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Five Steps to Get Started on Finances as a Medical Student

Today’s guest post comes from Michael Tokov. Michael is a second-year medical student at the New York Institute of Technology College of Osteopathic Medicine. He is also the co-founder and treasurer of the Business & Medicine Organization at his medical college. Wisely, he is getting his finances in order as a medical student. In this post, he shares five major financial pearls that he has learned and applied as a medical school student shaped by his unique experience and upbringing. Even if you are a resident or attending, these lessons are important and can help you!
medical student finances
Get started on your finances as a medical student like Michael!

I was born, raised, and educated in Queens, New York. Having been raised in a household by parents who immigrated from the Former Soviet Union, many unique lessons were internalized and built upon as a child. Many of these experiences led me to want to take control of my finances as a medical student.

My parents always praised this country’s opportunity for education and financial success, but of course with the struggles of immigration, money was an important topic at home.

How does one become financially secure? Which professions bring the best family life? How do we make sure our children do not struggle like we did?  

A keen awareness of financial responsibility was absorbed at home – and during the day a strong interest in mathematics, science, and history developed in my early public-school education. As circumstances became more difficult, without a providing father in the home, my older brother and I had to begin our journey to financial independence early on. In our teenage years, we went on to learn to become professional barbers at our uncles’ family owned businesses. These defining experiences coupled together helped propel us on the journey towards careers as professionals (my brother is currently a dental student). 

Unfortunately, there are aspects of being a student that we are simply not taught in medical school, such as personal finances. This is why I want to share the 6 key points that I have learned to help you all gain better control of your finances at this early stage.

Ed. – I always preach that you can’t argue with reality. The reality is that I completely neglected my finances in medical school (and residency and fellowship for that matter). I wish I could go back in time and read this article while I was a medical student or trainee. I can’t, but you can! The earlier you start, the greater impact your decisions will make on your future financial well-being. 

Five steps to take full control of your finances as a medical student!

Why bother with the financial aspects of a career in medicine? 

After all, isn’t our job as healthcare providers to just take care of patients? Not quite and let me explain why. 

It is common knowledge – I hope – that we as medical providers are unable to optimally care for our patients if we ourselves need help. It is encouraged that physicians and other healthcare providers take good care of themselves – hygiene, nutrition, exercise, mental health. By doing so, we will have the energy and focus to deliver quality patient care. As a bonus, we become the good examples of the healthy habits that we recommend our patients to adhere. 

Unfortunately, part of this blend of self-care that isn’t discussed much is financial well-being. Money is foundational to our success. When utilized intelligently and responsibly, it will fuel our success in our careers. The utilization of money is a fine skill, requiring knowledge and practice. This means that if we favorably land ourselves a high-income salary (such as an attending salary), but do not possess the financial intelligence to manage said high income, we will almost certainly irresponsibly manage our money. (Ed. – Very well said!)

This defeats the purpose of having a high income and diminishes our money’s ability to take care of us the provider. This ultimately negatively impacts our patient care. For these simple reasons, it is imperative to establish good financial habits and financial intelligence early on (college, medical school, residency, etc.), so that when the opportunity arises, we may flourish. There exist simple steps we can take to improve our financial intelligence, without a formal education, as medical students. So, let’s talk about them!

1. Read on the topic of money

Use the momentum of daily learning to fuel your learning in financial literacy.

Let’s be honest, medical school is not a “9 to 5”, it’s a “24/7”. Our minds are working around the clock and our study material never seems to escape us. What we have, that I believe many others lack, is what I like to call “intellectual momentum”. Our stimulated minds are constantly digesting complicated information at high speeds – even if/when we don’t want to unfortunately. But no worries! 

