4 Financial Planning Strategies Every Young Physician Must Know

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Don’t delay in mapping out a game plan.

Young physicians, even with their high earning potential face financial challenges. They have their massive student loans to pay off and manage their day-to-day expenses too. One thing that can help them through is financial planning.


The earlier you plan, the better your chances are of having a strong financial foundation. If you begin with a strong ambition to save up for retirement, you can set up an IRA for yourself. If you want to have a strong financial foothold, you need to first inculcate these three habits.

  • Keep a check on your finances.
  • Always prioritize saving over spending.
  • Invest in simple investment plans like 401(k) plans or IRAs.

Along with these habits, you must implement these four strategies to stay on top of your financial matters.

  1. Plan the Financial Journey

First, you need to identify your destination and then chalk out your financial journey. Your financial plan is a guide that takes you to your destination. You need it because without it you may get lost. While creating your financial plan, you need to think long-term. So, put your thinking cap on and ask yourself these questions:


  • What should your life look like?
  • Are you currently financially independent?
  • What financial independence means to you?
  • Are you willing to compromise on your current living standards to have a financially stable future?
  • What aspect of money do you like and why?

Once you get the answers to all these questions, then map out a plan to get there.

  1. Start Saving Early

You don’t need to wait for the extra money to be left in your account to start saving because that might never happen. The right time to save is now. You can open a 401(k) plan and start investing some percentage of your earnings. Keep on increasing the percentage every month. Ideally, you should be putting aside at least 20% of your monthly salary into savings.

  1. Map out the Cash Flow

It may come as a surprise to you that managing cash flow is different from budgeting. Cash flow management involves taking into consideration all sources of income and outflows with focus on long- and short-term planning, whereas budgeting is merely setting spending limits and monitoring the results. Cash flow gives you the bigger picture.

Your cash flow plan should be based on your financial plan. It should consist of these five components: income, taxes, giving (optional), saving and debt (spending). If you want your cash flow plan to be successful, you would have to constantly monitor the progress and tweak the plan if required. Use this basic formula to track your cash flow:


Income at beginning of the period + Total income inflows – Total income outflows = Income at the end of the period.

  1. Pay Off Student Loan Debts Early

As a young physician, you still would have a massive amount of student loan debt. Pay off a major chunk of the high-interest debt early. You can then later make slow and steady monthly payments. This means that you get to save more money. The best time to start paying off your student loan is when you have stashed three months of emergency savings aside.

You may have just started your medical career, but that shouldn’t stop you from planning for the future. You need to inculcate the three habits of successful physicians and implement the four strategies mentioned above to create a balanced financial life.


Rick Pendykoski is the owner of Self Directed Retirement Plans LLC, a retirement planning firm based in Goodyear, AZ. He has over three decades of experience working with investments and retirement planning, and over the last 10 years has turned his focus to self-directed accounts and alternative investments. Rick regularly posts helpful tips and articles on his blog at SD Retirement as well as Business.com, SAP, MoneyForLunch, Biggerpocket, SocialMediaToday and NuWireInvestor.

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