Ten Money Tips for New Physicians

Frustrated? You bet. You’re a second-year resident and still juggling the checkbook, trying to decide which bill to pay today, which to put off a few days. Might as well get used to it. Building wealth takes time, whatever your income.

It’s all about money management. Here are ten tips to help you manage and build wealth:

1. Set up a spending plan. (Some people call it a budget). Most people hate the idea, but a spending plan is the cornerstone of financial stability.
2. Stockpile a cash cushion for emergencies. So when a minor financial setback strikes (furnace repair, new tires for the car, etc.), your budget does not get knocked for a loop. Start out gradually, if necessary, putting aside a few bucks a week. Eventually, set up a savings account that contains as much as three months’ income.
3. Make your partner your financial partner. If you are married or have a significant other, you must work together to build wealth.
4. Put away the credit cards. Live by the motto:  If I can’t afford to pay cash, I can’t afford to buy it.
5. Research before buying major items, from car insurance to a new television to furniture to … you name it. You could save a fortune.
6. Shop with a list — and stick to it – especially when food shopping. No impulse buys.
7. Squeeze the fat out of your spending. Imagine you are currently spending $200 a month on utilities. By managing your heating/cooling (shutting off unused rooms, adjusting the temperature when you are asleep or away) let’s say you can cut that down to $160. That is $40 saved each month, or nearly $500 a year.
8. Maintain your vehicles. A car with a broken tail light, bald tires or worn out brakes is a danger to you and your family. Take the Auto Safety Quiz.
9. Use life insurance. It’s a tool to protect your loved ones. The key question is:  What would happen to them if something happened to you?  Not a pleasant question, but it is one we need to ask. That’s where life insurance comes in. It’s not sexy. It’s not pretty. However, it is important. The primary purpose of life insurance is to provide a death benefit that can replace lost income if we die too young. Remember, life insurance is not about you; it’s about the ones you love.   The bottom line:  Why buy life insurance? Because you care.
10.  Plan for retirement … yes, even if you are still fairly young. There are many ways and many reasons. Here are just ten.