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By Francis Bayes, WCI Columnist
This column is a guide for various financial decisions that one may face as a medical student or resident. But this column is NOT about how one should be as thrifty as possible. A trainee can–dare I say–splurge on themself as long as the splurge is relevant and timely.
The journey to financial independence will not necessarily be set back by a splurge here and there during training, because a trainee’s frugal spending habit tends to be circ*mstantial, not hard-wired. But once an attending's salary removes the safety gate, one may forget about their budget and sprint toward an Instagrammable vacation spot, a new car dealership, or a cul-de-sac neighborhood. A common explanation for such behavior is the build-up of resentment or envy as a result of financial deprivation. That behavior could be what gets you in trouble.
A new attending physician may be less likely to jump out of the gate if they have had an occasional experience or purchase that is “good enough” during their training. If, for years, I did not have some of my favorite Asian foods like banh mi or wonton noodles, I would be the most patient person who could wait in line for hours. But living in a cosmopolitan city in the Northeast, I have had a steady supply of Asian food; now, if the line is too long, I look for alternatives. In order to live like a resident as an attending, the resident lifestyle has to be somewhat acceptable. One has to wait for the “best of the best” and refuse to conform to cultural norms, but at the same time, one should splurge every once in a while.
Here are some questions that I've thought about for how to and how not to splurge in these areas.
What Should I Do with a Cash Gift from a Relative?
Don’t buy: income-producing assets
This is a common question on the WCI forum or Reddit. Regardless of the amount, the wrong answer is buying income-producing assets, such as stocks and bonds (or God-forbid, crypto!), BEFORE one “buys” other things.
Sure, if you buy VTSAX with a $100,000 gift when you start medical school at age 22, you might have more than $1 million after 30 years depending on your assumptions. But you may be better off financially and emotionally with any of the decisions below. For example, by paying your tuition, you lock in a guaranteed annual return of >= 5%. Imagine if you bought VTSAX in 2021 and had only $75,000 in your brokerage account at the end of 2022. You would not be reminding yourself of the $1 million that you would have 30 years later. You would be stressed about the thousands of dollars that you could have saved by taking out fewer student loans–on top of the stress of learning management of hyponatremia.
Do buy: peace of mind, rest, more peace of mind, and future fun, in that order.
The table below should be interpreted like a tax bracket. If you receive $50,000 in cash—after you pay off any credit card debt—the first $1,000 should fund your vacation, the next $10,000-$20,000 should be your emergency fund, and the remaining amount should pay for your wedding or tuition/student loans.
How Should I Budget for My Wedding?
Don’t have: (1) multiple groomsmen/bridesmaids; (2) a destination bachelor/bachelorette weekend.
This is a column for a personal finance site, so you should not be surprised by a countercultural answer. I can attest based on personal experience that all one needs is one person standing next to each partner to hold their flowers or rings (so, two total). No need to ask others to buy attire that they might never wear again and to take a day or two off so that they can attend the rehearsal dinner (which is expensive). No one should be offended that they are not part of your wedding party. No one attending your wedding thinks any better of you because you have a big wedding party. Save some money for yourself and your friends and families.
Also, have we talked about how you are worse than broke? You do not need a honeymoon AND a destination bachelor/bachelorette weekend (e.g., Nashville, New Orleans, Las Vegas). Cut the latter and improve the former. If you want to have one lasting memory with your closest friends as an unmarried person, you can ask them to come to you and spend the weekend at a nearby vacation rental. You can listen to Taylor Swift anywhere.
Do have: (1) a good photographer and/or make-up artist/hair stylist; (2) pre- and/or post-marital counseling.
Do not skimp on finding a good photographer for your wedding. Your wedding food is unlikely to be as good as the food at your tasting. But you should ensure that your photographer and make-up artist/hair stylist will be as good as they advertise online. You should pay extra to have a trial with them if possible. You will look back at your wedding photos and videos, and if they are good, you will not remember how much they cost.
