As a physician, it’s likely you’ve accumulated student loans from paying for medical school. Then, you take on more loans as you start your career. Before you know it, you’re swamped with debt and don’t have a solid plan to get out of it or to save for your future.
That’s why a certified financial planner who specializes in working with medical professionals is your best bet. They can help you with budgeting, loan repayment strategies, disability income insurance, retirement, investment planning and many other strategies to hit the ground running as you start your career.
Here are 5 things you need to know to avoid financial regret in the future:
Create a plan for student loans
You most likely have debt from undergraduate and medical school. Once you’ve completed medical school and are entering residency, you’ll need to have a plan to pay off your loans.
It’s important to pick a repayment plan that’s right for you. Physicians starting residency can take advantage of several different repayment plans. To learn more about repayment options, visit the American Association of Medical Colleges.
Protect your paycheck
If you fall ill or suffer an injury, it can limit your ability to practice. To ensure you still have money coming in to pay your expenses under these circumstances, check your employer’s group disability insurance coverage and what it does and doesn’t cover.
It may only cover a portion of what you earn. There may be supplemental insurance options that can help you in the case you get sick or hurt.
Be sure you understand how the policy defines total and partial disability.
Stick to a budget
This is financial planning 101. You can start practicing good financial habits while you’re in training. Track and control your spending using the following guidelines:
• 20 percent for savings and investing
• 60 percent on essential expenses
• 20 percent on discretionary expenses
As your income grows, monitor things and adjust. Sticking to a budget now will benefit you in the future.
Build an emergency fund
Everyone should have money to fall back on in case of an emergency, and physicians are no exception. Unexpected expenses that can’t be budgeted for monthly happen all the time and there needs to be cash on hand to pay for things that come up.
Make it a top priority to accumulate a minimum of 3 to 6 months of expenses in an account that’s safe and quickly accessible.
Save and invest for retirement
There are a few ways you can prepare for retirement, even while you’re in training.
You can benefit from contributing now to different accounts that have tax advantages that you can down the road.
• 401(k) or 403(b)
• 457(f) or 457(b)
• Traditional or Roth IRA
If your employer offers to match a percentage of your retirement contributions, set aside enough to obtain the full employer match at a bare minimum.
Diagnose Your Financial Health with A Professional
Dave Czarnecki is a certified financial planner (CFP) located in Milwaukee, WI that works with clients all over the country leveraging technology.
As the husband of a health care professional and father of three, his approach not only stems from his extensive training but also personal experience building financial safety nets for himself and his family.
Czarnecki specializes in providing financial expertise and services to physicians, business owners and those aspiring to retirement.
At Northwestern Mutual, expert financial planners are dedicated to diagnosing their clients’ financial health and finding a sustainable cure.
The company provides access to a network of advisors and specialists across the country. Advisors work with clients to find complementary and flexible solutions that align with client needs and goals.
It’s never too late to get in good financial health. If you’re a physician in need of a financial planner, contact Dave Czarnecki at Northwestern Mutual for a free consultation and grab your free Residency Financial Planning Checklist.