We can use this to our advantage. Pick up a simple book on financial literacy to get started with understanding personal finances. The White Coat Investor: A Doctor’s Guide to Personal Finance and Investing is an excellent start for anyone in the medical field interested in learning about personal finances. My personal favorite is Rich Dad Poor Dad by Robert Kiyosaki – a short and comical read. The book was an excellent primer to get me into the “wealth mindset”. It served as a “paradigm-shift” for me, allowing me to intimately understand how the wealthy use and build their money. There are plenty of other great books discussed on The Prudent Plastic Surgeon Blog. 

Be liberal in your approach to education and finances as a medical student. We all know medical school is busy enough as it is. If it takes a year or two to finish one personal finance book, so be it! It’s a heck of a lot better than never reading any. Down the line, your pocket will thank you for finding the extra time in your schedule to read.

Ed. – The money you spend on a book like those listed above will yield you the most return of any other investment that you will make in your life. Try to read one finance book each year as a habit.

2. Make sure you fully understand your loans 

If you are a medical student, you are likely taking out student loans like the rest of us. Let’s make no mistake of it – student loans are scary and mysterious. They somewhat resemble the complex organisms we learn about daily – they are born, they grow, they can be healthy, and they can be sick – sounds relatable. 

However, words like principal, fixed interest, compounded interest, capitalization, deferment, refinancing, consolidation, income driven repayment … what do these words even mean? I can’t imagine getting myself so deeply entangled into a commitment where I don’t even understand the definitions underlying it. Unfortunately, that is the reality for most of us medical students. For many of us, we don’t know how this intricate “system” works. 

Let’s not forget – we are smart! We can figure out finances as a medical student.

We can learn about topics such as Polycythemia Vera, Progressive Multifocal Leukoencephalopathy, Ewing’s Sarcoma, and Nephroblastoma with lightning speed, but get stumped when we hear words like origination fee

That is why I believe it is crucial we take the time to fully understand our student loans. What I did to get around this hurdle was simply visiting my financial aid officers at my college for a one-on-one meeting (a Zoom meeting should suffice these days) and unload a long list of questions I had for them. Not only did I learn a lot about my loans and how they work, I also developed connections with my financial aid officers for any future concerns related to my loans. They were extremely helpful with getting me started, and at no cost considering my tuition pays for their services! 

Moreover, they provided me with additional resources such as a list of potential scholarships and websites on education pertaining to federal loans. This sort of “mentorship” experience helped give me a jump-start on understanding my student loans, and with this understanding, I can more confidently read online about the topic and speak with people who are currently in the same process. 

Ed. – If you are past medical school, you still need to learn about your loans. This was a painful process for me at the end of residency. I read through each of my loan terms, created an Excel document with every loan and their terms, and even called each loan company to speak with a loan officer. If you haven’t done these things, you should.

3. Budget, budget, budget (and try to get some scholarships)!

It is mostly true that medical students are not working full or part-time jobs. The time, energy, and opportunity likely isn’t there. With this, we need to figure out how we can live day to day without income. 

A common option is to simply live off of extra loans. Some medical students even take out extra student loans to cover transportation, rent, etc. Some students will make the push to work a part time job or tap into savings from before medical school. And of course, there are some who are lucky to have help from parents or a spouse. 

Another option that I personally think is best is to apply to scholarship grants.

It only costs a few essays to be written and can yield large benefits. 

Take the time to consider your options, weigh the risks and benefits, and carefully consider that student loan interest rate! When considering working a job in medical school, understand that the extra income you receive will likely not exceed the profitability of spending time towards studying for your future career. Moreover, investing some of the money you have for good study material will up your chances of getting better grades, thus improving your career prospects. 

It is also very important to remember, that life as a medical student is not supposed to be as glamorous as it may seem on social media. Fashionable scrubs and expensive lunch dates will not get you the residency position you desire – sorry.  So, think twice or thrice before you spend. I know its intimidating, but sit down, open up your friendly calculator (I like Excel for this task), and start understanding your budget! 

Ed. – I love budgeting. (Yup, I’m a freak). A budget is not restrictive. If you feel this way, you need to change your mindset. A budget is freeing. It is a roadmap to your financial goal and ultimately financial freedom. 

