresh and recharge and one of the most popular things to do during that time is travel. Go to Greece, Belize, Europe, Hawaii, or whatever bucket list location tickles your fancy. This may be one of the only times in your life where you have an extended time off without work obligations so take advantage of it. Just be aware that these vacations aren’t cheap. They can cost thousands of dollars and usually require you to save for them ahead of time.
My point? The end of residency or fellowship can be exciting, but it can also be quite costly. Expenses tend to add up quick. If you’re not careful, you can find yourself charging way more things on your credit card than you ever imagined. Be sure to plan ahead.
5 Pro Tips I'd Give My Younger Self:
Realize personal finance is important. Despite what we may have been told about our careers and future high incomes, how we manage our money now matters a lot more than we may think. A lot of us are falling into a danger zone of being okay with rapidly accumulating student loans, credit card debt, and never-ending car payments which is a very VERY scary place to be.
How we spend our money today, can drastically alter our quality of life a few years from now. The last thing you want to do is be in your mid-40s still complaining about the student loan debt your friends and family forgot you had, picking up extra shifts at a job you hate to avoid racking up even more credit card debt than you already have. DO BETTER.
Figure out how much you spend each month. I cannot stress how much my life changed when I actually set down and tried to create a monthly budget. Regardless of how “simple” it is, I can tell you that 90% of my med school classmates didn’t have one.
As a med student life was so stressful studying for organ systems tests, clinical rotation exams, or Step 1 of the US Medical Licensing Exam that you barely have time to wash dishes, let alone try to understand finance. Most of my us just filled out a FAFSA form each year and magically received money from the government that covered our tuition and basic living expenses. We’d pay our rent, buy the food we wanted, and then realize we’re suddenly broke when the semester was about to end and our account balance dwindled. We’d sweat it out for a month trying to make ends meet, then fill out another finance form (aka FAFSA) and “magically” more money appeared in our bank account. Rinse. Wash. Repeat.
No one told me not to over-spend my loan money on the post-board exam vacation I felt I deserved. No one stressed the importance of resisting the urge to “treat yo’self” during happy hour or a colleague’s birthday dinner.
I am not saying you can’t do these things, but I want to stress making a budget because I’d bet that most graduate students and young professionals have no idea how much money they are actually spending each month. I know I didn’t. I mean I knew I was broke because I kept filling out loan applications every year, but I honestly couldn’t tell you my overall loan balance. Heck, I couldn’t even tell you my debit card balance. Don’t be as naïve as I was, DO BETTER.
Minimize the interest rates on the loans you have. The money you borrow now will cost you much more in the future. Let that sink in. The higher the interest rate, the more money you will pay back later. When you borrow $30,000 for school, you pay back closer to $40,000 later (assuming a 7% interest rate that you pay back over 10 years). That’s $10,000 extra you’re paying just in interest.
You can minimize this by not borrowing as much in the first place and by lowering the interest rate on the loans you currently have. If you have credit card debt, simply call your bank and ask if they can lower the interest rate on your credit card. Yes, it really is that easy.
Spend less! We all want to look good, feel well, and vacation like a champ. Trust me I get it. I get envious when I see the Instagram photos of my med school classmates or work colleagues taking another extravagant vacation I cannot afford. It’s hard not to let the positive balance in my bank account distract me from the big fat NEGATIVE sitting in front of my net worth.
As a med student, the student loan money sitting in my debit account was fictitious. It tricked me into believing I was richer than I was or that I can afford things I knew I couldn’t. When I finally had to face the big fat loan balance alongside my car payment and expanding credit card debt, I realized I needed to make a change.
I knew I didn’t have much self-discipline so I had to stay far away from the malls. I deleted the text alerts of new “sales” from my favorite clothing stores, resisted the urge to buy a new outfit for weekend outings, and started cooking more meals at home. Before I knew it, I had changed my spending habits and paid off my car.
