Securing your future: Essential financial considerations for early career physicians

Early career physicians need to make smart money moves: ©New Africa - stock.adobe.com

The transition from medical school to your first year as a working physician is a major leap, particularly when it comes to finances.

Many expect the change from student to resident to come with big improvements in their finances, but that's not always the case. In your early career years, your income might not be what you expect. If you're not careful, you might even build a lifelong habit of spending more than you earn.

Here's how you can establish good habits and avoid some of the most common money management pitfalls that early-career physicians face.

Spend conservatively

You're finally done with medical school, and you probably want to live it up a little. Sure, go ahead and celebrate, but make sure you resist a common temptation for new physicians: living a lifestyle you can't afford yet.

It's normal to feel like you need a new car to match your impressive new role, or to feel like you need to relocate to a big (expensive) city. But hold off until you know just how far your paycheck will go, especially if you're relocating to an area with a higher cost of living.

Additionally, keep in mind that your salary will be modest during post-grad training. In July 2023, the average one-year stipend for medical residents was $63,800. That's the equivalent of roughly $66,700 in 2025.

Ultimately, there's no harm in continuing to live on a budget for a while. You might even consider doing your residency somewhere rural, where there's a shortage of health care professionals. Doing so can mean a lower cost of living, and getting more attractive benefits and unique learning opportunities.

While making these trade-offs may not always be ideal, it will ensure you can set money aside for emergencies and for things like paying off school debt. Speaking of which…

Be proactive with student loans

In 2024, 74% of physicians said they had taken on debt to pay for school, and the vast majority owed over $150,000.

Most new graduates will have a six-month grace period of six months before their first payment is due. But that doesn't mean you should wait to come up with a plan for managing debt.

If you have federal student loan debt, there are steps you should take right away to set a smooth path for yourself. Visit studentaid.gov to explore your repayment options, which might include the following:

Adjust your payments: Check if you qualify for programs such as income-driven repayment (IDR) or loan consolidation, both of which can help make your payments affordable. About half of all physicians say they've used at least one of these options to manage their student debt in the past.

Certify for forgiveness: If you'll be working at a nonprofit or government facility, make sure to certify your employment, since you can have your federal student loan balances forgiven after you make 10 years’ worth of qualifying payments. (Keep in mind, however, that recent executive orders around Public Service Loan Forgiveness programs may alter the terms of the program.)

Whether your loans are federal or private, another important strategy is to prioritize paying off debt with the highest interest rates first.

In other words, pay extra toward the debt with the highest rates (usually credit cards), while maintaining the minimum payments on your other accounts. Federal student loans usually have unbeatably low rates, which means minimum payments on these loans could be your best choice for managing debt during your early career.

Additionally, as you're making decisions about where to do your residency, keep student debt in mind. Some medical facilities will offer you student loan repayment or forgiveness as part of their benefits package if you commit to staying on staff for a set number of years.

Understand your contract(s)

Contracts are going to play a big role in your pay and benefits as a clinician, and yet you probably didn't learn much about them while in school.

Before you begin residency, you'll have to secure a contract, also known as a resident doctor's employment agreement. Then, you'll have to sign another contract before becoming a licensed physician.

While resident agreements are nonnegotiable, you still need to put some work in to make sure you're getting the best deal. For example, research standard salaries and benefits for your role and location. You will also need to thoroughly read all the contract terms to ensure you're willing and able to comply before signing. Some items to review and compare:

• Pay
• Location
• Hours
• Time commitment (years)
• Mentorship opportunities
• Health care and other benefits
• Student loan payments/forgiveness

Hiring a contract review specialist can help you ensure there are no red flags, like missing information about your hours and pay.

For physicians, contract specialists can help too, since they assist with negotiating benefits packages, including salary, bonus, health care and retirement benefits. They can also help you look beyond the money and recognize details that will impact your day-to-day experience as an employee.

Start retirement savings early

A 2025 Sermo survey of over 500 physicians found that only 22% felt fully prepared for retirement. The majority also believed they would need a secondary source of income in order to retire.

Why are physicians so unprepared for retirement? There are certainly factors you can't control throughout your career, such as inflation or layoffs. But one of the main culprits is undersaving.

Fortunately, you have the biggest opportunity to prevent this problem when you're just getting started in your career. Why? Because the earlier you start saving, the less you'll need to contribute from each paycheck to have enough set aside for retirement.

For example, let's say you're 27 years old and you contribute $200 to a retirement account from each biweekly paycheck. You could expect to have roughly $1,428,000 in savings by age 67. By contrast, if you wait until age 37 to start making $200 biweekly contributions, you'll have less than half of that (roughly $664,000) saved at age 67.

As you transition into your role as a full-time physician, small, disciplined actions taken now can lead to increased financial freedom in the years to come. Remember to maintain a clear vision of your financial goals to allow yourself to focus on what matters most, your patients and personal well-being.

Sarah Brady is a freelance writer and credit expert who's been helping individuals and entrepreneurs improve their financial wellness since 2013. Sarah has written about personal and business finance for Forbes Advisor, Yahoo Finance, ValuePenguin and more. Before becoming a writer, Sarah worked as an NFCC-Certified Credit Counselor, a HUD-Certified Housing Counselor and she taught financial education workshops for the San Francisco Mayor's Office of Housing. You can reach her at LinkedIn.