Finances are a hot topic whenever people who go to medical, dental, veterinary or other graduate type school get together. I am by no means an expert on the topic, but I have always tried to know the necessary minimum to make good financial decisions. So today I will be sharing with you some of my best financial decisions and how I made them. This way you will get an idea of how you can make better decisions as well. Keep in mind these are general terms and you do not need to incorporate all of them into your own situation. The topic of personal finances is unique to every individual’s situation.
This will be a long one, but I promise it will be worth it. So grab a cup of coffee and bookmark this for future reference.
If you love my advice please SHARE this with other graduate/healthcare students! Let’s get into it.
It all began when I was a child. My mom always enforced on the the importance of savings. As such, I always had a savings account. Whenever I received money for christmas or my birthday I would go deposit it there. I always remember a time during middle school that I wanted a new phone. The phone was $150. I saved all my coins, birthday money, car washes, etc and eventually I bought it myself. This was my norm.
Of course when I turned 16 and began working I saved half of all my paychecks. By the time I was in college I had about $4k saved up. One of the benefit of having a savings account is that you get interest on your balance every certain amount of time. So for me the best foundation for making wise financial choices is having savings. Learning how to save is also part of this process. Setting small, attainable goals will greatly impact your overall financial state and hep you save for your future.
Knowledge IS power. The worst decisions you can make in your life are uninformed and impulsive.Unfortunately as healthcare professionals most people assume that a) making lots of money is easy and b) you will be financially well of regardless. I cannot emphasize how WRONG that is. You could be making all the money in the word, but if you do not utilize it well and spend recklessly you will find yourself in over your head.
I recently found a YouTube channel dedicated to finances called The Financial Diet. They have a TON of resources. It’s mostly simple videos to help you begin to understand the language of finances and investments. They cover a wide range of basic topics and they are easy to watch/listen. This is a fast and easy to to begin taking control of your finances. If you want even more knowledge there are many pages directed at doctors and other healthcare professionals. Below I have a list of resources of this sort that I really enjoy and have read over the years.
If you are a medical student, more than likely you have/will have student loans. Most of us have to take out loans to pay for school. If you are already in medical school there is still hope, but if you will be starting soon (or even starting college) pay close attention. Loans are not FREE money. You need to understand that it is money that you HAVE to pay back and with interest.
Having said that, the best decision you can make with regards to your loans is get what you NEED. This might make you feel insecure if you don’t know what you need but let me expand on this. Figure out how much money you have left over after your tuition and work with that. Then figure out your living expenses: rent, utilities, gas, groceries/food, everyday medications, cell phone. When you have that you will end up with a number that will be your month to month expenses. That number you multiply by 12 to figure out how much it is a year. That is what you NEED no matter what.
Then come the variable expenses. These will include books, equipment, clothes, and “fun money”. The first two on the list are easy to calculate and to modify. Why? Well most people nowadays prefer digital book copies which can easily be found on your schools library and you don’t need to buy them. If you prefer hardcopy books, then Amazon and EBay will be your best friends. Equipment, you can find second hard from higher level students at your school or amazon has some good ones. Question banks and other digital aids you can find prices online or buy a shared account with a small group of classmates. Clothes and fun I will touch later on. Tally the numbers and now it’s time to ask for the moolah.
Once you have calculated your expenses then you will be able to plan out your loans. The first step is seeing if the remnant from your main loan will cover those expenses for 6-7 months. You should aim to have about $500-$1,000 leftover after your expenses are accounted for that semester. If you notice that you need more money to cover for the expenses mentioned above, you have several alternatives. First, you can try to modify/cut out expenses. If that is not an option, you can consider private loans or a Direct PLUS. Keep in mind that both of these will have higher interest rates than the main loan.
What I did, was take as little as possible from the Direct PLUS on first and second year. I did this by cutting expenses and not going out or not spending as much on anything. The reason is that the loans from your first 2 years will be the ones accumulating interest for the longest time and if you can avoid them, DO IT! For third and fourth year I took the max for both because driving every day, eating at the hospital, dressing professional, etc adds up. TRUST ME.
If you want more information or insight on this topic, let me know in the comments below!
