Budgeting is a fundamental skill of adulthood that those in medicine don’t learn soon enough. I recently published a post called Got Debt?! The Truth About Paying for Medical School- Since We Can’t All Go to School for Free where I talked a lot about budgeting and how crucial that is to paying for medical school. But a lot of people don’t actually know how to budget - I didn’t learn until residency!
In college and medical school, I didn’t think about budgeting. I had scholarships and medical school was all loan money so it felt like I was playing a game of Monopoly. Then I graduated medical school, had a bunch of loans and was making a residency salary in NYC and had to learn how to budget out of necessity. So as soon as I got my first check, I implemented Operation Financial Wellness ASAP. Here’s what I learned!
MAKE A THOROUGH BUDGET
Most people don’t keep good track of how much they are actually spending. In the medical profession we tend to be particularly bad at this because we take out loans and worry about the consequences later. “I’m on call so I deserve take out, I been studying all day so I’ma treat myself.” We have all been there and that’s how we end up spending $200 a month on take out. So the first step to stacking your coins is to know where your money is going.
List ALL your expenses: every single expense.Depending on where you live your costs may vary. As a New Yorker, I spend sooooooo much money on rent. I live close to my job so my commute is minimal and I don’t spend a lot of transportation. However, that expense is not negligible and when I take an uber and public transportation to get around outside of my job that adds up. Don’t have a washer and dryer in your place? Laundry counts too! Go to happy hour once a week? That counts too. All those expenses add up. If you are not sure, review you bank statements and bank account to see what you are spending money on and use that as a starting point.
Also be realistic. Do not pay all your bills with one check and have no money to eat until you get paid in 2 weeks. I distribute my bill payments across the month depending on when the bill is due and pay well before the due date to give myself an extra cushion. That way I do not have to worry if a random expense comes up that my account is empty until my next check. Some companies give you a discount if you set up automatic payments and paper statements. I pay all my bills manually before the due date to avoid overdraft fees and being overcharged for a bill and having to dispute it later.
Stick to your budget. If you really need to go over your budget, that money will need to come from elsewhere. I also give myself a spending allowance, that way I can buy whatever I want with that money without feeling guilty or affecting my overall budget. But that means once that money is gone, I can’t go out to dinner, take a $10 cab, or buy a pair of shoes without having to take that money from some of my other financial responsibilities. Taking out physical cash from the ATM can also help with sticking to your budget because physically watching your money dwindle is sad. Check you bank account at least once a day to make sure you are not overdrafting or someone is hacking into your account.
Here’s a list of some of the things I include in my budget:
Rent and utilities (electric, water, gas etc)
Transportation (gas, Uber, public transportation, visiting home)
Subscriptions (Apple Music, Spotify, Netflix, Hulu, Magazines, etc)
Toiletries (toilet paper, paper towels, soap, detergent)
Health (dental work, copay, prescriptions, etc)
Books and educational expenses
Spending allowance (going out, makeup, clothes, dinner)
Adjust your budget as needed. Keep your budget somewhere you can adjust as needed like a notebook, excel sheet, or budgeting app. I find the budgeting app to be the most useful and having it on my phone makes it super easy to make sure I’m not overspending.
Here are a few budgeting apps I have used: Fudget, Mint, Clarity, Joy
CUT COSTS AS MUCH AS POSSIBLE
Once you have developed a good budget and identified where all your money is going, it’s time to figure out how you can reduce your spending and increase your savings. You can’t increase your income, so to shift the balance you have to cut your costs. Think about the things that you spend money on and ask yourself, do I need this?
Let’s start with the easy stuff: television. Why do you need cable anyway ? You are never home to watch it. And nowadays, with Netflix, Hulu, Amazon, Sling TV, there really is no reason to spend $200 a month on TV. If you can, share accounts. My family all shares one Hulu and Netflix account and I even share some of my accounts with my trusted friends. All we pay for is internet and those subscriptions. Saves us hundreds of dollars a year.
