Shortly after graduating from medical school, individuals need to apply for and complete a residency. This is a type of intensive on the job training in which a future physician works between 3 and 8 years under the supervision of more experienced physicians. As a resident physician, your financial situation can be a little complicated due to lower compensation compared to your more experienced colleagues. In order to successfully complete your residency, it is important to consider a few things before you apply for and accept your new medical residency. This will help you get through this transition more easily and avoid financial hardship.
Table of Contents
Annual Cost Of Living
Whenever you begin your medical residency, it is important to keep in mind the cost of living where you will work. Large cities on the east and west coast are among the most expensive in the nation. So if you get a residency in cities such as Los Angeles, San Francisco, New York or Boston, expect your living expenses to be much higher than other locales in the country. Since your salary will be much lower than what experienced physicians make, it will be very important to evaluate your annual cost of living and find a place that you can comfortably afford to live in.
Income Potential With Specialty
Another factor to consider when beginning your medical residency is the income potential of your chosen specialty. The salary of physicians differs according to the specialty. Surgeons usually make a lot more than primary care physicians. Therefore, you need to consider your earning potential in each specialty and how long it will take to complete it. This will enable you to better determine your ability to stay afloat during your residency. According to rotationsplus.com, you will want to apply for a residency that offers the compensation that you are seeking once you begin practicing independently.
Ability To Pay Back Education Loans
As well as choosing a specialty that provides a sufficient income and the cost of living where you begin your residency, it is also important to consider your ability to pay back your education loans. Completing a medical degree is quite costly and most people need to get loans to finance their education. It is important to make sure that you will have the funds available to make payments on your education loans during your residency and when you become an independent physician. With a clear plan on how to pay back your education loans, you will be less likely to encounter financial difficulties while you complete your medical residency.
Tax Rates
As a medical resident, you are an employee at a hospital or a medical clinic. During your residency you will need to pay taxes on the wages you earn. Therefore, it is important to find out how much money in taxes you will need to pay based on your residency income. Since your salary will be much lower than that of practicing physicians, you will pay less in taxes. However, you will still have to pay a considerable amount of your income in taxes as a resident physician. Therefore, knowing your tax liabilities ahead of time will allow you to budget a lifestyle that is as comfortable and affordable as possible with your take home pay.
Financial Planning Will Help You
With sound financial planning, you will be able to find a way to maintain a good quality of life while preparing for a career in medicine. By considering these factors, you will be in a better position to know your financial situation and can ensure that you avoid potential financial hardship. While working as a resident physician can be stressful due to the low pay and long hours, financial planning will help you better manage your finances during this period of transition.
