Formulate a Financial Plan

Know Your Net Worth

Manage & Minimize Debt

Accumulate Assets

Budget to Live Within Your Means

Understand Investing Basics

Plan for Retirement

Insure People & Property

Deal with Financial Advisors

Review Your Employment Contract

Make Plans for Your Estate

Make Good Decisions


In this section I provide a list of stereotypical circumstances and financial priorities by stage of professional development. Clearly, your situation may differ from these generic lists.

Find a budget template in the Resources section of this site and customize it to fit your specific household circumstances.


Medical/Dental Student Circumstances

The period of medical/dental studies is characterized by intense pressures: keeping up with vast volumes of information, not embarrassing yourself in front of peers and professors, and meeting the expectations of family and friends. Responsibilities increase as you begin to have more interactions with patients and their families. And there can be nagging concerns that everyone else seems smarter than you or the sense that you are the admissions mistake in your class.

As this period comes to an end, you have new concerns: passing board or licensing exams and getting the outcome you want on Match Day. Meanwhile, your debts are steadily piling up.


Some generic medical student financial priorities:

  • To the extent possible, avoid student debt. If you must borrow, minimize the use of borrowed funds. Keep in mind that any debt you incur puts you deeper in the hole
  • Understand how to manage your growing debts. Estimate how much you will need to borrow, identify lenders, find out the interest rates and when you have to begin making payments
  • Know how to contact your lender(s) and how to track the amounts you owe. It may be a good idea to establish online access to all relevant records. Be aware of your options: Can you consolidate loans? What are the permissible repayment options?
  • Take advantage of grants, fellowships, or scholarships whenever possible
  • Develop healthy consumption and saving habits
  • Live as modestly as you can (without disrupting your studies)
  • Consider living with a housemate instead of living alone. You’ll pay less in rent and share utility costs
  • Set some cash aside as an emergency or rainy-day fund

It’s difficult during this stage of your career to think about money matters. But learning the basics of financial planning will save you time, money, and stress later.


Intern/Resident/Fellow Circumstances

The internship is characterized by long hours, low pay, fatigue, and desperate efforts to have a life despite all evidence to the contrary. Student debt burden continues to loom large and may grow even further if you elect to defer payments and capitalize interest, thereby raising your loan principal.

The residency is usually similar to the internship, with more fatigue, more responsibility, and more debt. By this time, you may also have family obligations, including a spouse and or children.

The fellowship may be similar to the residency phase in terms of lifestyle: Earnings are still quite low and there’s usually even more responsibility and debt.

Ironically, the most prestigious hospitals and schools tend to pay their interns, residents, and fellows the smallest amounts. This only makes it harder to make ends meet.

During these training periods your financial concerns tend to be more immediate—for example, the need for money to pay rent and buy groceries. You may have to deposit your meager paycheck quickly just to satisfy outgoing payment obligations. While financial literacy seems more relevant, it often takes a backseat to other priorities—mostly work related. When you do have a minute of time, you prefer to spend it sleeping or doing something social.

Under the assumption that around this time you begin a family, you likely consider some insurance and investments. But you’re overwhelmed by debt and have no disposable income, making insurance seem like an unnecessary luxury. If all that isn’t enough stress, you’re worrying about the uncertainty surrounding your first “real” job search and figuring out that cryptic first employment contract.

Medical trainees are sometimes told by senior physicians that once they finish graduate studies everything will be fine, because their higher salaries will be sufficient to cover all expenditures. Yes, financial obligations are easier to handle with higher income. But it’s not a foregone conclusion that all your financial problems will go away. They’ll just be different. For example, you’ll be required to begin repaying student debt, and you may have new obligations with home and car purchases, as well as family-related expenditures.


Some generic Intern/Resident/Fellow financial priorities:

  • Live modestly to make ends meet on your low salary
  • Avoid taking on more debt if possible. Make an informed decision about how to repay existing student loans: can you afford to make some payments to at least cover interest? Do you prefer to defer payments? (see the managing debt chapter)
  • Set some cash aside as an emergency or rainy-day fund
  • Consider Term life insurance coverage as a cheap way to protect your family (see the insurance chapter)
  • Obtain some basic disability insurance to protect your human capital (see the insurance chapter)
  • If you can afford it, contribute to a 401(k) or 403(b) plan. A key with these plans is to get the full employer match
  • If you can afford it and are eligible, consider contributing to a Roth IRA
  • Begin thinking about funding children’s college savings plans
  • Develop healthy consumption habits—don’t over-extend or over-consume—live within your means
  • Learn the basics of financial decision making. If your graduate program doesn’t offer this, approach your administrators and ask that such education be made available, from an objective source, i.e., not from insurance agents or financial advisors[1]
  • As you near completion of training and contemplate your first real job offer, seek advice from a qualified attorney regarding your employment contract (see employment contract chapter)

Paying for contract review may seem like an unnecessary expense but it’s crucial to avoid mistakes at this early stage of your career, when you are least knowledgeable and most vulnerable. Many doctors learn this the hard way. Looking back, they wish they’d consulted an attorney in advance. Your first contract sets a precedent for all future contracts. Make it a good one!


First Full-time Job Circumstances

Your first full-time job means that you finally receive a higher salary—one that is more commensurate with your skills and credentials. At this career stage you likely want to focus on work and family. You don’t want to be distracted by money issues. But you must make good decisions early on to generate excess cash and give your investments the longest horizon to grow and compound.

