Match Day has come and gone. It’s time to think about next steps as everyone still in training moves on to the next level.
Fourth year medical students know where they will be going in June.
Residents who are going on to fellowship have known about their next destination for a few months.
Those finishing training in 3 months will (hopefully) be moving on to a practice that excites them. And pays a lot more than a resident salary.
The move from resident to attending salary holds plenty of opportunity: to spend more, to save more, to make plans that can affect your financial life for years to come.
When I graduated residency, I did not have a very clear plan for my finances. There really wasn’t much out there to guide people who were going to see a large increase in income.
I muddled along, making some good moves, and some not-so-good moves. I periodically look back at the choices I made, and I thought I might share some lessons I take away from my spending at that time, in the hopes it helps you make your own plans (or maybe let you know you are not alone if you have made similar choices yourself).
No regrets
There are a number of ways I spent my money for which I have no regrets, whatsoever.
Maxing out retirement accounts.
To be fair, I couldn’t do this right away. I needed a few months as an employee to be allowed to contribute. Then I needed a few more months to off load the house I had purchased in residency. I could not afford a mortgage payment, a rent payment, and my retirement contribution. I was in primary care, after all.
Nevertheless, I was able to max out my retirement account for nearly 4 years. I received an employer match too (3%, nothing amazing). When I left my position just before the Great Recession hit, I had about $40 K in that account.
I didn’t look at my balance for a bit (I think I wasn’t sure how to log in). I didn’t sell, and I didn’t rebalance. I just let that baby ride.
Despite some high fees (and even with low balances, fees always matter), and no further contributions, that account is worth a lot more these days.
I don’t regret putting that money away, at all.
Purposeful Spending
There were two things I knew I wanted to buy, once I was making money: a flip phone to replace my outdated candy bar model, and a car that wouldn’t break down as much as my 17 year old one.
I very much enjoyed my new phone, which didn’t cost all that much, but worked well for me for many years.
I was more anxious buying a new-to-me car, the first time I’d bought a car on my own. Despite the stress of picking it out, I was very happy with it for 8 years. Eventually it was traded in for a minimal amount, but it got me to and from work, and took me on many road trips, before we parted ways.
Once those 2 items were purchased, my eyes turned to furniture. I shopped for a super-comfortable arm chair, and finally replaced my hand-me-down futon with a real sofa–both of which live in my attending living room today. They might need a little TLC, but they are still comfortable and useful, and I love lounging on them.
I regret nothing about any of these purchases.
Flying to see family
For 4 years I lived near a major airline hub. Flying home to see my parents was super-easy (flight less than 90 minutes) and relatively cheap (round trip was usually about $118 or less–which even 15 years ago wasn’t that expensive).
In the spring and summer, I took a few weekend trips to see my parents: home by Saturday at eleven, leave again Sunday at 2. I was able to fly home for most holidays too, though usually I had to pay holiday rates.
To someone raised in the ’70s, this sort of flying seemed extravagant, but I was worried about my Dad’s health. I was super happy to see him and my mom while they were (relatively) young, healthy, and active. It was also fun to get only-child attention for a weekend.
I considered those tickets money well-spent back then, and still think they were a good use of my money now.
Learning Opportunities
Some spending isn’t always the wisest. I look back at my choices from the distance of 10+ years and think: if only that money could have been invested, my investment accounts would be ever so much more robust today.
And yet. It’s very easy to say (now) that some purchases weren’t worth it. At the time, though, I was still learning what I really wanted; something I couldn’t really pursue when I had hardly any discretionary funds.
I would call these expensive lessons (or learning opportunities), rather than total wastes of money.
An expensive apartment
I splurged on my housing at my first attending job.
To be fair, I had to find a place to live pretty quickly once I was hired. I rented in an apartment complex with a short commute (no highway driving required) from the office. It just happened to have a vacancy when I was looking.
The place was amazing. It had a garage, a in-apartment laundry on the main floor, a loft for my office, and a double walk-in closet. That’s not even counting the community amenities (a pool, a work out room, a great location for walking). If only the walls with the neighbor had been more sound proof, the place would have been perfect.
So, of course, I didn’t feel like moving as the rent rose each year.
Besides, the housing bubble was going strong. I wasn’t going to be moving anywhere cheaper without a big sacrifice in comfort.
However, by the end of my time in town, the rent was too high a percentage of my salary. I wasn’t pinched to cover my bills, but I wasn’t able to save as much as I could have.
Going through my budget a few years later was a learning experience for me, seeing that I could “afford” that apartment, but maybe was missing other goals by living there.
The little things
I was young(er), I was in a new town, and I’d never made so much money in my life.
I had Marshall’s, and TJ Maxx, and some great clothing outlets in easy striking distance. I went to Starbucks every morning (sometimes I walked, so at least I got my exercise).