Speaking of subscriptions- minimize how many you have. Music streaming sites, pick one. Shoe subscription, get rid of it. Gym membership, find the cheapest closest one. If you have a fitness class membership, make sure you use it. Otherwise, if you don’t use them or need them, shut them down.
Save on transportation by using it only when it necessary. In some cases, taking a cab is more convenient when you are going long distances or have a lot of stuff with you. But if it is nice out and you can walk somewhere, do it. It’s better for your health and my pockets. For those with cars, try carpooling to save on gas. Get a car with reasonable car payments, now is not the time to get a Bentley. Pay down those loans first and then get your dream car when you are a successful attending.
Budget for house stuff. Having your own house or apartment means that there will also be expenses associated with that. Cleaning products, tools, plumbing, maintenance issues. Be sure to budget for that ahead. Try when you can to fix things yourself. Buy yourself a good tool set, it’s an investment that will save you money in the long run. In other cases, it may be easier or cheaper to pay someone else to do it. Don’t go fiddling around with something if you don’t know what you are doing because it may just cost you more. In those cases, make sure you budget for that as well.
Food and groceries is another major area for budgeting. In medical school, I had no budget for groceries and would end up wasting food all the time. Now I stick to a budget for grocery shopping, and once that budget runs out, I have to get creative and use what I already have in my fridge. I find that by cooking my own food I save money and it’s better for my health. When I grocery shop, I buy essential items first, lean meats, vegetables, dairy, grains. I also love to cook and love trying new items, so I restrict myself to 1 new item per grocery run. Trader Joes always has new items I want to try and their prices are pretty reasonable. I always search new recipes and watch Chopped on the Food Network to get motivated and creative with ingredients I already have. I try to minimize ordering out because it can become expensive, and when I do I use my spending money.
Now let’s get to the more difficult stuff- shopping, beauty, and self care. This is a big area of spending for us ladies. Between manicures, pedicures, hair, makeup, and beauty products and services, we spend ALOT of money. I know what you are thinking, you are not trying to go to work or school looking crazy. But the truth is, you are beautiful just the way you are and 10 years from now, your manicure color is not going to matter.
So how can you cut costs in this area? Let’s start head to toe like a physical exam.
As a woman of color with natural hair, I personally used to spend tons of money on hair products, hair weaves, hair installs, and all that. My hair lifestyle was becoming unmanageable so I had to cut my costs. The first thing is that I do my own hair and hairstyles so I never have to pay for someone else to do my hair. YouTube is exploding with instructional videos on all the hairstyles you could ever hope and dream for and that is a good way to learn. Even if you are not hair savvy and not able to do elaborate hairstyles, you should have a few key go-to hairstyles in your arsenal for when you don’t have the money or time to get a new hairstyle. And if you are one of those people that absolutely must get your hair done or see a hairdresser, account for it in your budget, and that may mean no weekly happy hour for you! What some people also do is make an initial investment in a good wig that is reusable and ultimately saves money in the long run. In the end, remember you are doctor and if you can memorize the Kreb’s cycle and coagulation cascade, you can figure out how to do a ponytail.
Develop a good skin care regimen so that you can minimize the amount of products you need. You will be surprised with water and exercise will do for your skin.take care of your skin to minimize the need for tons of products to make you feel beautiful. Finish the products you have before you buy new ones. Buy the products you need when you need them. If you want to try a new lipstick or foundation, use your spending money so that it doesn’t cut into you other expenses.
The other trap we fall into is buying too many products. Save your money buy using the products you have until they are gone. Also opt for more natural simple products like shea butter, coconut oil, olive oil, etc and make your own products. Figure out what works for you, and use those products. You can also swap products with your friends! You do not need 4 different types of hair gel or body lotion. You can also order all that stuff online and have it delivered with free shipping. If you are a student you can get Amazon Prime account with your email. If not try other stores like Walmart or Target with free shipping.