With the expectation of putting down roots and having decent income, many newly employed doctors purchase a first home and a new car. Subsequently, they carry school debt, a mortgage, and potentially a variety of family obligations, such as day care, babysitting, and home maintenance.

In accounting terms, with that added debt your balance sheet explodes, which means it gets much bigger. Think carefully before taking on new financial obligations. In the absence of proper money discipline, even a decent income may not be enough to make ends meet. Continue to focus on living within your means.

Upon graduation from your medical training program you have several choices:

  • Work as an employee in a hospital
  • Go directly into your own private practice
  • Work as an independent contractor in someone else’s practice
  • Work as an employee in someone else’s practice

A medical or dental practice may insist on hiring you as an independent contractor. This designation is favored by employers because it lowers their costs. It’s better for you to be an employee as opposed to an independent contractor, primarily because you’ll be eligible for full benefits.

While your employer may insist you are an independent contractor, thereby denying you benefits, Internal Revenue Service (IRS) guidelines may designate you an employee. The IRS uses several dozen questions to determine the appropriate status. You can search the IRS site for the latest commentary on this topic. While it could be awkward to get into an argument with an employer over your status, the law may be on your side. 

For those turning to private practice, there’s often a contract clause that sets the terms for buying into a partnership or ownership share. Most young doctors have no idea whether the terms are fair, whether the price is right, and whether it’s a good deal. Lawyers affiliated with medical and dental programs sometimes voluntarily provide advice on such contracts, but unless this is their specialty area it isn’t clear that they’re giving the best advice. This is why it can be useful to hire a licensed attorney who specializes in medical or dental contracts.


Attending Physician

The stereotypical attending physician worries about managing her team of fellows/residents/interns, raising her young family, repaying debt, deciding whether to take a job elsewhere, and trying to distinguish herself from other attending physicians in an effort to increase the probability of promotion. The latter often means seeking a project with which to make an impression on senior faculty. It may be a research initiative, medical management/public health concern, an idea about improving care or decreasing costs, or a more effective way to manage interns/residents.


Junior Associate in Private Medical/Dental Practice

The typical doctor at this career stage focuses on refining her craft, understanding the business, meeting patient or procedure quotas, being efficient and effective, and doing what is needed to be considered for promotion or a partnership stake.


Some generic first job financial priorities:

  • Take advantage of 401(k) or 403(b) matching funds by your employer. Your income will likely be too high to qualify for Roth IRA contributions
  • Consider increasing disability insurance coverage to protect your higher income (see insurance chapter)
  • Ensure your life insurance coverage is appropriate (see insurance chapter)
  • Ensure your malpractice insurance is appropriate and in force (it may be covered by your employer)
  • Ensure umbrella insurance is appropriate (see Insurance chapter)
  • Ensure your rainy-day cash fund covers the equivalent of 3-6 months of earnings
  • Consult a qualified accountant to ensure you’re taking steps to minimize taxes payable
  • Consult an estate planning attorney to draft a Will and related documents. Documents must be state-specific and should be updated as your circumstances and state laws change. (see the estate planning chapter)
  • Continue to make payments on all your loans; focus on paying off the loans with the highest interest rates first
  • Diversify across as many pillars of wealth as possible
  • Consider purchasing a home and take advantage of tax deductions
  • Set up college savings plan(s) for your child(ren) (as relevant)
  • Create a business plan and budget for starting your new practice (if applicable). More guidance on this is provided in the second book in this series: Pillars of Wealth: Business Essentials for Medical Practices
  • Don’t over-extend or over-consume—live within your means and focus on paying back debt!
  • Make financial decisions collaboratively with your partner/spouse. Open communication is crucial to the financial well-being and unity of your family

It may be tempting to splurge with that first of many anticipated large checks, but keep in mind that depreciating assets don’t help you to reach your long-term goals. Your financial imperative is to accumulate diverse, appreciating assets. This is my unsubtle reminder: Don’t buy the expensive sports car if you have student loans and other obligations outstanding.

You learned to live modestly as a graduate student. If you can, continue living modestly for a few more years. This will allow you to generate a lot of excess cash, which can be used to pay down debt or invest.

If you don’t have significant debt, generating excess cash is still a good move which allows you to: save for a down payment on a home, maximize retirement plan contributions, or get a head start on your children’s 529 college savings plans.


Managerial/Ownership Role Circumstances

Regardless of whether you’re in private practice or a senior physician in a hospital setting, the main difference compared to your first full-time job is that you now have managerial and or executive responsibilities. Along with these responsibilities you’re enjoying a higher salary.

 Managing others, and especially owning your own business, introduces a new set of challenges and requires new skills. For many, this is not an easy adjustment.


Some generic Owner/Partner/Manager financial priorities:

  • Build your human capital as a manager. Learn how to run a business or hospital division, and how to deal constructively with junior staff members
  • Finish paying off school debt
  • Diversify across multiple pillars of wealth
  • Ensure the rainy-day fund is topped-up 
  • Consider adding more disability insurance coverage as your income rises
  • Consider increasing life insurance coverage to protect higher earnings capacity 
  • Ensure umbrella insurance is at an appropriate level
  • Work with a competent accountant to minimize taxes
  • Work with a competent attorney to ensure estate planning is in place and in particular that your assets are protected. Asset protection looms large now that you have some significant holdings and are aiming to generate even more
  • Save. Save. Save. Accumulate appreciating assets. Make the most of your prime earning years!
  • Don’t over-extend or over-consume—live within your means and save the rest


[1] contains a section for academic literature on physician financial literacy. The literature establishes that personal finance is an important element of wellness for medical professionals.