Many of you have just started your training as a resident. And let me tell you, making, saving and investing money as a resident physician is not really easy.

You work super long hours for much less than your work is worth. This leaves you with limited bandwidth and even less capital (see: money) in training. Even more importantly, your focus in training is rightfully on learning to be the best doctor that you can be to take the best care of your patients. That is and should be your primary goal rather than building your net worth.

But…

But, ignoring your personal finances and financial well-being all throughout training is not a good idea either. Trust me.

So there has to be a middle ground.

The 12 step program to save and invest money as a resident physician

I'm going to share with you the middle ground.

I am going to give you 12 easy steps that, if you follow as a resident, will lead you to financial well-being during and after training. I believe in building simple habits that will exponentially yield massive results.

That's exactly what this 12 step program is.

I'll also personally vouch that these 12 steps can easily fit into even the busiest resident or fellow schedule. I get to say this because I was just a trainee a few months ago. So I remember those days and the realistic time contractions that exist in everyday life as a trainee.

Oh yeah, and if you're wondering what makes me an expert in what to do to be financially well as a trainee. It's because I did everything that you shouldn't do…aside for just 3 things.

The 12 step program for residents to achieve financial freedom

I'm going to present this list in a high yield format, cutting right to the chase. Topics that may need a deeper dive for some people will have links to other posts throughout the blog.

Before we get started. Let me say again, do these 12 steps…and you will be ahead of 99% of your peers. You will be ahead of 99% of attending. You will be setting yourself up to live and work on your own terms. It's not hard but does take effort. It's worth it.

And here's a little secret…these steps really work for any physician in any career stage, early or late!

Step 1: Start your financial education

• Read one financial book per year
• Pick one financial blog and read 1 post/day
• Learn about contract negotiation
• Consider a course or coaching to accelerate the process
• Invest in yourself!

Step 2: Establish your big why

• Arguably most important step
• Your big why is the reason why you want to achieve financial freedom and financial well-being
• My why is that I want to gain financial well-being to enhance my overall well-being, to spend more time with my family and friends, and to pursue my passion on my own terms

Step 3: Learn to keep score

• Net worth is your score card for wealth
• Income is not listed on any net worth calculators
• Net worth = Assets – Liabilities
• Once you know how to keep score, you can play the game, like me! I went from a net worth of -$500k to >$1M in less than 4 years.

Step 4: Pay off debt!

• I know, I know. By now you're asking, “wait isn't this post about making money?” Stick with me.
• The first step when you are in a hole is to stop digging
• So don't take on moire debt and start paying off any existing debt
• Each $1 to debt is $1 that your net worth increases – few to no other investments with this 1:1 relationship
• The worst financial advice I ever got was that doctors should plan to die with their debt…

Step 5: Budget – Nike style “Just Do It!”

• Budget = your treasure map
• Don’t hate it
• Use my simple system

Step 6: Save 20% of your income

• Create a lifelong habit
• Formula to build wealth = Increase and invest the margin
• Margin = What you make – what you spend
• Make your margin at least 20% (mine is now >41% as you can see in this map of my money flow)

Step 7: Use the right investing strategy to flip the margin

• Approximate the market by investing in index funds
  •   Stocks
  •   Bonds
  •   Real Estate
• Don't try to stock pick or time the market which has been shown over and over NOT to work
• Set asset allocation and rebalance yearly (this is really easy to do, don't be intimidated)

Step 8: Invest in the right places

• Maximize tax advantaged retirement savings/investments
• Use any retirement accounts available to you in residency (usually a 403b or 457b)
• Open a Roth IRA (training will likely be the only time your income is low enough to contribute directly to a Roth IRA instead of through the back door)

Step 9: Consider a side gig

• Here is everything that you need to know about physician side gigs to make you passive money
• Don't think it's impossible for a trainee. It's not stupid to chase passive money as a resident physician. I even know of one doc who gained financial independence during her residency through real estate investing!

Step 10: Small savings add up as a trainee

• I generally advocate for an abundance mindset with money
• However, in the specific circumstances as a money-strapped resident, I really will encourage you to:
  •   Not order out for food
  •   Drink hospital coffee
  •   Bring lunch
•   And….

Step 11: Invest your change

• Acorns is an app that will actually do just this for you
• You'll build up some nice savings invested in broadly diversified, low cost index funds with money that you will not even notice is gone
• This is great as a trainee
• Sign up through this link and get $5

Step 12: Develop your written personal financial plan

• This is kind of like the Mecca of personal finance planning
• You really should do it in training before you start making a lot more money
• Making a lot of money without a plan is dangerous
• Making a lot of money with a plan is a surefire way to FIRE
• The difference is a plan
• Here's a step by step guide showing you exactly how to make your plan

What do you think? Am I missing any steps? Can you save money as a resident physician? How many have you completed? Do you think you have enough time to do this as as trainee? Let us hear what you think below!

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