Do Residents Have More Money to Spend Than Students?

Daniel J. Egan, MD

Disclosures

September 24, 2009

Question

I have been on a tight budget throughout medical school. When I graduate, will I be less restricted financially during residency?

Response from Daniel J. Egan, MD
Associate Attending Physician, Department of Emergency Medicine, St. Luke's-Roosevelt Hospital Center, New York, NY

In medical school, you essentially have a set amount on which to live. As a student, your school determines the cost of living beyond tuition. Each school is different depending on housing and location. Going through school, it was a strange concept to me that I took out loans for my day-to-day expenses. I received a loan check twice a year, and that amount of money had to last 6 months. It was the beginning of a long life of budgets and attempts at minimizing spending.

Finally, you finish medical school. You sit down with the financial aid department for an exit interview, which may be one of the most depressing experiences of your life if you received financial aid. If you are a lucky student whose family was able to pay for your education, this may not apply to you. However, if you are part of the 80% of students that accrues significant debt in medical school, a lifetime of repayment lies ahead. For most loans, repayment begins after residency when your deferment period ends.

Throughout the United States, most residents' salaries are in the $40,000-$50,000 range, maybe more in the most expensive cities. It is nice to finally receive a paycheck, but how financially liberated you feel may be location dependent. As a resident in Boston, my monthly paycheck was about $3000. Rent was the biggest expense, and 3 years ago, my rent was $1600 a month. That left $1400 to live on each month -- not bad, considering the amount of time I spent at the hospital.

I developed spreadsheets to determine a daily living "allowance" that factored in car insurance, groceries, cable, Internet, etc. A major problem was the desire to go out and do things when not at the hospital. It was easy to drop $100 on an evening out. So, although manageable, my budget certainly was not liberating. If you train in a more suburban area, your cost of living will be completely different. You will likely have a much lower rent, groceries will cost less, and you won't need to use cabs. I suspect that a resident's salary will go much further each month.

All in all, my financial outlook did not seem tremendously different after graduating from student to resident. However, looking back, I accumulated way too much credit card debt during training. A friend had told me that she and her husband used their credit cards as additional loans, and that seemed like good advice at the time because it was challenging to live in Manhattan on a student's budget.

If I could give one piece of advice as you begin this process, it would be to pay attention to your debt. The transition to being an attending may give you the luxury of being able to pay off your debt quickly, but how nice it would have been to use that money toward a down payment on a house as opposed to credit card interest. If I had paid more attention to the amount I spent as opposed to swiping the card so easily, my first year and a half out of residency would have been a very different experience.

In summary, I would just caution you against living your dream lifestyle while you are a resident. It is tempting to splurge and spend a lot of money when you actually have free time outside the hospital. However, if you stick to a budget, make conscious decisions about spending, and monitor your credit cards, you will be in a much better place when you finish.

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