The learning of a medical professional starts right from school and goes on for years to come till they finally become a specialist in their chosen medical field. However, with the knowledge of the human body and medical science, it is also necessary to become financially literate. While medical knowledge will assist in building a good career, financial knowledge will help in managing the finances to success.
Financial literacy is an inevitable part of everyone and cannot be taken for granted. This is further true for students who have taken student debt to pay for their medical education. In this article, we will look at the challenges faced in managing student debt for doctors, effective physician investment strategies and how financial literacy for medical professionals can help.
Challenges in money management for medical professionals
Medical education can dig a huge hole in the pocket with the long study tenure as well as costly fees. The challenges of medical education get doubled as soon as the word student loan enters the life of an aspiring medical professional.
Additionally, medical students are often unable to indulge in side income sources due to their heavy workload which adds to their loan burden. The cost of living also adds up to the total cost of education and living for the years of education.
All these challenges together make financial literacy a crucial part of all medical professionals functioning on a budget.
As a result, it is crucial to manage the initial years as well as post-education and save a decent amount by having a strong financial foundation for the future.
Also read: The essence of financial education in schools – All you need to know!
Strategies for managing medical student debts and investments
There are a range of strategies that can assist in student loan management for physicians. These include:
- Pay loan during residency
Medical debts usually accrue interest during the residency period and begin repayment six months after graduation. While this is the normal way of doing things, it is recommended to begin paying the loan during residency itself to cut down on the interest significantly.
This can be done by living on a budget during the residency and transferring all the remaining funds to the repayment of the loan. Despite the amount being small, it will help in cutting down on the repayment and accumulated interest amount later. This helps in wealth building for doctors.
- Refinance the loan
Check for opportunities to refinance your loan if you can find options at a relatively low rate of interest. This can be the ideal scenario to cut down on interest costs. This option can be availed during residency as well as when you begin practising.
Some of your benefits might be cut down in the process of refinancing, but it is a great financial opportunity to save money and pay back your loan depending on your convenience.
- Monitor your credit score
Having a good credit score at all times is extremely important. It helps keep you safe to avail of loans in the future at a minimal interest rate.
Further, you must avoid accumulating credit card debt as it can impact your credit score and damage your prospects of saving.
- Seek help from financial advisors
Financial advice about managing the current student debt and avoiding indebtedness in the future is very important. You can use financial advice to invest money in different funds or refinance your student debt.
Speaking with professionals can provide you with a tailor-made solution depending on your circumstances and future requirements.
- Cut expenses during your residency life
Living with minimal expenses is natural during residency life. However, one of the most effective strategies for financial management for medical professionals is to cut down expenses. If you can live on minimal expenses for a few more years while practising, you will have enough to save and invest for your future.
It will help you make extra payments faster, repay the loan, and build a secure fund all at once. A few years of struggles will benefit from saving interest payments and securing the future.
- Build an investment fund
It is advisable to always have an emergency fund in place to meet unexpected expenses and promote wealth-building for doctors. This fund can be divided into liquid savings and investments based on your individual preferences. It can also act as a supporting fund in case you want to open up your clinic and need resources.
These investments for healthcare professionals will keep you on the go without having to depend on taking loans once again.
- Pool in resources for retirement
Another tip in financial literacy for medical professionals is to pool resources for retirement funds right from the beginning. This will benefit enormously with the applicability of compound interest and the sum growing in decades.
It also provides a safety net for the future in days when there will be no source of regular income. Lastly, this fund also helps with tax saving for later periods when you will begin practising.
These strategies can assist in financial planning for healthcare practitioners and ensure a stable and financially secure future.
By following the aforementioned strategies, managing student debt and investments can become a no-brainer with sufficient wealth being accumulated. This will ensure that the past is recovered, the present successful, and the future profitable for all medical professionals. The sooner you understand the intricacies of Financial Literacy for Medical Professionals the better.
Also read: Decoding finance: A millennial’s guide to money management
Summing up
Financial Literacy for Medical Professionals is crucial due to the expensive and long education tenure. This is why an integral part of medical professionals’ financial education is debt management for medical graduates. Further, financial management is important in the initial years to repay student debt fast and in the later years to aptly manage the funds and optimise savings and gains. For more, subscribe to StockGro!
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