From paying off student loans to budgeting for big purchases, here's what you need to know to help keep your finances secure.
Paying for medical school is the biggest financial investment you’ll make in your career. To help lower your debt after graduation, you can:
If you graduated from osteopathic medical school saddled with debt, you’re not alone. A 2016 survey from the American Association of Colleges of Osteopathic Medicine found that approximately 86 percent of graduates begin their careers with an average debt load of $240,000. While paying off that much debt might seem overwhelming, creating a plan to manage your student debt early can pay dividends in the long run. Here are some factors to consider:
Completing your residency training is certainly a cause for celebration. You’ll want to set the foundation for good financial health by putting together a plan to manage your finances. Setting short- and long-term financial goals can help you prioritize paying off debts and saving funds for bigger purchases like a car or home. To begin, you’ll want to create a budget listing:
You’ll also want to establish an emergency fund with enough to cover living expenses for three to six months, and set aside money for your short- and long-term goals. Consider setting up automatic payments to transfer money from your checking to savings accounts.
No matter where you are in your career, living within your means will help you stay on the path to financial solvency. Stick with cash or your debit card when making purchases, and be sure to pay your bills on time to avoid costly late fees.
It might be tempting to splurge when you receive your first paycheck as a practicing physician. But financial experts caution to hold off on making luxury purchases until higher financial priorities, like paying down student loan debt, are addressed.
Buying a car
When it’s time to purchase a car, be sure to:
Buying a house
One purchase that you might not be able to wait to make is purchasing a home. A physician mortgage offers a specialized home loan financing program for physicians that can result in a lower monthly payment compared to conventional mortgages. AOA members, for example, have access to PhysicianLoans, which offers home financing to physicians with no down payment or private mortgage insurance (PMI). Typically, buyers pay PMI when they put down less than 20 percent for a down payment or they refinance a mortgage with less than 20 percent equity.
While forgoing a down payment can help cash-strapped physicians, it also means having little to no equity. If your home’s property value declines, you could end up underwater, meaning you owe more than your home’s market value. If possible, try to make a modest down payment. You’ll also need funds to cover closing costs.