There’s no getting around it — you need a budget. Whether you’re in medical school or residency, whether you have outstanding student loans, are debt free or even have a bit of savings, you have to pay special attention to where, when and how you’re spending your money.
Getting started is the hardest part
Often the thing that prevents people from developing a budget is the very first step: looking at your overall spending. It can be a painful process to look honestly at where your money is going (especially when you know you’re going to have to cut back in some areas). But there are a few ways you can make the process of building a budget — and, more importantly, sticking to it — a little less stressful..
One way to get over that first hump is to skip the step of assigning a specific dollar amount to a category. Trying to spend a certain amount each month in a particular category can be complicated. Instead, you could pay for everything with your credit card and then look at your balance every two weeks. If you’re halfway through the month and under the total you wanted to spend, that’s great. If not, then you’re going to have adjust for the next two weeks.
Sometimes a simple little trick like that can make all the difference; it’s all about finding a new perspective on your finances.
Your medical training should be your priority, and every moment taken up with worrying about where your money is going works against it. Life can be stressful enough — your budget should be easing your stress, not contributing to it.
The burrito exchange rate
We heard about one client who had a unique way of forcing himself to see his finances in a new light. When he thought about the thing in his life that he couldn’t live without — the thing that really made him happy — he discovered it was…burritos. After a long night, he energized himself with a burrito. The promise of a nice hot burrito also got him through the day.
So, when it came to better understanding his spending habits and making hard choices about where his money should go, he started calculating the value of things he wanted in burritos. Think of it as a burrito exchange rate. Would he be willing to trade 10 burritos for a new pair of shoes? Was that weekend ski trip worth 40 future burritos? Could he bear to give up five potential burritos for a night out? It might seem silly, but this new context for understanding the “happiness cost” of things in his life helped him to be more disciplined with his budget.
Like this person, you might need a unit of measurement for happiness. You don’t have to be happy about your budget — but you can find what makes you happy within it. You’re going to have to spend money; there’s no getting around that. You just have to find out what those expenses are really worth to you.
There are things in your life that you love (which may or may not be tasty Mexican delicacies), and because you love them, they probably bring some small sense of peace and consistency to a life that has been thrown into upheaval by the pressures of your medical journey. So it’s not wrong to spend money on them. But as you try to control your spending through a personalized budget, you have to free up money from elsewhere to accommodate them.
Day to day, your spending habits might seem inconsequential, but there are long-term consequences. Over time, the amount you spend on a couple lattes every day could go towards a down payment on your first home.
There’s no point in sugar-coating it
The reality is, you won’t be able to do everything you want. It’s about making hard decisions and knowing what’s most important to you. Knowing how to say no to things you don’t need makes those decisions much easier.
A budget is just one part of your financial plan — to get a big-picture view of your finances, and to develop a smart strategy for managing it all, you can connect with an MD Advisor* to chat about budgeting, burritos or whatever else you’d like to learn more about.
*MD Advisor refers to an MD Management Limited Financial Consultant or Investment Advisor (in Quebec), or an MD Private Investment Counsel Portfolio Manager.
The above information should not be construed as offering specific financial, investment, foreign or domestic taxation, legal, accounting or similar professional advice nor is it intended to replace the advice of independent tax, accounting or legal professionals.
