Finances in Residency and Early Career

Achieve your financial and lifestyle goals

Key Financial Decisions

As you enter residency, you'll need to make critical personal finance choices. Here's what we recommend you consider:

Making financial decisions during residency can make it feel like you were expected to have earned a finance degree in addition to a medical degree. Many financial decisions come with earning your first salary as a physician. Focus on your personal and family needs, as well as your preferred financial and lifestyle goals.

In preparing for residency, you might have factored cost of living into your program choice. Even if you are training in an area with higher than average expenses, getting by on your salary alone (which for family medicine residents is $54,000 on average(www.medscape.com)) will prepare you for managing money for the rest of your life. Loans are available for residents who want to supplement their income, but these are typically administered at a very high interest rate that will compound quickly over time.

Money Management and Key Decisions in Residency

As you begin residency, you’ll quickly have to decide what to do with your education debt. Your choices are postponing payments or making payments. Paying on your loans during residency can help you save money over time by keeping your interest from adding up too quickly. However, postponing payment may be a more realistic, depending on personal priorities, responsibilities, and the flexibility of the repayment plans available to you.

Loans are postponed through different processes: grace periods, deferments, and forbearance. Borrowers must contact their loans servicer(s) to get information about the options available on each loan and learn about the costs associated with postponement. Each process is different. For example, interest won’t accrue during deferment of subsidized loans, but deferment periods may be shorter than the total length of your training. During forbearance, however, interest on loans continues to grow.

Refresh Your Skills

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If you choose to make payments on your loans while in residency, there are different plans to consider. The amount you pay can vary widely depending on your budget and the options your loan servicer offers.

Whether you postpone some, all, or begin paying your loans immediately, strive to set aside some of your earnings in a savings account, even if it’s a small amount.

Financial Planning

With new income, often high debt, and a very strong future earning potential, you may not know where to turn for sound advice about budgeting and investing. For example, life insurance is a product that residents are often encouraged to buy immediately, but many new physicians are unsure about what type to purchase. Research this and other topics carefully, identify trusted resources, and consider consulting with a financial planner who has your best interests in mind and can clearly explain choices to you. Ask financial planners how they are compensated before you decide to use their services.

Earning Additional Income

During residency, some physicians moonlight to earn extra income. Residency programs each have their own policy on this practice. In addition to checking with your program about moonlighting eligibility, consider how new physician payment models factor into a second job. Residents who obtain and bill through a Medicare provider number will have their performance measures scored under the Merit-based Incentive Payment System (MIPS), with this score following them as they transition to full-time practice.

Looking Ahead at Your Career and Income

There is a high demand for family medicine physicians, and this demand is increasing. Patients in every community in the country and around the globe need family doctors. Many family medicine residents start being contacted by recruiters during their intern year.

To give you an idea of your future earnings, according to the national health care research firm Merritt Hawkins, in 2016-17, average annual income for family physicians was more than $231,000(www.merritthawkins.com). Additionally, starting bonuses for all physicians averages more than $30,000(www.merritthawkins.com).

Family physicians work in any location and nearly every setting. They earn competitive income and can practice their broad-scope skills in urban centers and rural communities. To focus your search for a career after residency, consider if you are planning to enroll in a loan forgiveness program, and then ensure your employment meets the requirements of these programs.

The AAFP has several resources to help residents with career planning, including advice on negotiating your first employment contract and an analysis of compensation models.

At the AAFP’s annual National Conference, residents can meet with potential employers, network with peers, and attend workshops dedicated to professional development and career planning.

Further resources on career management have been published by Family Practice Management (FPM)