The key to financial freedom: Live and work like a resident

That first paycheck as a new attending means so much more than what is direct-deposited into the bank account. The emotions of finishing medical school and training to finally seeing the fruits of your labor positively affect the bank account is something to be proud of. As a medical student (like myself) and resident, it is the light at the end of the tunnel. You’re probably asking yourself, “Why should I read about salary and making money coming from a med student?” Well, how is that any different than you as an attending being told how to practice medicine from an insurance company?

With that newfound income comes countless ways to spend it. Quite literally overnight, there are many worthy (and a few not so worthy) things to spend your money on, but not enough money to go around. What a great problem to have! Having given up your 20s and most of your 30s, finally having a real paycheck is (or will be) refreshing, to say the least. Being a physician is financially unique: a) going from $50,000 per year to $250,000+ per year is quite the raise; and, b) the more you work, the more you get paid. Most other high-earning careers cannot say that. Here’s what I mean.

Physicians, even those on salary, can earn as much extra money as they want via a number of ways. The most common seems to be by picking up extra shifts/moonlighting (spoiler alert: often with higher paying rural hospital systems). However, other income-boosting ideas I have come across include locums tenens, becoming a medical director of a MinuteClinic or hospice company, seeing nursing home patients, being an expert witness, perform claim reviews, consulting, blogging, to name a few. My personal favorite is literally cold-calling a hospital (bypassing locums fees) to find shifts. These high-paying extras cause that annual income to go from “average” to “high.” Obviously, these require a sacrifice of time but haven’t we been doing that for ten plus years? What is another year or two to financially set ourselves up for the rest of our (and our progeny’s) lives?

Self-taught physician finance “experts” (even though they hate being called that) such as The White Coat Investor and Physician on FIRE (a.k.a. Financial Independence Retire Early) have become the go-to resources when medical professionals want to take control of their financial lives. I am an avid follower of both and thoroughly enjoy agreeing and disagreeing with their respective points of view. A question that is routinely brought up within those forums typically falls in the category of, “What is the best thing I can do to set myself up financially?” The common answer from both is to “live like a resident for 12 to 24 months after residency/fellowship.” Basically, be as frugal as an attending as you were as a resident. I 100 percent agree. It puts a huge dent in the unmentionable mountain of debt and sets the tone for your spending habits.

However, I am realizing more and more that living like a resident is only half of the equation to winning the financial game. If you are also willing to work like a resident for the first 12-24 months as an attending, the dent in the debt will be even bigger, and you’ll be on the fastest track to achieving the goals.

For you numbers people out there, consider this simple math: As a resident, you were working 80+ hours per week making +/-$55,000 per year. You are now a new attending in a given specialty working normal 50 to 60-hour weeks making a respectable $250,000 per year (or more). If you live like a resident, you obviously have a pretty nice thing going. Now, let’s say you are a real financial gunner and start picking up extra shifts here and there, or use any of the other aforementioned salary-boosting gigs, your salary can jump up by $100,000+ per year. We are already behind the 8-ball when it comes to investing. I’ll leave it to those physician finance ‘experts’ to walk you through what an extra $100,000 could do for your portfolio (or your lifestyle if you’re not that into the whole saving-for-the-future thing).

Let us not lose sight of the fact that even if you only make $150,000 per year, you are humbly in the top 5 percent income bracket compared to other Americans. Bump that number up to $250,000 per year as most physicians do, and you’ve officially crossed into “The 1%.” Any amount of money you earn as a physician will allow you to live comfortably. Just think of the good you can do with that money while adhering to a sound financial plan and eventually debt free!

As a treat for reading this far: Here is a bonus, an often-unrealized common sense gem. The first six months as an attending, you’ll be in the lowest tax bracket of your career thanks to only making $30,000 the first six months of said year while finishing up residency. So, if there is ever a time to work like a resident (or even harder than one), it would be those first six high-paying months as an attending. Delay that well deserved month of vacation until January of the next year, and you’ll save a boatload in taxes.

In short, the money is out there, begging to be earned. It is the law of the jungle: You eat what you kill. It is no secret physicians of all specialties are in high demand and hospitals are willing to pay for them. Living like a resident while working like a resident and getting paid like an attending is the financial formula to eliminating debt and cruising to financial freedom. It’s basically as close to a “get rich quick” scheme as there is out there and I’m offering it to you for three small payments of … just kidding.

Brad Brown is a medical student and can be reached Twitter @brad_brown2.

Image credit: Shutterstock.com

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