Moreover, for my wife and me, pre-marital counseling sessions bolstered our trust in each other and our confidence about our marriage. Perhaps this advice is more relevant for those of us who follow a more “traditional” path to marriage (e.g., no cohabitation prior to marriage). But even those in religious communities seek pre-marital counseling from their religious leader who did not have extensive marriage counseling training. Having a few sessions with a specialized marriage counselor before saying the vows can pay dividends throughout marriage. The sessions can help improve a couple’s communication, increase their awareness of the impact of their family history and upbringing, and identify ways to work together on their shared or individual priorities.
Which Electronics Should I Buy During My Training?
Don’t buy: big, expensive electronic devices
After pre-clinical years (i.e., MS1-2), we spend most of our time in the hospital where we have to use hospital computers. Little computing power is necessary to study for medical school and board exams. If your laptop has poor battery performance, you can replace the battery to extend the life of your laptop (and even speed it up). For example, a battery replacement for a Macbook costs $129 at an Apple store and even less if you want to do it yourself. If you want to watch TV shows or movies on a bigger screen than a smartphone, buy a heavily discounted laptop, monitor screen, or TV on Black Friday or an online marketplace. When you move after medical school or residency (or start living with a partner), one of the biggest headaches is going to be keeping vs. selling/giving away your TV.
Do buy: a refurbished smartphone
You will be on your phone on the toilet after waking up at 5am. You will do research on your phone before presenting to your team. You will take photos with your phone to send to your resident or attending. You will play games, watch TikTok videos, or browse Reddit on your phone while you wait for your patient in the operating room. You will use your phone to study, whether with flashcards, videos, or podcasts. By the end of the day, you will be too tired to cook, so you will order something on your phone.
You will use your smartphone all day. Stressing about typing on a broken screen or finding a way to charge your phone is not worth your precious time or energy. You can consider fixing it or replacing its battery. Or you can splurge on a refurbished phone from resellers like Backmarket.com.
On Backmarket, you can buy phones in different conditions in terms of both appearance and durability: fair, good, and excellent. The price difference between fair and excellent is usually within $100. Battery health might not be 100% of its original capacity, but even after you later replace the battery, it will still cost you less than buying the phone at its retail price.
Should I Buy a House During Medical School/Residency?
Don’t buy: a house
Many columns and threads have sought to convince medical students and residents not to buy a house. But new threads continue to pop up. I am not going to try here.
Do buy: a shorter commute (or distance to “fun”)
Sometimes, a long commute might be necessary if your significant other also commutes or if you are living with your family. But if you do not have such geographic constraints, is a long commute after a call day or night shift worth the money you save in rent? Various studies show that long, stressful commutes decrease your life satisfaction and have a negative impact on your work. Paying more in rent to live closer to your hospital(s) might be a worthwhile splurge for your well-being.
A long commute also becomes complicated if you commute by car. Whether or not you drive a beater, your car might not be available for an extended period at some point in your training. A shorter commute gives you the flexibility to (1) take a rideshare while your car is not available, or (2) be dropped off/picked up by your significant other or colleague.
You might consider a long commute because you want to live closer to a trendy neighborhood or your ethnic community, especially if the rent is cheaper. But as a medical student and resident, time is your most precious resource. You should save the long commute for your day off when you can enjoy your time in such desirable neighborhoods. If you are too exhausted after a long commute, you cannot reap the benefits of living close to the neighborhood, anyway.
Should I Buy a Latte?
Focus on the questions that are worth thousands of dollars (like above). Buying caramel macchiato lattes every morning is an issue only if it is part of a broader spending problem. But don’t feel guilty about rewarding yourself with a latte after you saved some lives during a long shift–especially if you have already splurged on your future with appropriate insurance and adequate savings.
What do you think? What other aspects of your life should you splurge on? Where should you be thriftier? Comment below!