4. Find mentors who can speak to you about money

Along our career, we will come across many people who will inspire us and change the way we see the world, medicine, and ourselves. 

Without question, we will eventually make a friend who can offer us valuable financial advice, so long as we look for him/her (and I’m not talking about financial advisors). The mentor-mentee relationship is a valuable one where we can learn organically and ask questions.  No book or online forum can do this for us. It is important to choose your mentors wisely. Only take financial advice from someone you want to emulate. If such a person does not possess the income or wealth you desire then do not take their financial advice – simple. Get into the conversation and build connections with those who have their financial future in mind.

5. Begin thinking about the financial aspects of your career

If you haven’t already, start thinking about the financial aspects of your career. 

Ask yourself, how much income do I want to make? Do I want to comfortably provide for a family? Does my specialty of interest match my desired financial future? Would I be more comfortable working for a hospital or being my own boss? Do I want to be involved in side-gigs such as investing, writing, or management? The sad truth is that if you do not think hard about these pressing facets of your life, someone else such as a boss or a hospital institution will. Then, the decisions made for you will almost likely not be in your best interest. So, circle this point back to the first point – take control!

Tying together personal finances for the medical student (or young physician)

The above-mentioned points are simple soft skills toward approaching your money. They should help guide you toward developing the hard skills associated with managing personal finances.

Some personal practices that I have developed as a medical student are as follows:

  • Personally, I do not take out more loans than are needed for tuition
  • I take out a new zero interest credit card once a year to jump start my credit building journey.
  • It’s my habit to only spend what I would usually spend.
  • I pay off my cards in full every month. This in part will help me build my credit score, eventually allowing me to take full advantage of financial opportunities in the future.
  • I redeem all of my accumulated points. 
  • Something very simple is that I mostly stick to home food. Cooking breakfast, packing lunch, and coming home for dinner are great ways to save big bucks as a student.
  • Filing and paying taxes, which I consider to be the most confusing, is something I am trying to learn a little bit about so that I can be best prepared for it in my future. 
  • I also began investing in a brokerage accounts such as Robinhood and TD Ameritrade. I do this not with building wealth in mind particularly, but to first learn how to invest in the stock market. If I have gains, great! If I have losses – that’s great too – it’s the price I pay to learn. Again, I do this so that I can prepare myself to become an intelligent investor in the future. 

Ed. – Like the White Coat Investor, I am actually not a big fan of Robinhood or similar apps/companies. They try to make day trading and active investment management sexy. The reality is that people should make their investments boring, investing in passively managed index funds that outperform 80% of actively managed funds. Getting a start in investing (like Michael is doing) is a great habit to build. But make sure to start the right way. Here’s a guide.

Most important of all, why should I do any of this in the first place?

Why is financial literacy important to you? For me it is because I want to do good for society and have a healthy and happy family life. So, you should discover your “why” too. 

I hope this information helped. There is much learning ahead in this topic for all of us.

What do you think? Were you starting your financial education as a medical student? Did Michael miss anything important? What have you done to fix your past mistakes? Leave us a comment below!

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    Jordan Frey MD, a plastic surgeon in Buffalo, NY, is one of the fastest-growing physician finance bloggers in the world. See how he went from financially clueless to increasing his net worth by $1M in 1 year and how you can do the same! Feel free to send Jordan a message at [email protected].

    2 thoughts on “Five Steps to Get Started on Finances as a Medical Student”

    1. In order to perform better than index fund such as S&P 500, just simply buy and hold the top 5-8 holdings of the the fund. Now you don’t pay the MER of the fund and these 5-8 stocks cost you zero commission using TD AMERITRADE or others similar.

      • I don’t disagree with that strategy although I am a bigger proponent of index fund investing to further diversify. But the key is to buy and hold like you say. I worry many get tempted to trade more often when they hold individual stocks. It takes a bit more discipline from those I’ve seen take this strategy.

        Thanks for reading!



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