Feeling underpaid and overworked? Tired of living up to the Millennial stereotype of being riddled with debt? Welcome to residency in 2019. Over the years, my wife and I have gotten married, had four kids, built up debt from medical school loans, and now I’m in my third year of my ophthalmology residency. Despite all this, we are quite proud of our financial accomplishments throughout my years in medical training. Here are three quick proven financial tips that helped me get those coins flowing, and those boomers off my back.
1. Cut costs.
Yes I know, you’re already living on ramen. Many residents already have this down to a science but there may be some things you can do to improve.
- Lower the temperature on your hot water heater. (Not sure how? YouTube it!)
- Use LED bulbs.
- Invest in a smart thermostat. Some power companies subsidize the cost of this.
- Check your car’s tire pressure monthly—1% better fuel economy.
- Try walking/biking to work – so many benefits here. These little things really do add up over time.
- Consider cutting the cable bill.
- Team up with family and friends for better deals on cell phone plans.
- Ask your HR department what discounts they offer for employees — And take advantage of them!
- Evaluate what your consumable habits are and cut them out (smoking, daily diet sodas, snacks, coffee, etc.).
- Look at what you don’t use around your house. Our general rule is if we haven’t touched it in 8-12 months, then it’s listed on Craigslist.
- Adopt a DIY attitude. I have come to realize that I am capable of learning most small repairs and odd jobs myself. If it requires an expensive tool or in-depth knowledge I leave it to a pro. For everything else, there is probably a How-To for it. If you can learn C-sections and circumcisions, you can learn brake jobs and basic plumbing.
2. Add to the top line.
Find ways to make extra income.
- This is likely the easiest way to quickly raise your earning potential. Talk to your program director. Many institutions have extra paid work in demand of a willing resident.
- Taking vacation? For those that own a home/apt/condo. Clean up your place, take some nice photos of it, and post it to Airbnb for the days you will be out of town. Where we live, there is a well-known tournament nearby that we rent our home for a sizable sum of money. Capitalize on your unique situation.
- Tutor, Uber, Resell (eBay, Craigslist)—I’ve done all of these and have had variable success. Explore if desperate.
- Start a business. The business my wife and I started in medical school netted $10K in one fiscal year. We took some small calculated risks, but it paid off for us. Keep an open mind to new ideas and ventures.
3. Use a budget.
Don’t fall into the trap that a budget is a restrictive tool for tightwads. Using one will help you sleep better at night and feel free.
- Read the book, The Millionaire Next Door to redefine what wealth looks like. Then get your Apple Watch out and post it to eBay. (Yes, I have actually done this)
- Use the Envelope Method. Here’s how it works: Cash out your whole paycheck and grab some envelopes. Write out all your expenses each on a different envelope and allocate your cash accordingly. Then, only spend what is in each envelope. These days, my wife and I personally use an Excel spreadsheet (DM me for it) along with mint.com to plan and track what we spend.
- Don’t ever go late on a bill or payment. Sometimes it can be so easy to justify buying that new couch or piece of tech. However, skipped payments or obligations come back with a bloodthirsty bite. They quickly snowball and make the next month that much harder. Before you know it, you can be playing a hard game of catch up. My wife and I immediately pay off all fixed expenses the day we get our paycheck (rent, utilities, payments, phone, etc) and live on the rest carefully.
- Repeat after me: “I will not buy a new car. I will not sign for a leased vehicle. I will not buy into a timeshare. I will not carry a balance on a credit card.” I could keep going here. The list of ridiculously dumb financial moves continues to grow daily. We’re smarter than them. Yes, this includes that puppy subscription box with a catchy name.
- Look for ways to smooth variable costs. For example, many power companies allow for balance billing where they will charge a flat rate for utilities (based on prior years averages). This simplifies your budget and helps eliminate bullwhip effects of expenditures.
- By that same token, look for ways to front load, bundle, and save. For example, we save $200 every year by paying 6 months of our car insurance up front.
- Fees are not final! You will eventually get stuck with a fine of some type in your life. Never pay a fee until you have spoken to someone, their boss, and their boss’s boss about getting it removed. We are in a unique and vulnerable time of our lives where we are making sacrifices and people understand that for the most part.
- If you have self-discipline and a credit card with excellent rewards points– charge your large expenses to it such as rent, plane tickets, and educational fees. Many landlords now accept credit card payments and eat the transaction cost. The more expenses you can push through a credit card with a good rewards system, the more you get back. However, you must never carry a balance (See point 3)!
This is all I have for now but there are lots of good sources out there to help you make wise decisions. Read up on it now and start building financially savvy habits before it’s too late.