Practice self-discipline and delayed gratification. For the love of God and all things man please break your expensive habits. Mine was wine and lots of it. I liked it red, aged, and expensive. It just tasted better. But man was it costing me.
I was spending at least $15 a week on wine, which doesn’t sound like much but when spread that across 52 weeks a year that amounts to $780. I mean I was spending nearly $800 on alcohol! This was going to cost me closer to $1000 when I paid it all back, since I was buying the wine with my student loan money. What a waste.
Every year for Lent I tried to give it up and the day Lent ended I picked back up the habit. Don’t be me. Curve your habits. Do not waste money you don’t have on things you don’t need. Granted there is a balance, but graduate school is not the time to be treating yo’self to wine and fancy dinners every other week. Face it. We aren’t rich…yet. Quit pretending you have more money than you actually do. Practice self-discipline so you can get out of debt and start building your net worth.
Tell me, what ways have you started practicing self-discipline? What things are you going to try to spend less on this month?
6 Life Hacks To Start Saving More Money
As a busy young professional who aims to be fiscally responsible and money savvy, I realized I needed to change my habits. Here are 6 habits I changed to save more money:
1. Pre-plan restaurant outings. When I get invited to eat out with friends, I show up a lot more prepared. Instead of getting there and being shocked by the price, I take a look at the menu online before I arrive and come up with a maximum dollar amount I want to spend. If I know I don’t want to spend more than $25, then I’ll think twice before I order another round of drinks or that extra appetizer I know I don’t really need. I spend less money if I set a limit for myself beforehand.
2. Decrease the amount of times I go to the mall. Most people who know me, know that I loveeeeee to shop at Express. They have cute business casual clothes for young professionals and quality dresses for an occasional night out. As a med student I could never seem to resist their sales and if things were magically 40% off, I usually bought up the whole store. Since I knew I couldn’t curb my self-control, I did something even better. I refused to let myself walk by the store. In fact, I decreased trips to the mall altogether. I now only go to the mall once a month for make up and any other personal grooming things. Since my self-control wasn’t the best I had to avoid putting myself in situations that constantly tested my limits.
3. Remove text alerts from clothing stores. If you know me, you know I love a good sale. Getting a sale price for a quality item is something that brings me immense joy. Anytime I got a text alert from one of my favorite stores notifying me of a sale it was hard to resist. When I realized I wanted to start spending less money, I changed this practice. I turned off the text alerts to my phone and send the sale notifications to an email address I didn’t check as often. That way, when I actually needed to buy something from the store, I still had access to valuable coupons, but was no longer inundated with them every couple days via text message.
4. Drink less alcohol. I’m not addicted to any drinks and don’t particularly care for hard liquor, like many young professionals I know, I love wine. Something about a glass of red wine after dinner alleviates my stress and makes me feel like a success. Unfortunately, this craving for wine was costing me a lot of money. Drinks were overpriced at bars and weekly wine bottles were starting to add up. In an effort to spend less money and lower my grocery bill I deceased my wine intake and started drinking less wine
5. Purchase things in cash. A couple years ago I noticed that I spent less money when I purchased things in cash versus when I bought things with a debit or credit card. When I swipe for a payment it can seem a bit passive. There is something about physically seeing the money leave my hands actually makes me want to spend less. Anytime I pay in cash I question whether I really need what I’m about to purchase. With a debit card, I typically don’t have that doubt check system into place.
6. Take advantage of free and low cost entertainment. When I was a med student on a large college campus and even now as a resident in an urban city, there are tons of affordable entertainment options, especially on Friday nights. Instead of paying to go out somewhere, my friends and I decided to go to some of the free things. Our med school college campus had a bowling alley that was free on Fridays. Occasionally, they had art and painting classes that were also free. Sometimes we would even go to sporting men’s football games or women’s gymnastics meets which were relatively affordable as well. During the warmer months, we could rent Kayaks on the lake or do a movie night with popcorn at someone’s home in the winter. Either way, these affordable sources of entertainment were saving me money.
