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 goals:
1. Continue to invest at least 10% of my 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 work 403b (similar to a 401K) 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 403b 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 (increase passive income). 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 for a year and a half 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 burnout from medicine. So, I've tried to increase my income 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 docs to consider passive income ideas, or monetizing some of their hobbies, to increase their monthly income 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 med 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 that each day I had the debt I was being charged extra money in interest. 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 less than a year a half. 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 my credit card to book flights, pay for vacations, and purchase other items on sale but resisting that urge has served me well. In 2022 I hope to continue this practice.
4. Save money for future vacays. 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, travel, holiday gifts, and friends' weddings so that I don’t end up charging these expenses on 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 into a separate bank account prevents me from having to rely on my memory or self-control. I plan to continue this same practice in 2022.
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 wellbeing 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 & exercise 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.
Tell me, do you plan to do some of these things this year? What are some of your goals for the new year?
My 5 Residency Money Goals
Residency can be challenging. We are perpetually overworked, underpaid, and trying our best to make it through. Even those who aren’t resident physicians may be able to relate to this in some way. While this time has its ups and downs, we can’t lose sight of the bigger picture. We will soon be attending physicians and one of the best things we can do during residency is lay the foundation for the life and career we desire. This means doing a few things during our time in training to set ourselves up well financially. Here are 5 of the money goals I set when I started residency:
1. Figure out what’s going on with my student loans. When I graduated from medical school, I had a substantial amount of student loan debt. I remember being called into the financial counselor’s office and being told that I had over $200,000 in student loans. I don’t know about you, but I had never seen or made that much money in my life. I knew I needed a plan. I began to read about the different repayment options and tried to pick one that would give me the lowest monthly payments in residency, provide some government subsidies, and still qualify for loan forgiveness once I finished my training. I didn’t want to be stressed about student loans in residency, so I signed up for an income-driven repayment plan and had my residency coordinator sign the form needed for me to enroll in Public Service Loan Forgiveness.
2. Pay down my credit card debt. I had credit card debt before I started residency. Most of it was accumulated before I was med student, back when I was struggling to make ends meet as a post-grad student in Washington, DC. However, I had also racked up some debt when I was starting residency. Moving from one state to another, paying the deposit for a new apartment, and affording basic expenses like food while I was waiting weeks to get my first residency paycheck was tough. I didn’t have the benefit of a working spouse or cash from my parents to lighten the burden. I didn’t realize doctors could get low-interest personal loans, so I instead charged the expenses on my credit card. My goal was to pay off this debt within the first year of residency, so I set aside money from each paycheck to pay down this debt until it was gone.
3. Save money for vacays and emergencies. One of my goals as a resident is to be able to take full advantage of my vacation time by traveling and visiting friends in other areas of the country. Before COVID, I had visited friends in Seattle and Chicago. In a few months I’m planning to attend a destination wedding. In order to afford those trips without taking out additional debt or charging the expense on a credit card, I knew I needed to plan ahead. Thus, one of my goals was to save a few hundred bucks from each paycheck into a “vacation fund” so that I could afford to take nice trips during my time off. Along with saving money for vacations, I also wanted to make sure I had money in an emergency fund so that if an unexpected expense occurred like needing new brakes for my car, a new phone, or a new laptop, I had the money to pay for them. So in addition to my vacation fund, I also had a few hundred bucks from each check put into a separate emergency fund via automatic savings.
4. Protect my income with disability insurance. As a resident physician I know my income will increase when I become an attending. (And as someone who feels underpaid right now, I cannot wait for that to happen). But even as I near the finish line of my training, I realize that a lot of the goals I have for my life—to buy a nice home, spend quality time with my family, have memorable international travel experiences, finance my [future] kids’ education, and build wealth for future generations—depend on my future attending income. Because the life I envision is so heavily dependent on my future high salary, I knew I need to protect it by getting disability insurance.
Having disability insurance means that if something unfortunate happens (like getting in a car accident, being diagnosed with a chronic medical illness, or suffering from a mental health disorder) I will still have an income high enough to help me reach my financial goals. Getting disability insurance as a healthy young resident allowed me to not only protect and insure my resident salary, but it also allowed me to lock in a lower rate with guaranteed coverage so that I would be insured as an attending physician as well.
5. Start Investing Money. With the goals I had above and an initial salary of $60,000 as an intern, I wasn’t sure I could afford to have any more money goals as a resident. Fortunately, I still decided to invest. I knew that I couldn’t save my way to wealth and that if I wanted to meet my financial goals sooner, I needed to start buying assets (things that increase in value over time). I also knew that one of the best things about investing is that my money can make even more money via compound interest and that compound interest would be more effective the earlier I start investing. So yes, even though my income would increase as an attending and money was tight when I started residency, I still made a goal to invest.
Because of the tax, student loan, and asset protection benefits, I prioritized investing through retirement accounts (like a Roth IRA and my residency 403b). I also knew that I wanted to invest money in a way that maximized the chance I would make money and minimized the risk I would lose money which meant I invested in index mutual funds like the vanguard total stock market index. Because I wanted to prioritize paying off my credit card debt, I started off as an intern investing only 3% of my income into my residency 403b. I gradually increased the percentage every few months as I paid off my credit card debt and stacked up my emergency fund until I got to my target of investing 10% of my income.
My point? Even as a resident, it’s important to have money goals. Maybe you want to pay off credit card debt and start investing. Or, maybe you want to save for a wedding or set aside money to buy a home. Regardless of what your desires are, the first step in becoming money savvy as a resident and setting yourself up well as an attending is to clearly define what you want and make some money goals that you can work toward while you are in training.