After completing medical school, many young doctors are excited to earn more but often find themselves struggling with money down the line. The best way to ensure financial security is to avoid these three money mistakes that doctors make.
Not Saving Enough
Sometimes it is hard to save money, especially when you're a young doctor. New doctors are used to making around $50,000 in residency, then jump to six figures once they are full-time. The jump in pay can feel overwhelming, and young providers sometimes do not save enough once they reach this point in their careers. Professionals recommend that doctors save 15-25% of their income so they can live comfortably and retire at a reasonable age.
Managing Debt Badly
Similar to not saving enough, bad debt management is another money mistake many doctors make. It's no secret that medical school alone costs hundreds of thousands of dollars. After years of hard work, it may be tempting to start spending what you're making as a young doctor on things like the latest model of a car you like, an upscale apartment, or nice meals from fancy restaurants every week. It doesn't help that society expects you to be able to afford nice things off the bat. However, this isn't realistic if you want to have financial security. Therefore, it's important to manage your money wisely, pay off your debt, and put money into savings.
Not Saying "No"
Unfortunately, once you are the "high-earner" amongst your friends and family, it's not uncommon for them to start asking if they can borrow money from you. While it may be tempting to say yes, especially if you are close to them, you have to look out for yourself too. Learning to say no can be hard at first, but it's imperative to protect your finances and lifestyle.
However, each circumstance is different. If you feel comfortable with letting friends and family borrow money if the situation calls for it, then, by all means, do what you think is best. Just make sure you say no to circumstances or dollar amounts that make you uncomfortable.
Overall, many doctors are able to manage their finances and live comfortably if they avoid these money mistakes early on. But, if you find yourself in a situation where you need guidance, find a financial advisor that you trust to help you figure out a plan.
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