Nooks and Crannies
Waxing, hair removal, eyelash extensions, massages- all those thing are also important and should be accounted for in your budget as well. Find places that have good prices and have rewards/loyalty programs and give a deal for be a great customer. Some places have package deals, so look into those as well to cut costs. Once again, learning to do your own eyebrows, using lash strips, shaving or using Nair (in some places not all!) - these are all ways to cut costs.
Hands and Toes
That biweekly manicure and pedicure? Cut that to down to monthly and get the services that will last longer (you can’t wear open toe shoes at work anyway so no one really sees your toes). Better yet, learn to paint your own nails or have a nail painting party with you close friends. And for special occasions, try press ons nails. I know press on nails sounds like something that your grandmother wore, but now there are so many options, colors and designs. And the benefit is that you can take them off if they are not compatible with your job (ie operating room or other procedures). Most pharmacies and convenience stores have whole sections of press on nails and kits and there are also tons of online and social media sites with trendy designs.
The main theme here is become a DIY’er (do it yourselfer). Nowadays you can find anything on the internet.The more things you learn to do yourself, the less you have to pay others to do things for you and the more money you save.
SHOP AT HOME AND SHOP SMART
I know, it sounds weird. How are you supposed to shop at home? Easy, look in your closet and dresser and wear something you already have. With social media and advertisements constantly flooding us, it’s easy to get overwhelmed and think you need new stuff. But I challenge you to look through the stuff you already have. If there is something you haven’t worn in 2 years, let it go. Those 5 pairs of jeans from college you are trying to lose weight to fit in? Sell them. Ebay, Poshmark, Let Go, Salvation Army, and Good Will are few places to get rid of your old clothes. Fashion changes so rapidly that the things you are holding onto are going out of style and taking up space in your closet. Once you have done that and you truly feel that you have nothing else to wear or nothing fits, then you earned yourself some shopping. Use your spending money and buy a few items every month. Or save your money and go shopping all at once. Or use your credit card (give yourself a limit) and pay it off as soon as possible. Make a list so you are buying things you need and not impulsively wasting your money on stuff you don’t need.
Buy high yield items- Staples items that you can use over and over with different outfits. Invest in a good pair of workout sneakers (I buy a pair every year, keeps me motivated), a good pair of comfortable work flats and work boots, snow boots, fashionable heels for special occasions, and sandals for the summer. For clothes, buy items that are plain and buy accessories like jewelry and scarves to jazz up your outfits. A black pencil skirt and white shirt can go a long way. And once you have your few key items try on different combinations of outfits.
When you do shop, shop smart. Shop sale and clearance first. Buy winter stuff on sale in the spring and summer stuff on sale in the fall. I have done a lot of shopping in my day, and I can guarantee you the same items that are on sale will be full price the next season. Before you buy anything full price, always search for coupons online or in your email. Retail Me Not, always has coupons. And only buy it if you need it and will use it, not just because it’s on sale. I have a pile of stuff I bought because it was on sale, but never used them. Don’t be me.
Want something that’s not on sale? Wait 1 week before you buy it. Is it on your list of things you need? A lot of times we just make impulsive purchases because we really want something. But if you wait a week and still want it, then go for it. But I guarantee in most cases you will forget about it.
Remember, I’m not saying you shouldn’t buy yourself anything, because we all like nice things, but be smart about it so you feel good about your purchases and don’t end up in further debt.
TAKE CARE OF YOURSELF
This seems like a no brainer, but as medical professionals, we often neglect our own health. We don’t drink water, we eat old junk food left over in the nurses lounge, we order out when we are on call or had a stressful day, and we rather sleep than hit the gym. But just like saving money is an investment in our future, so is taking care of ourselves. Invest in a good water bottle and make a plan for how you will drink it. Keep that gym membership or fitness classes, but be sure to use them and get your money’s worth. Eat the fruit and vegetables that you brought for lunch (even though those chicken fingers and french fries from the cafeteria sem more appealing). Take multivitamins every day. Avoid excessive caffeine and energy drinks. Get some rest when you can. Disconnect from your phone, the TV, and your computer and talk to the people around you. See your dentist and primary care physician regularly. Seek mental health services BEFORE you feel overwhelmed. And let them know you are a doctor too! Not in a bragging way, but we have to look out for one another. Take care of yourself to minimize the impact training to become a doctor will have on your health.
