1 – Communicate With Your Spouse!
To this day, my wife still gives me a hard time about our first date… we went for ice cream and were getting to know each other. About 3 questions in, I casually ask that she describe her 5 year plan in life. Apparently normal people don’t ask these type questions on a first date, but I wanted to talk about the “biggies” before getting serious. She didn’t really have a 5 yr plan but it did spark great conversation. Everyone knows good communication is essential for maintaining a strong relationship. Finances are a major part of a marriage and often the subject of disputes. Take time to talk about money with your spouse, even if it gets a little uncomfortable! Being on the same page sounds easy on paper, but is extremely challenging especially when one member of the party is a resident physician working 80+ hour weeks. Take five minutes and ask your spouse some deep thought provoking questions.
2 – Write it Down!
As you lay out your financial goals for the future and begin making progress, document your experiences. Take note of your progress, challenges, thoughts and ideas. Revisit them from time to time. You might use a journal and have a financial section in it. It’s easy to lose sight of your goals and your journal will help keep you in check. Evernote is a great app for e-journals and notes, or you may prefer the good ol’ fashioned pen & paper. Spreadsheets (like Excel or Google Numbers) can help supplement your notes as you work on your numbers.
3 – Live Within Your Means!
Save first and spend what’s left over (and nothing more). Understand where your money is going by using a budget. Before you make big financial decisions, revisit your budget to make sure it balances. The training physician salary will be tight for the typical family – use this to time to develop good habits now and carry them with you as your financial circumstances change.
4 – Consider Your Mortality!
Of all people, medical professionals should understand life can end unexpectedly. The critical, and often overlooked step, is to think through how things might play out if you and/or your spouse were to pass away today. Walk through the scenario with an open mind. Would your spouse be provided for? How about your children? There are plenty of very simple steps you can take right now to address this risk. Secure life insurance and create basic estate planning documents.
5 – Consider Your Morbidity!
No one is invincible… not even you, Doc. You must acknowledge this before you can make any progress. Once you accept this, it’s time to walk through another scenario. Think through how life plays out for you and your family in this kind of scenario. Identify the issues and work on solutions. Consider having a durable power of attorney, living will and/or disability insurance.
***If you have children, #4 and #5 should be your #1 if they haven’t been addressed. No excuses allowed.
6 – Keep a Cash Buffer!
If I’ve learned one thing, it’s that life is certain to bring uncertainty. Have you planned for that unexpected financial burden heading your way? If you do not have the appropriate cash reserves when this occurs, the smallest incident can wreck you. Think of cash like insurance – it protects against the unforeseen. It does not alone make you wealthy, but it certainly positions you to build your wealth efficiently in other areas. Everyone should have at bare minimum 1 month’s worth of expenses in savings. More often, we recommend 3-12 months of expenses depending on your specific circumstances.
7 – You’re NOT Broke!
The typical resident physician salary of $50,000/yr may be challenging to live off of in our society, especially if you have a family. $50,000 may not be enough to keep up with your friend’s lifestyle, but it’s plenty to cover your necessities. Keep in mind that the average income in Somalia is $600/yr. Sometimes we just need a dose of perspective to make us appreciate what we have. Take advantage of the lessons a modest salary brings and learn to live frugally. At worst, spend what you make and nothing more.
8 – Keep it Simple!
Most residents do not have the time to be fiddling with credit card rewards and all the “special deals” they advertise. Keep it easy on yourself and maintain as few accounts as possible to manage your finances. Don’t worry about promotions and deals – organization is far more important. Why not start by operating 100% of your spending through one checking account with a debit card? Let your monthly statements be your budget tracker. The average U.S. consumer has 3.45 open credit cards. Throw a few checking and savings accounts on top of all that, and you now have a full time job on your hands just trying to keep it all straight. No wonder people have trouble budgeting!
9 – Be Cautious When Receiving Advice!
What information sources do you use in medicine? Do you seek credible and objective sources to further your education? Here are 5 simple filters to use with any potential advisor, salesperson or mentor before taking any action. Make sure the person passes all 5 of these tests before you act on anything. If you feel they are not qualified in any one of these areas, get a second opinion.
- Objectivity – What conflicts of interest do they have? How are they managed? If they are providing advice, are they a fiduciary?
- Expertise – How many times have they worked with someone like you? How do they further their education? Can they explain things on your level? Do you understand what they say?
- Relationship – Do they understand you personally, professionally & financially? Do you trust them? Do you enjoy working with them?
- Transparency – Do you get the whole story or grey answers? Are they a yes man/woman or will they shoot you straight?
- Cost – Do you fully understand how they make money? Is the cost greater than the value you anticipate? Is the cost reasonable for their profession?
Coaches and advisors are critical to your success, however, you must choose wisely. Avoid unsolicited advice. Be critical of free advice. Don’t take advice from non-experts (ie. your colleague telling you to buy “this great stock”). Be aware of salespeople that make money on product transactions. Salespeople work to help you purchase products and services. Advisors provide advice and help you make decisions.
10 – Stay Healthy!
Sometimes you need to sit back and quit stressing about money and student loans. Take the time to appreciate other things – your family, your friends, the fact that you’re capable of being gainfully employed – keep your stresses in perspective and don’t dwell on them. Following tips like the nine above will help you accomplish this.
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