Graduating from residency and landing your first job isn’t just exciting — it’s a huge milestone. With that milestone comes a regular physician salary, which is one of the things you’ve worked so hard for over the years.

During the first few months (or years) of regular employment, you might experience a bit of a rush. After being cooped up in residency for so long, likely living a meager lifestyle, the temptation to spend — and spend big — is huge.

Blinded by gratification and adrenaline, many new physicians fail to put serious thought into their finances. (But hey… if you’re going from an average physician salary of $45,000 to $300,000, it’s kind of hard not to want to throw a party.)

If you talk to docs that are 5, 10 or 20 years older than you, though, most will say they regret the way they spent their physician salary in the early days of practice. The fact is, spending frivolously, making high-risk investments and shelling out dough for big purchases can drive you into serious debt… even if you’ve got an outstanding salary.

Below are a few must-read tips that will point you down the right financial path.

1) Does Your Physician Salary Cover Your Basic Needs?

In Stage 4 of the Adventures in Medicine Resource Library, there’s a great financial exercise that walks you through categorizing your expenses into “wants,” “needs” and “dreams” buckets. Basically, it lets you prioritize your lifestyle needs, letting you see the bigger picture of your financial limits and goals. If you haven’t checked it out, it’s incredibly eye-opening (yet refreshingly simple).

At minimum, your physician salary should be able to cover your needs, or the bills and expenses you must pay. Most likely, this won’t be an issue. But it’s important to tally up the total of your essential monthly expenses in order to know what you can spend (and save) in addition.

2) Does Your Physician Salary Afford You a Little Fun?

Your salary should afford not only your needs, but also your wants. “Wants” are things that are possible to live without, but they make life more fun. They also depend on lifestyle — your wants will be different than your neighbor’s.

For most people, wants are things like eating out, tickets to special events and designer clothes. For others, wants are a little more extravagant.

Make sure you budget for wants. Avoid callously overspending on dreams (i.e. a luxury car or a second vacation home), which can put you in so much debt that you can no longer afford wants.

3) Paying Down Debt Should be a Priority

On average, medical school debt hovers at around $160,000. While a generous physician salary makes it easier to pay down this debt, you need to approach debt smartly — pay it down aggressively to avoid nightmares down the road.

Though educational debt can be monstrous, it’s a wise investment (and sometimes called “good debt”). If you’ve got “bad debt” (excessive credit card usage, etc.), work on paying that down, too. This credit card repayment calculator will help you get a quick idea of how long it can take to pay off debt.

4) Save, Save, Save

Saving definitely doesn’t give you the rush that a fancy purchase does, but it helps ensure your long-term security. Here’s a simple rule of thumb: If you’re aiming to retire at a traditional age, save 10 percent of your income. If you’d like to retire earlier and become financially independent, save 20 percent.

5) Remember: There’s More Than Money

Once you start looking at your finances (especially your debt!), it’s easy to get “money tunnel vision.” Suddenly, your thoughts turn to dollar signs, and they have a hard time turning anywhere else. Your physician salary becomes your ultimate focus.

Remember: you can be financially successful no matter your income, as long as you spend it wisely. Whether you make $100,000 per year or $500,000 per year, you’ll be the happiest if you’re working a position that’s not only well-paying, but also in line with your values, interests and lifestyle priorities.

Have you struggled with properly budgeting your new physician salary?   


Though the views expressed above are solely the writer’s, SwedishAmerican Health System supports “The Dose with Dr. Goodhook” and is partnering with Adventures in Medicine to create an open, inspiring and insightful community for residents and physicians. Click here to learn more about ways that SwedishAmerican Health System is making practice purposeful.