What Financial Planning Should I Do in My Last Year of Residency?
By Jared Andreoli, CFP®, CSLP®
Simplicity Financial provides financial advice and planning catered to medical physicians and residents who want to manage their student loans, optimize their investments, and develop a comprehensive financial plan. At Simplicity Financial, our primary goal is to help early-career physicians pursue their financial goals. If you’re planning out the final year of your residency and aren’t sure where to start, check out our video with the top five financial planning steps you can take.
1. Assess Your Finances and Make a Budget
Before a diagnosis or even a plan for your patients, you have to assess their current situation. This is true for your finances too.
Financial advisors assess your current income, expenses, debts, savings, and investments to get a full understanding of your finances and identify the risks and issues impacting your goals.
This could look like reviewing your monthly income and expenses to determine which expenses are a necessity and which ones you could do without. Try to identify any areas where you’re living outside of your means or falling short of your money goals.
Develop a comprehensive budget that accounts for all your expenses, including rent, utilities, groceries, insurance, credit cards, and student loan repayments. Don’t forget to allocate part of your income to savings and investments as well.
2. Pay Off High-Interest Debt
The goal is to have compounding interest work for you, not against you. High-interest debt like credit cards are expensive forms of borrowing that could eat up chunks of your income if you hold a balance from month to month.--You’ll want to focus on paying down those debts first.
After spending seven to twelve years training to be a doctor, you’ll need to plan on repaying student loan debt. On average, student loan payments for medical school cost a minimum of $2,280 per month to repay within 10 years.
If you aren’t eligible for Public Service Loan Forgiveness (PSFL) you might consider refinancing or consolidating student loans to lower interest rates if possible.
3. Build an Emergency Fund
During difficult times you don’t want to dip into your investments or retirement savings to cover costs. And putting unplanned expenses on a credit card could push back other financial goals.
Avoid taking on debt for emergencies by starting or beefing up your emergency fund. Aim to save at least three to six months of living expenses.
To keep your money working hard, consider a high-yield savings account for a higher annual percentage yield (APY) on your funds.
4. Get the Right Insurance
Your income is how you’ll pay for your essentials as well as everything else involved in your lifestyle. If anything impacts your income like malpractice or disability it could have dire financial consequences.
Protect your earning potential with the appropriate level of insurance. How can you get the right amount of insurance? Work with a financial advisor to analyze the gaps in your coverage.
Some of the most common options for new physicians include term life insurance, own-occupation disability insurance, malpractice insurance, and of course health insurance.
5. Work With a Financial Advisor
As part of your residency, you likely encountered patients who thought they knew better than medically trained professionals like yourself. While those patients may have been intelligent and done their research, they still need experience, education, and skills to address their health issues.
Similarly, a CERTIFIED FINANCIAL PLANNER™ professional is trained to help you advance toward your financial goals and address the problems holding you back.
This allows you to focus on finishing your residency and locking down an attending physician job. Meanwhile, we’ll help keep your finances moving in the right direction.
Get in Touch With Us!
We’ve been helping early-career physicians map out their finances and develop strategies for paying off student loans, and optimizing investment portfolios and pursuing their goals since 2017.
We would enjoy learning more about you and uncovering how we can help you reach your goals.
Get started by reaching out to us by emailing jared.andreoli@simplicityfinancialllc.com or calling 414-207-6473.
We can help you too. Get started by scheduling a free consultation, or reach out to us by emailing jared.andreoli@simplicityfinancialllc.com or calling 414-207-6473.
About Jared
Jared Andreoli, CFP®, CSLP®, is president and financial planner at Simplicity Financial, a fee-only RIA dedicated to helping early-career physicians conceptualize their financial picture and achieve their financial goals. Jared specializes in devising individualized financial road maps for clients, and he loves nothing more than a full day meeting with clients who value his partnership to solve problems—big and small.
After college, Jared spent six years working as a mutual fund administrator for a large company. While he learned an immense amount about the financial world, he was missing the personal connection of working with individual clients. Combining his passion for finance and personal connection, he established Simplicity Financial in 2017.
Jared has a degree in finance with a concentration in financial planning from Western Kentucky University, along with the CERTIFIED FINANCIAL PLANNER™ (CFP®) and a Certified Student Loan Planner (CSLP®) certifications. Outside of work Jared enjoys cooking and traveling. He played baseball in college and still coaches occasionally. He and his wife recently welcomed a daughter, who occupies most of their time. To learn more about Jared, connect with him on LinkedIn.