What do you think of these habits? Are there one or two life hacks from above that you could start adopting in your own life?
6 surprising benefits of having a spending plan
In order to practice good money management, we must put a valiant effort into getting our spending habits under control. Although challenging, creating a monthly budget or at least having a “spending plan,” can really help us get on the right track. When I finally started following a budget not only did my finances improve, but I also noticed these 6 surprising benefits:
I am better organized. Before I created a budget, I used to “guesstimate” how much money I spent each month. After a few weeks, I’d realize that my bank account was lower than I anticipated and would just tell myself to “try harder” next time. As you can imagine, that didn’t work. I was still spending too much money and barely making ends meet. When I finally sat down and made a monthly budget things changed for the better. With a budget, I actually know how much I can afford to spend on certain items and can plan better strategies on how to meet my financial goals.
I know what is happening to my money. Now that I have a realistic budget, my spending habits have changed. I am more aware of fixed vs variable expenses and have a rough idea of how much money is in my bank account at all times. Because of this awareness, I no longer have anxiety opening my mobile banking app or logging into mint.com. I know how much I can afford to spend on food and which times I can splurge on other items. Instead of getting to the end of the month and wondering where my money went, I am now the one telling it where to go.
I feel less guilty when I spend money on myself. Before I created a budget, I felt guilty spending money on myself. Even though I worked hard, I always felt like I should be using the “extra” money I had to pay off credit card bills or save for retirement. At one point, my guilt was so bad that I could barely walk into the nail salon without feeling financially irresponsible. All of that changed when I actually created a budget. Each month I allocate a certain amount to “personal grooming and self-care.” I now have a small portion of my budget set aside for a monthly pedicure and trip to the hair salon. This minor change adds so much to my quality of life. It makes me happy knowing that I can enjoy myself from time-to-time and remain on track to meet my financial goals.
I worry less about my bills. Before I had a spending plan, paying bills near the end of the month gave me anxiety. Even though I knew the bill was coming, I had usually spent too much money earlier in the month so paying that bill would lower the balance in my checking account to a level that I was not comfortable with. Facing that reality caused me great angst on a regular basis. When I created a budget, things changed. Fixed expenses that come out of my check are no longer a surprise to me, regardless of when the money is deducted. I am more aware of my spending throughout the month which makes me better prepared to pay those mid-month bills when they come.
I actually save money each month. Before I had a budget, saving money was something I didn’t think I could afford to do. I swiped my card whenever I deemed it necessary and was genuinely surprised that I didn’t have much left over at the end of the month. When I created a budget, this changed. I became much more aware of how my unhealthy spending habits precluded by ability to save. Nowadays, I solve this problem by actually “paying myself first.” I have a portion of my check directly deposited into a totally different bank account. Since I hardly ever use this secondary account, I don’t really “see” the money I am missing. As result, the money in this account has continued to build over time. As I continue to work in residency, I’ll have this separate bank account serve as an emergency fund, new car fund, and vacation savings account.
I finally started giving. As a well-intentioned Christian, I try to give to others. Generosity not only blesses the other person, but it does something internally to the giver as well. Every time I give, I get this wave of gratitude knowing that I helped make someone else’s life better. Creating a budget has allowed me to continue these good deeds on a regular basis. Instead of feeling like I can’t afford to share with others, having a spending plan helped me see where I could make room in my budget to tithe and make small charitable donations. It might take me a little longer to become financially independent, but to me, this sacrifice is worth it. Giving to others brings me so much joy and helps me maintain perspective. It also allows me to enjoy the work I’m doing so much more. Without a budget, I wouldn’t be able to continue this practice.
For these 6 ways and more, creating a spending plan has really enhanced my life. If you haven’t already, sit down and make a budget and see if you experience some of these same benefits. As the old saying goes “Do something today that your future self will thank you for.” Believe me, creating a budget (and sticking to it) is something you won’t regret.
Tell me, was this helpful? What other benefits have you gotten from creating a budget?