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Live Like a Resident

If you’ve just completed your residency or fellowship, congratulations! You’ve put in a tremendous amount of work, and a promising...

Published December 08, 2021

If you’ve just completed your residency or fellowship, congratulations! You’ve put in a tremendous amount of work, and a promising career awaits you. If you’re like most physicians in this stage of their career, money is certainly on your mind.

With hefty student loans and a modest salary to live on, most residents are not able to reach the same savings levels as some of their non-medical peers. Now, as you enter a whole new income bracket, you’ll need to prioritize how you allocate your finances.

What’s the best approach?

It’s simple – live like a resident

We don’t have to tell you how to do that; you’ve been doing it for years. And it probably hasn’t been easy. But if you can keep living modestly, at least for another few years, it will have a transformative impact on your finances.

According to the Medscape 2020 Resident Salary and Debt Report, the average resident earned $63,400 a year. You’ve likely built your lifestyle off of that sum, by choosing which apartment to rent, which car to drive, and how often to dine out at restaurants.

As tempting as it may be, this is not the time to change the lifestyle you’ve become accustomed to by adding a bunch of new expenses. Instead, address the financial hardships that came with eight years of school and perhaps another eight as a resident.

There is some ground to make up, and now is the time to do it.

So what should you do with that extra money?

First, keep it out of your checking account. If you’re like most of us, you tend to spend the money you have on hand. So, instead of putting everything into checking, set up a separate savings account and organize your direct deposit so that only the equivalent of your resident salary makes it to your checking. Most payroll departments will let you have multiple direct deposits, so this should be easy to do.

Of course, if you feel like you want to give yourself a small raise (and yes, you’ve earned it) start off with a 5% or 10% bump. But try and stay true to your “Live Like a Resident” mantra.

Next, set your priorities

The foundation of your financial wellness starts with budgeting. You need to understand where you’re spending your money now and how you want to spend it in the future. And you don’t want to live beyond your means. (Read more about budgeting here.)

Next, is emergency preparedness. Build an emergency savings account with three to six months of living expenses to cover everything from an unexpected car repair to losing your job.

After that, make sure your income is protected through disability insurance and, if you have a family, life insurance.

Finally, set your priorities. Your priorities likely include paying off your student loans and credit cards, saving to buy a home, and setting money aside for the future. You need to decide which comes first.

Retirement contributions

As you start to build your plan, don’t forget that your employer-sponsored retirement package may include contribution matching. For example, if you put 6% of your income into your retirement account, your employer may match it. Regardless of market performance, this translates to a 100% return on your investment. And that’s hard to beat.

Four strategies worth considering

Eliminate a payment. With this approach, you’ll focus on debts you can pay off relatively quickly, so you can free up money to use on some of your other priorities.

Eliminate high rate debt. Focus on paying off your highest interest rate debt first. That way, you can reduce the interest you are paying and have more of that money for yourself.

Take a balanced approach
. With this strategy, you’ll chip away at all your debts at the same time while still setting money aside for savings.

Focus on your investments. With this approach, most of your extra funds are applied to long-term investments, like retirement, with an understanding that the compounding effect of your investments will be substantial.


  • Keep living like a resident.
  • Split your direct deposit, with your old resident salary going into your checking account and the rest going into a separate account.
  • Prioritize budgeting, building your emergency savings, getting the right disability and life insurance, and making employer-matched retirement contributions.
  • Decide which strategy makes sense for you and stick to it.


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