Adopting the right personal finance habits can both help you improve your money management skills and set you on a...
Adopting the right personal finance habits can both help you improve your money management skills and set you on a path toward financial success early in your career. From creating a loan repayment plan to paying your future self first, we’ve gathered some of the most effective habits that can help you improve your financial wellness.
Here are five of the most important financial tips that all doctors should know.
Creating a loan repayment plan is an important step toward paying off your student debt. You have two different options, depending on which type of loan you took out:
Making a habit of regularly tracking your finances can help you make informed financial and budgetary decisions. The following steps won’t take long and are perfect for busy doctors who want to keep an eye on their financial wellbeing:
Creating and following a budget can encourage mindful spending and act as a powerful antidote against lifestyle creep – an issue common among new doctors who start spending beyond their means after finding themselves with significantly higher incomes than they had as residents. Continuing to live like a resident and following a budget can be smart tactics to avoid falling into this trap.
Here are a few tips on how to create a budget:
a. Estimate your monthly after-tax income.
b. Create a list of your monthly expenses. Include both fixed expenses, such as rent, and variable expenses, such as groceries.
c. Compare your income to your expenses. If you’re making more than you’re spending, you can funnel the extra money toward important savings, such as retirement.
d. Adjust as necessary: If you’re spending more than you make, you may need to tweak your budget and cut back on discretionary spending.
Start investing now to take advantage of the power of compound interest. Compound interest is when your money starts making its own money and is a valuable tool in combating inflation. There are a myriad of investing options, from low-cost index funds to maxing out your Roth IRA contribution.
Lastly, you’ll want to pay your future self first. This means putting money aside for things like an emergency fund and retirement savings. If you’re worried about having the willpower to save for your future, consider automating some of your savings. That way, a small portion of your paycheck can be allocated to your future self each month, no action required.
Adopting effective financial habits will help you maintain and improve your financial health and get you closer to achieving your financial goals. Even if you haven’t tried any of these before, there’s no better time to start than now.
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