I spent a lot of discretionary money on stuff that… wasn’t as purposeful as my bigger purchases. Home decor and cheap clothing still add up if you go shopping often, and buy stuff without a plan.
Much of those purchases have been thrown out or donated by now. A few remain, and, to be fair, I did need a professional wardrobe once I wasn’t wearing scrubs . However, much of that money was sort of wasted.
I list this as a learning opportunity because, on the whole, the amounts spent weren’t a huge part of my income. I learned to start spending a little, and learned what was worth it to me, and what wasn’t.
Nevertheless, I’d lump this money lost under “Latte Factor” spending: little leaks here and there, that don’t seem like much at the time, but which add up to larger sums quicker than you might think.
Learning to travel
This is a different kind of lesson.
When I first came out of residency, I was, if not broke, stretched financially.
The first year I didn’t take a lot of vacation, except to visit family (free lodging!).
After one year of practice, with my student loan paid off and some of my other financial goals met, I decided to take a vacation. I picked a place that has been a tourist destination for about 100 years. A real resort town.
However, my cheap habits led me to take a vacation that wasn’t as nice as I had envisioned.
I drove many, many hours to get there. I stopped twice to visit college friends, who hosted me, so the driving was sort of a feature. But I would say there were about 5 hours too many on my trip.
Then, I had picked a hotel downtown, right by the highway, as it turns out. The downtown wasn’t as walkable as I had thought, and I was totally missing the tranquillity and views that had made the resort town famous.
I was saving money, but didn’t enjoy my vacation as much as I had hoped.
A few years later, I returned to “do the vacation right.” I stayed at the fancy resort after finding a real deal (book 2 nights, stay the 3rd night free). I flew down and rented a car (much more relaxing).
Lesson learned: if you have it, spend the money to have the vacation you were hoping for.
CME
I am not sure if this falls under lessons learned or lessons failed. Since I did learn something from my experiences, I’ll list it here.
I left my residency at a major academic center to work in the community, and eventually returned. So my outlook might be biased, but–I regret not using my CME money to attend national meetings.
I saved money attending CME dinners put on by drug companies (back when they could do that). My PA and I went to a number of fancy restaurants, and I found a few nice ones to take my parents to when they visited. I learned that I don’t like steakhouses as much as I thought I would (my arteries thank me).
I went to one paid CME conference put on by a private company, mostly because it was held near where my sister lives. I was able to visit with her after the meeting, which was nice.
On the whole, though, I think I would have been much happier making my employer pay to send me to the ACP for several of the years I was with them.
Sub-regret: not using all my CME money every year. That was a true fail. Don’t you do this.
The Big Fail
No clear plans for saving OR spending
My biggest money regret related to my the jump in salary was not having a clear overarching plan for my money.
I did okay, with plans to max out my 403(b), and having clear goals for some of my money. However, I always had a nagging feeling that I was drifting along. I wasn’t sure if I should be putting more away for retirement, or even how much I was comfortable spending on fun stuff.
My income increased nicely from my residency, but contrary to what I read at the White Coat Investor, my salary did not increase by 3 times (or more). It was more like a doubling.
After paying more in taxes, more for health insurance, and putting money in my 403(b), well, I didn’t really have as much extra money as I thought.
I knew not to spend more than I made, but I just wasn’t sure what was a reasonable plan for me. Had personal finance blogs been around when I was at that stage, I think I would have been able to come up with a budget that gave me more peace of mind.
In the past, I’ve run my spending through a few reasonable budgets–my favorites are the 50/30/20 budget and the live on half challenge. I think had I followed either I might have missed out on my deluxe apartment, but would have felt more comfortable with my fun spending.
I would probably also be financially independent by now. Looking back with my 20/20 retrospectacles, I can totally pinpoint spending I could have done without and felt just fine.
My Advice to You
If you’ve made it this far, I assume you might like some advice.
Based on my experiences, I would suggest:
One. Make a savings plan. Maybe you want to try the live on half challenge. Maybe you want to be able to buy your attending house in 2 years, pay off your student loans in 5 years, and retire in 25 years. Figure out what you ought to be putting away to make this happen, and build your budget around this.
Two. Make a spending plan. Build your life (for a few years, at least) around your savings plan. That means that your core expenses (home, auto, food, loan payments, child-related costs) should be significantly less than your paycheck, to leave wiggle room for the things you forgot in your initial budget.
Three. Learn to spend money. Build into your budget some room for silly spending. You have been delaying gratification for a long time; don’t break the contract with your younger self by restricting fun money too strongly now. This doesn’t mean going hog wild with frivolous spending. I just mean that if you now earn $300,000 a year, you deserve more than $100 a month to spend on things you enjoy. Then go learn what you enjoy spending money on.
Attendings (new or old): any other advice you would give to someone just starting out?