As a new physician, you’ve likely spent many years focusing on medical education and clinical training, with little time to consider personal finance. However, the financial decisions you make early in your career can set the stage for long-term financial success and security. This checklist is designed to help you navigate key financial steps, from managing student loans to planning for retirement, while ensuring you build a strong foundation for your future.
What is Your Financial WHY?
The most important question to ask yourself when creating a financial plan is: What does wealth mean to you? Define what financial success looks like in your life. Is it freedom from student loan debt? Early retirement? The ability to travel the world? Having a clear financial “why” helps guide your financial decisions and ensures that your goals align with your values. Without understanding your why, it’s difficult to create a financial plan that is truly suited to your needs and goals. This can also change over time, so be sure to check in with your plan over the years to ensure your vision of financial success is still true to who you are.
Student Loan Management
Student loan debt is one of the most significant financial burdens faced by medical professionals. U.S. medical graduates typically accumulate an average of over $200,000 in student loans.1 Understanding how to manage this debt effectively is essential to your financial health.
Depending on your situation, you can explore different repayment plans for your student loans. Income-Driven Repayment (IDR) plans can help if your income is modest relative to your debt. Alternatively, Graduated or Extended Repayment Plans may allow for lower monthly payments over a longer period. You may qualify for loan forgiveness through programs such as Public Service Loan Forgiveness (PSLF) if you work in qualifying non-profit settings. Keep in mind that because these programs are determined and funded by the government, it’s essential to stay up-to-date with any legislative changes that could impact these programs.
Budgeting and Cash Flow Management
Managing your income and expenses is a critical step to achieving financial stability and avoiding unnecessary stress. Start by creating a budget to track your income and expenses. This helps you understand where your money is going and allows you to allocate funds for goals such as debt repayment, savings, and investments.
As your salary increases with your transition from residency or fellowship to full-time practice, it’s easy to fall into the trap of lifestyle inflation. Think of this like the proverbial hedonic treadmill: as your income rises, so do your desires for more luxury goods and experiences. Avoiding the “golden handcuffs” — feeling trapped by high income and expensive lifestyle choices — and staying disciplined in your spending habits can help you build wealth over time.
Investing is often a key to long-term wealth-building. Rather than trying to time the market, focus on long-term growth through consistent investing. Have patience, think long-term, and invest in diversified portfolios within retirement accounts that allow your money to grow over time. Given the complexities and risks associated with investing, it’s a good idea to consult or partner with a financial advisor to build a strategy that’s right for you.
Additionally, aim to set aside three to six months’ worth of living expenses in an easily accessible account. This fund acts as a financial cushion in the event of unexpected costs like medical emergencies, job changes, or other life circumstances. A cash management account can be a good fit for this purpose, and you can learn more in this article by Lead Advisor Janelle McCreary.
Understanding Your Insurance Needs
Insurance is a critical safety net for protecting your income, assets, and family. For physicians, the right insurance coverage can make all the difference in your financial security.
- Professional Liability and Malpractice Insurance - As a physician, malpractice insurance is crucial to protect yourself from potential lawsuits. Depending on your specialty, you may also need to consider additional coverage to meet specific needs. Our partners at Curi share more information on insurance consideration on the Curi Blog.
- Disability Insurance - Disability insurance is often overlooked, but it’s arguably one of the most important forms of insurance for physicians. If you become unable to work due to illness or injury, this policy can replace a significant portion of your income. Consider both short-term and long-term disability coverage to safeguard your future earnings. Learn more about your options in this article from Senior Wealth Manager Barb Black.
- Life Insurance - While life insurance may not be your top priority as a single early-career physician, it’s worth considering if you have dependents or plan to start a family soon. Life insurance can protect your family from financial hardship if something were to happen to you.
Tax Planning
As a high-income professional, tax planning can significantly impact your financial outcomes. It’s essential to understand the tax implications of your income, including tax deductions, credits, and strategies to minimize liability. A financial advisor paired with a tax professional can help you explore options like tax-deferred retirement accounts, health savings accounts, and flexible spending accounts to reduce your taxable income year-to-year. The overall goal is to ensure you are saving in the most tax-efficient way for the long term.
If you are self-employed or work as an independent contractor, your tax situation may differ. Be aware of self-employment taxes, estimated tax payments, differing employer retirement plan options, and deductions available to business owners.
Retirement Planning
It’s never too early to start thinking about retirement. The sooner you begin saving, the more time your money has to grow, and the more you’ll enjoy the benefits of compound interest. Starting your retirement savings early, even with small contributions, can result in substantial growth over time. We often recommend trying to save at least 15% of your pre-tax income for retirement.
Take time to understand your employer-sponsored plan(s) and tax-advantaged accounts. Many employers offer retirement plans like 401(k)s or 403(b)s with matching contributions. Take full advantage of these, as employer contributions are essentially free money. Additionally, explore tax-advantaged accounts such as IRAs (Individual Retirement Accounts) or Roth IRAs for further retirement savings.
Continuing Education and Financial Literacy
A successful financial journey requires ongoing education. Being proactive about personal finance can significantly improve your financial wellness. Financial stress can take a toll on your mental and emotional well-being. Understanding and having confidence in your financial situation and long-term plan can help reduce stress—especially when you have a financial professional working in your corner to help look out for your best interests.
A certified financial planner (CFP) can help you develop a comprehensive financial plan tailored to your unique circumstances and aligned with your values and life goals. Working with an advisor is especially helpful if you need complex or comprehensive guidance on topics such as taxes, investment strategies, or retirement planning.
By thinking through this checklist, early-career physicians can establish strong financial habits and build a foundation for long-term financial success. Whether managing debt, investing for the future, or planning for retirement, these steps will help you make smart financial decisions that empower you to focus on your medical career with confidence. If you’d like to learn more or discuss your financial needs, please reach out to us today.
Suggested Resources
- “The Psychology of Money” by Morgan Housel
- “Happy Money: The Science of Happier Spending” by Elizabeth Dunn
- “Dollars and Sense” by Dan Ariely
- “Investing for a Lifetime” by Richard Marston
- https://www.ama-assn.org/medical-students/medical-school-life/medical-student-financial-faq-insight-loan-forgiveness
The opinions and analyses expressed in the article are based on Curi RMB Capital, LLC's research and professional experience. The information and data in this article do not constitute legal, tax, accounting, investment or other professional advice. Investors should consult with their trusted professionals prior to taking any action.
The content contained herein was generated by Curi RMB Capital with the assistance of an AI-based system to augment the effort.
Certified Financial Planner Board of Standards, Inc. owns the certification marks CFP®, CERTIFIED FINANCIAL PLANNER™ and federally registered CFP (with flame design) in the U.S., which it awards to individuals who successfully complete CFP Board's initial and ongoing certification requirements.
