+ LR-Icons

Budgeting 101 for Physicians

For physicians, a 50/30/20 budget can help you track toward your goals.

Published July 09, 2022

We all want to make good financial choices in our lives. We want to live within our means, but at the same time we want to be able to enjoy the money we’ve earned and have enough savings to retire when that time comes. To strike this balance, it’s important to create a budget.

Whether you’re finishing residency or progressing in your career as an attending, your budget should reflect where you are now and also address your future financial goals.

According to the 2020 Medscape Physician Debt and Net Worth Report, only 18% of physicians have a formal written budget, while 49% have a “mental” budget. Thirty-three percent of the respondents said they have no budget at all. Not surprisingly, the same study revealed that only 43% of physicians currently live below their means.

Clearly, creating a budget isn’t something that most doctors prioritize. As a doctor, your workdays are long and your free time is limited. Nevertheless, a budget will go a long way in setting you up for financial success. So instead of creating a detailed budget that might take hours to complete, let’s find a middle ground, by creating one that’s easy to follow and easy to stick to.

Let’s start with the model of a 50/30/20 budget

The 50/30/20 budget is one in which you put your after-tax income into three buckets: Bucket 1 for needs; Bucket 2 for wants; and Bucket 3 for savings.

Try out our 50/30/20 Budget Calculator below, or watch this quick video to learn more.

Budget Calculator : The 50/30/20 Rule

Our budget calculator will divide your after-tax income into three categories: 50% for needs, 30% for wants, and 20% for savings.

Budget Calculator : The 50/30/20 Rule

Our budget calculator will divide your after-tax income into three categories: 50% for needs, 30% for wants, and 20% for savings.


Your 50/30/20 Budget

Add your monthly income on the left to calculate.




Essential required expenses – including housing, utilities, and minimum debt payments.




May include expenses you don’t always need, such as restaurants, travel, or entertainment.




Should include emergency funds, retirement, and extra debt payments.

Let’s explore this further.

Bucket 1 includes your essential needs and should take up 50% of your budget. This money goes for all the things you must pay for, including your housing (like rent or mortgage), your car or lease payment, groceries, utilities, health care costs, and the minimum payment due on your debts.

Bucket 2 is for those things you want but don’t necessarily need. Maybe you’d like to take a nice vacation, upgrade your phone, or splurge on that sports car you’ve had your eye on. You work long hours and deserve to treat yourself every now and then, so let’s budget for it. Your “Wants Bucket” should take up no more than 30% of your after-tax income.

Bucket 3 is your “savings bucket,” and should take up 20% of your income. Money allocated here should go towards improving your financial situation and preparing for your future. Your savings bucket should include things like your retirement account contribution, additional investments, and emergency savings. This bucket might also include saving for your health insurance deductible (if you have a high deductible health insurance plan) and making extra payments on your debts.

In summary

While it’s important to stick to your “needs” and “wants” thresholds, there is no limit on how much you can put towards savings. Over time, you may find that you have the means to save more and invest more, which is certainly something to aspire to.

The 50/30/20 plan is a simple starting point that’s easy to plan and easy to follow. More importantly, it will give you the peace of mind that you are on the right financial path. A promising medical career is in front of you. Let’s make sure that your budget and financial plans help you reach your full potential.

Information and interactive calculators are made available to you as self-help tools for your independent use and are not intended to provide investment advice, legal, financial, or tax advice. We cannot and do not guarantee their applicability or accuracy in regard to your individual circumstances. All examples are hypothetical and are for illustrative purposes. We encourage you to seek personalized advice from qualified professionals regarding all personal finance issues. Calculators do not include the fees and restrictions that certain products may have. This calculator does not indicate whether you would qualify for a Laurel Road loan. Please visit the applicable banking product pages on laurelroad.com for specific terms and conditions.

In providing this information, neither Laurel Road nor KeyBank nor its affiliates are acting as your agent or is offering any tax, financial, accounting, or legal advice.

Any third-party linked content is provided for informational purposes and should not be viewed as an endorsement by Laurel Road or KeyBank of any third-party product or service mentioned. Laurel Road’s Online Privacy Statement does not apply to third-party linked websites and you should consult the privacy disclosures of each site you visit for further information.

You May Also Like

a male doctor with a blue coat and stethoscope over a shoulder, smiling wide

7 Tips for Your First Year Out of Residency

SH_thumbnail_Quick Budgeting Tips for Doctors

Quick Budgeting Tips for Doctors

doctors holding a white piggybank at the hospital - residents and early attendings need to budget

Why Residents and Early Attendings Need to Budget


Search Results