Managing finances in residency and early career

The start of residency brings a new set of challenges—besides increased responsibilities at work, you’re likely adjusting to living in a new place. And then there’s learning to manage money on your first physician’s salary.

Factoring cost of living into your search for a residency program is smart. But even in more expensive areas, getting by on a resident’s salary alone will help you better manage your finances for life.

The first big decision for most new residents is how and when to pay off medical school loans. Making payments during residency can help save on interest costs over time. But, depending on your individual situation and responsibilities, putting payments off may be more realistic.

Each process is different, so contact your loans servicer(s) to get full information, including any fees. For example, interest won’t accrue during deferment of a subsidized loan, but the deferment period may be shorter than the duration of your training. During forbearance, interest on loans continues to grow.

If you decide to start making loan payments during residency, there are a number of different options to consider based on your budget.

Some physicians moonlight during residency to earn extra money. Each residency program has a policy on this practice. In addition to checking with your program, consider how new physician payment models may 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.

Residency likely will find you at a financial crossroads—in considerable debt but making new income, with the potential to earn much more after your training.

Unless you made time to get a finance degree during medical school, it’s wise to seek out sound advice from a professional. The designation of fiduciary or certified financial planner is obligated to act in your best interests and disclose any commissions or conflicts of interest.