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Preparing for Your First Year Out of Dental School

Whether you’re days, months, or years away from graduating dental school and becoming a practicing dentist, it’s important to think...

Published April 28, 2021

6 min read

Whether you’re days, months, or years away from graduating dental school and becoming a practicing dentist, it’s important to think about financial benchmarks for yourself.

Below, we’ve outlined some important considerations that should be part of your preparation.


Too many Americans – even dentists – tend to spend what they earn. Frugality is not a concept we generally embrace. Instead of saving our money, we focus on building our lifestyle, and as a result end up building debt. As you finish dental school, it’s easy to fall into this “lifestyle trap” of immediately spending based on your new income bracket.

But as you prepare for your first year out of school, you should start to make choices about your financial priorities. As a guide, it’s best to stick to a 50/30/20 plan, in which 50% of your income goes toward your needs (housing, food and bills), 30% goes toward your wants (travel, entertainment), and 20% goes toward paying down debt and building your retirement and other savings.

As you transition out of school – and begin to enjoy a steady paycheck – it’s a good idea to maintain your student lifestyle for at least the next two years. Why? Because your first two years as a new dentist represent the largest financial opportunity of your life. If you can hang on and live below your means a little longer and use your extra income to chip away at your debts, you can set yourself up for financial success for the rest of your career.

Think of it as your financial residency.

Emergency Savings

As you start working, we recommend that you build up emergency savings equal to three to six months of your living expenses. On the way to this target, focus on smaller goals, like reaching $1,000 in savings, then one month of expenses, and eventually $5,000 in emergency savings. Reaching your benchmarks will give you a sense of accomplishment and progress.

Retirement Savings

Let’s assume you’re starting to contribute to a 403b or 401k. Your goal here should be to contribute a regular amount of your gross income, say 6%, toward your retirement goals. If you make this a habit, then you’ll be in good shape and will be on the path to reaching your financial goals.


Today, debt is a tremendous issue for many dentists graduating from dental school. In 2019, the ADA estimated that the average debt per dental school graduate was nearly $300,000!

It’s no secret that debt is a huge stress point for young dentists. With balances so large, it’s easy to feel overwhelmed.

What can help ease this anxiety is to develop a concrete plan to bring down student loan debt. Set goals and prioritize which debt you’ll address first. While your student loan considerations are time sensitive, there are consolidation options that you might want to consider.


You’ve invested money and time into your education with the expectation of future earnings. Disability insurance will protect your income in the event that you can’t work.

During residency you likely purchased as much disability insurance as you could fit in your budget. According to the ADA, experts typically recommend that dentists protect 60% of their net income with disability insurance policies. As your income increases in the coming years, prepare to supplement this policy to maintain the same coverage percentage on your new income.


  • Lifestyle is an intentional choice. Understand how you spend your money and assess whether that aligns to your priorities.
  • Build toward your emergency savings targets, starting in $1,000 increments.
  • Build the habit of contributing to your retirement.
  • Prioritize your debts with a plan to pay them down and then pay them off.
  • Be prepared to supplement your disability insurance coverages based on your income.


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.

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