Why Monthly Budgeting is Critical for Physicians in Training

med student debt

  • As a physician in training, you are responsible for the lives of others. Stress around your personal finances can negatively impact your ability to put patient care first.
  • Surprisingly, financial stress has been identified as the second highest cause of depression among physicians.
  • However, you can alleviate money-related stress and distractions by creating and managing a budget, gaining control over your spending, and planning for the future.

As a physician in training, you already have enough on your plate—the absolute last thing you want to worry about is your finances. But creating a budget can help you plan, track and prioritize how you manage your money. Abudget is a valuable tool that:

  • Gives you control over your money. Budgeting saves you the financial stress of suddenly having to pivot if there is a lack of funds. A budget is not limiting – it gives you freedom to spend based on your priorities.
  • Makes you aware of your spending. Budgeting saves you from wondering at the end of every month where your money went. It puts you in control of your money.
  • Keeps you focused on your goals. Whatever your short- or long-term goals (such as paying off your student loan or saving for a new house), a budget is a plan that helps you achieve them.

This article provides step-by-step instructions to help you create your own personal budget.

#1: Pick your budgeting tool

The easiest way to create a budget is by using a tool like Mint, You Need a Budget (YNAB), Tiller Money, or Money Patrol

These tools easily sync to your bank and other financial accounts—plus they’ll import information about all your transactions.

And the best part? Many of them are free.

Each tool navigates differently. Regardless, each of them will need to be populated with information about your income and expenses. That’s where the next few steps come in.

#2: Start gathering information

Start by going in reverse: take a historical look at your income and expenses over the last three to six months (or preferably, the last 12).

Be sure to gather all of your online banking records, receipts, credit card and other financial statements—anything that demonstrates your income and spending.

#3: Review and understand your income

Based on the last few months, how much money do you estimate you will have coming in each month moving forward? And from where?

#4: Identify and categorize your expenses

Review your expenses, and identify whether or not they are fixed or variable. Fixed expenses are those that do not vary from month to month, while variable expenses may change depending on the season. Identifying which category an expense falls into can help determine which expenses you can trim to reduce spending each month.

  • Fixed:
    • Housing: rent or mortgage payments
    • Insurance: renters or home insurance, health insurance, car insurance
    • Transportation: car payments
    • Utilities: water, electricity, heat, internet
    • School costs: equipment, USMLE/COMLEX exams
    • Debt: student loan and credit card payments

  • Variable
    • Sustenance: groceries, eating out, coffee
    • Entertainment: streaming services, nights out with friends
    • Transportation: ride-share services, taxis, gas

To estimate your expenses, identify everything you spend your money on and how much you’re spending in each category.

#5: Balance your budget

You have your income and expenses figured out. Now it’s time to balance your budget.

To do so, simply subtract your expenses from your income. 

If you have a positive balance, congratulations: you’ve got more money coming in than you’re spending!

If this is the case, you may want to use that money to pay down debt, save for a cash cushion in one of our high yield savings accounts (recommend at least 6 months worth of expenses), or support future goals like retirement or a vacation. Don’t forget to occasionally treat yourself—you deserve it!

What should you do if you are spending more money than you are bringing in?

Identify your essential expenses

First, determine your most necessary expenses. These types of expenses would include—among other things—housing, electricity, transportation to and from work, and food.

Uncover the Unnecessary

Once you have identified the essential stuff, everything else is pretty much considered non-essential. 

If you’re serious about getting your finances on track, this is where the hard decisions are made. This is where you determine your actual needs vs. wants.

Here are just a few common areas we’ve found physicians-in-training tend to waste money (we get, however, some of these are necessary for your mental health!):

  • Grabbing food on the go (fast food, gas stations, convenience stores etc.) Instead, lower your expenses by always carrying snacks with you, and bringing meals to work. 
  • Entertainment. We understand the need for a night out on your Golden Weekend is important for your mental health, but try to set a budget for the night and stick within it.
  • Grocery shopping Are your grocery bills skyrocketing? Make a list in advance and don’t deviate from it, no matter the temptation. You can also buy no-name brands, which are generally cheaper. Also, limit the number of times per week that you go to the store. 
  • Subscriptions Are you still paying for apps, games or streaming services you no longer use? Go through your financial records and ensure you cancel the ones you no longer want. 

As harmless as those $5 and $10 expenses may seem, they can add up to a lot over a year. For example, if you spend $5 on a coffee 3 days a week during each and every week during a three-year residency you will spend $2,340!

If you can save a small amount of money each month by adapting new behaviors, your budget (and your future self) will thank you.

#6: Automate your payments

If you’re in the middle of treating a patient, you don’t want to be distracted wondering if you’ve paid your water bill. 

The good news is you can automate payments on the majority of your ongoing monthly bills. Take advantage of automated payment features to stay organized, ensure prompt and on-time payment, and avoid penalties like late fees, increased interest rates, and more. Plus, once payments are set up, you can go about your busy life with one less thing to worry about. 

7: Automate your savings

Open a high-yield savings account or retirement account and start automatically putting aside some of your monthly salary into these accounts. Start small. $10, $25, $100. We all realize that automatically setting aside $25 a month isn’t going to make or break your retirement. But it’s important to start the habit early and begin saving today.

Stick to your plan: you can do it!

We get it: taking the time to develop a budget and plan for the future as a medical student, resident, or fellow is tough. And sticking to that budget is even tougher.

But if you establish a plan today and then review and update that plan regularly, you will be better prepared for life after training.

Having these habits in place will also give you peace of mind—plus decrease the possibility of being blindsided by something unexpected in the future. Reducing this stress will make it much easier to focus on what really matters: your patients and your studies.

You’ve got this!

Here’s to better financial solutions for MDs & DOs