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Overcoming 5 common hurdles that keep residents from saving money


After investing so much time and money in medical school, you are no doubt finding residency to be a life-changing start to your professional career. While your paycheque may not be large right now, setting something aside is good practice for future financial success.

Here are five common barriers that prevent young physicians from saving money—and an easy way for you to overcome each one:

1. I just don’t have any time.

As a medical resident, you have a schedule packed with clinical duties, studies, research and volunteer time—not to mention seeing your family or getting to the gym. Who has time to sweat over financials?

Consider this: Use time to your advantage.

As busy as you are, time can be on your side if you can set aside even a small amount of money through an automatic savings plan. The younger you are, the more you’ll benefit from compound interest over time—which means that your contributions earn interest upon interest.

Even a small amount like $25 a week can accumulate to a big sum over time, as you can see in the example below. For other contribution amounts, use the MD compound growth calculator to see what you could achieve in savings.

If you save $25 a week for 10 years, assuming a 4% rate of return, you’ll earn almost $3,000 from your small investment.

                                              Total contributions:      $13,000
                                              Compounded returns:   $2,972
                                              Total Value:                     $15,972

2. I’m too tired to think about savings. 

A day’s work as a resident can feel like a series of obstacles to taking a nap. One national survey reported that 70% of residents experience prolonged sleep deprivation. If you’re tapped out, it’s easy to tune out concerns about—or to not even think about—your finances.

Consider this: Set up automatic contributions and hit the snooze button, guilt-free.

Good self-care habits are essential for physicians in training, from managing stress to getting enough sleep. Your financial health can also suffer due to neglect or burnout.

Make a new habit of saving and investing. If you can automatically contribute even a few dollars each month into a savings plan, you’ll be able to rest easy, knowing you’re working toward future financial achievement.

3. I have a young and growing family to support.

Work-life balance is a challenge for any physician in training, and it’s even tougher for those who are working parents. Stretching a resident’s income to cover child care and necessities can be a juggle that drops the ball on saving.

Consider this: Prioritize saving toward one family goal.

When juggling bills, debt and other financial requirements, think about “paying yourself first.” Set aside a certain amount each week or month, and focus on saving toward one family goal for now, such as a child's education fund, a down payment for a home or even a well-earned vacation.

For instance, if you and your partner have been talking about buying a house once you finish residency, start building equity now by accumulating a down payment. By contributing a few dollars regularly to a dedicated savings account, you’ll have more cash in hand to help finance a purchase when the time comes.

4.  I have huge debts to pay. Why try to save?

If you relied on loans or lines of credit through medical school, your debt may loom large compared with the smaller paycheque you earn in residence. Why save when you have so much to repay?

Consider this: Save to start building your net worth.

Now that you earn income, setting aside savings is an important habit to develop, to start shifting your net worth to the “plus” side.

Loan repayment rules during residency differ from lender to lender and also depend on the type of loan or line of credit you have. It’s always a good idea to quickly pay off consumer debt, such as credit card balances that have high interest rates.

A debt repayment plan is important, but so is establishing a savings base. For an example of how both can be accomplished, see the article Should medical residents start saving or pay down debt?

5. I’ll start saving when I’m earning “real money”!

You expect to earn more money as a medical professional within a short time; why not wait until then?

Consider this: Use your early earning years to adopt good financial habits.

Even if you are certain of earning high income in a few years, starting a savings plan while in residency can help you to prepare for the transition to practice and to learn the basics of investing.

You’ll be better equipped to make financial decisions once you become a practising physician, and you can easily increase savings proportionally, as your earnings grow.