PLAN FOR LARGE PURCHASES/EXPENSES
During residency I attended 5 weddings, was in 2 of them, went on 3 vacations, interviewed all over the east coast, and took step 3. Now I am planning for post residency life and will need to move to a different state and get a car. The way I was able to afford all of these things was planning ahead and saving up. Each month I would put aside money and when I received a lump sum would put aside some of that money as well. For the additional money I needed to cover those expenses I used my credit card and then paid it off as soon as I could. Planning ahead is the key to being prepared financially and reducing your stress. Here are a list of a few things you should plan for:
Vacation- payment plans
Board exams- step and licensing
Interviews-submitting application and travel
Moving- furniture, movers, security deposit
Weddings- friends, family, and your own
Babies- friends, family, and your own
Electronics- phones, computers
Birthdays and Holidays
MANAGE YOUR CREDIT CARD DEBT
Like I previously mentioned, I used my credit card to help cover some of my larger expenses. But it is important to manage that credit card debt. Do you know how much you owe on your credit card? Do you know your interest rate? It’s definitely higher than your student loans, therefore you should pay it off as soon as you can. You have to make a realistic plan. You cannot spend all of your income trying to pay off your credit card debt, because then you will be broke and have to use your credit card again any way.
First step is to reduce the number of credit cards you have. Pick the ones with the lowest amount owed and highest interest rates and pay them off as soon as you can. Keep one so that you can build credit and keep your debt manageable. Pick a reasonable amount to pay on your credit cards each month and pay more than the minimum payment and before the due date.
Most credit cards have a promotional deal where you have no interest for the first year, take advantage of that and pay it off before you are charged interest. Some credit cards also have promotional deals after that period. Call you credit card company to see if they can give you a deal or reduce your minimum payments etc. Be strategic when you use your credit card to maximize rewards. If you get rewards when you travel or when you buy gas, use your credit card to make the purchase and pay it off right away with the cash or money you already have. Unfortunately, it is inevitable that you will need a credit card as a medical student or resident given the inability to increase your income. So be sure to pick a good credit card, with good interest rates and use it wisely.
In some cases, it may be better to borrow money from family instead of the bank. You don’t have to worry about crazy interest rates and minimum payments. Just be sure to pay them back!
START PAYING YOUR LOANS ASAP
I know what you are thinking: this blog post is supposed to be about saving coins, not spending them. But the reality is, loan functions in the same way as credit cards in that they accumulate interest and will cost your more in the long run. Be sure to minimize your loans, and maximize your scholarships. If you can, start paying your loans off in medical school, and definitely in residency. For more about reducing medical school costs and loan repayment check out my blog post Got Debt?! The Truth About Paying for Medical School- Since We Can’t All Go to School for Free.
SAVE MONEY AND OPEN A SAVINGS ACCOUNT
So now that you have figured out where you are going to spend all of your money, it’s time to talk about how you plan to save money. I had a bad habit of constantly transferring money from my savings account into my checking account. So in order to save money, I began physically taking out cash every month and saving it in a coffee can at my parent’s house to ensure I wouldn’t spend it. By the end of intern year I had saved $1200. I then took that money and opened a Roth IRA account. You may not have to be as extreme as me, but the point is, savings money should be just that and should not be used unless absolutely necessary and for emergency situations.
To learn more about Roth IRA’s check here. https://www.nerdwallet.com/blog/investing/the-best-ira-account-providers/
Remember, everyone is different and you have to find what works best for you. These are just the things that have worked for me! Drop a comment below if you found this helpful.
This article will be featured on Women in White Coats Website. Check their blog for tons of useful information for women in medicine.