This might sound counter-intuitive to some but hear me out. Building a good credit score/report is very important for grown up life. To be able to buy a house or car you need to have a good credit score. So getting a credit card will open this door for you. The trick of credit cards comes on how responsible you are with them. I knew I couldn’t use my credit card whenever I wanted. I made a conscious effort to ONLY use it for gas and emergencies. This meant I was not maxing it out, or misusing it and getting in over my head. If you feel you do not have the discipline to keep this under control there are other ways to do the same thing. For example, paying your cell bill, buying a car and paying on time, etc will all contribute to your credit score.
In medical school I have found that if you don’t have a credit card the best moment to get one is third/fourth year. Why? Well because you will incur in a LOT of expenses that you will make regardless. So why not, improve your overall finances while doing so. The trick here is to pay the balance off as soon as you can. I always set a day of the week to check my card and pay off balance.
Having a credit card for traveling purposes, especially in 4th year, will make your life 100x easier.
Well I personally got the Discover It for Students. You do NOT need an excellent credit score to be approved and the balance you get will be low. In addition to that, you get no interests in your first 6 months, so if your loans get delayed at some point and you “miss” a payment it will not gain interest. You also get cash-back with this card. I love this aspect of it. For every purchase you get 1% cash back, and they have quarterly events that give you 5%. These events include: Amazon purchases, Wholesale club purchases, Gas stations, and more. You also get matched for all the cash-back you accumulate on your first year.
Another great alternative, which some of my friends have done, is an airline credit card. You will get miles, extra miles, or special perks with the points you accumulate. Beware though, this works only if you will be using the SAME airline for ALL of your travel. I considered this but finding flights from Puerto Rico to where I needed proved hard at times. So for me this was not a great alternative, but it might be for you. Do your research and find one that fits your needs.
This one is a no brainer. Having extra money will be beneficial because it will help you take out less loans. This is a very personal decision and it will not apply to everyone. There are a vast number of ways to make money online. My two favorites are eBates and E-Rewards. EBates allows you to receive cash back from online purchases at HUNDREDS of retailers including Sephora, Express, and many more. E-Rewards functions by doing surveys. You register and do surveys and you accumulate money which can be used towards gift cards or even airline miles. You can browse and choose surveys that interest you and both me and the husband have made around $300 worth of JetBlue miles with this.
If neither of these call your attention, this video from The Financial Diet has insight into other side hustles you can do from your bed.
This one should be a given but this will connect with how to take out less loans. One of the best decisions I made during my transition into medical school was realize I needed a GOOD quality wardrobe. This meant fast fashion stores like Forever 21 were out of my sight. I found that I am a classic girl. As such stores like Loft, WHBM, and Express have a lot of great (but expensive) alternatives for me. My plan was to constantly scout their SALE pages and this way I managed to get a good 10 -15 pieces for under $25 each. I found several dress pants and blouses that I still own today. It was a slow process but totally worth it.
Today I still shop sales 98% of the time. I follow items that catch my eye using Shoptagr on their app. When they go on a good sale I take advantage and buy them. Before starting rotations I set aside $300 to buy new professional clothes. For shoes I absolute root for DSW. They have hundreds of great alternatives and I have gotten many designer shoes for under $30. Whenever I buy online from any of these I make sure to activate the eBates button for additional saving in cash back form.
This point is the most important of all after savings. The first and most crucial step is budgeting. Using the numbers above you have an idea of your expenses and that way you can set yourself a monthly budget. This way you will minimize overspending and you will be in control. Budgeting will help you take out less loans so it will be a longterm benefit.
The other thing is to not think of your loans as something you will deal with after you graduate. THAT is the worst thing you can do. You need to be aware of your loans, which interests are higher, etc. This way when you reach your fourth year and begin thinking of your salary you will be able to start thinking how to pay them back. There are many resources in the pages I shared above on how to tackle this. In simple terms you want to begin educating YOURSELF on your repayment options. This will allow you to figure out which approach is best for you.
If you find this tedious there are people out there who specialize on financial planning and education. If you want someone’s help ask your family and friends for information on accountants and finance specialists they trust. The key will be to find trustworthy people to guide and educate you. The Financial Industry Regulatory Authority, FINRA, has a lot of resources to get you started on this and warns you about how there are many deceptive advisors out there. They also have a tool to verify if a broker ir certified with them and has passed their examinations.
If you made it this far CONGRATS! You survived. I know this was long and you might be a little overwhelmed. Take this post as a push in the right direction. The sooner you can start taking control of your finances the better. The most important thing is that it is NEVER too late.
Do you have any other tips to making good financial decisions? Share them in the comments below.
Thanks for reading