Managing debt and building wealth go hand in hand. Building wealth requires saving, investing, and making smart financial decisions. With excessive amounts of debt looming, that can be difficult to do.
Debt is something that many people struggle with, including high income earning physicians. But there are some things you can start doing today that will help you live a more financially secure lifestyle.
Here are five ways that physicians can manage debt and build wealth throughout their career.
Look Into Student Loan Repayment Options
For new physicians, student loan debt can seem insurmountable. Hefty monthly loan payments can make it difficult to save money, lead you to make more purchases on credit cards, and make the idea of home ownership seem like a distant dream.
As of September 2023, the average medical school graduate owed $202,453 in med school student loan debt, and that doesn’t even include carryover debt from their undergraduate years. It’s a huge hole to dig out from, especially as a resident earning around $60,000.
To better manage student loan debt, look into income-driven repayment programs. If you work for the government, for a nonprofit, or in a rural area, there are also student loan forgiveness programs available that you might qualify for.
The quicker you can rid yourself of student loan debt, the more money you’ll have to start saving, investing, and building wealth.
Eliminate Credit Card Debt as Quickly as Possible
Like student loans, it’s important to pay off credit card debt as quickly as possible. Credit cards can carry high interest rates, and the higher the balance owed, the more money you’ll pay (and waste) in interest.
The best way to eliminate credit card debt is to pay as much as you possibly can above the monthly minimum payment required. While it can be difficult to do so, that might require you to live far below your means and eliminate all unnecessary spending.
Just keep the big picture in mind. Once that debt is paid off, it’ll be that much easier to start building wealth and living the “doctor” lifestyle you’ve always wanted.
Purchase Your First Home with a Physician Mortgage
Renting won’t help you build wealth. Every monthly rent payment you make pays off someone else’s mortgage or goes directly into the landlord’s pocket.
Home ownership can help you build lifelong wealth. Real estate is one of the best investments you can make. Stock investments tend to net higher annual gains, but real estate typically appreciates in value over time, making it a safer long-term investment.
The physician mortgage offers healthcare professionals a unique opportunity to purchase a home without having to save the traditional 20% down payment. Physician mortgages require low (and sometimes zero) down payments, allowing you to get into the real estate market early on in your career.
This article from LeverageRx dives deep into what the physician mortgage is all about, including who qualifies and which loan lenders to consider.
Spend and Invest Wisely
No matter how much you earn each year, it’s important to create a budget and be smart about how you spend your money. The less you spend, the more you can save, and the more you can save, the more you can invest.
Financial experts agree that you should never put all your money into one investment vehicle. It’s always better to have a diversified portfolio with investments in various vehicles such as:
- Stocks
- Real estate
- Bonds
- Index funds
- Money market funds
Some people think it’s wiser to save cash in the bank rather than make potentially risky investments, but it’s not. While all investments carry some level of risk, saving cash isn’t the best approach either. With inflation, every dollar you put in the bank today will be worth less tomorrow.
Protect Your Income and Assets with Essential Insurance Policies
Having a steady stream of income is key to building wealth, as is protecting the assets that you’ve already acquired.
You can do both by investing in disability insurance, malpractice insurance, and life insurance.
Anjali is the owner of the https://indiacsr.in/ , https://businessnewsthisweek.com/ and https://www.digitalsmagazine.com/ website. Her creative ideas, passion, and enthusiasm can be seen in her articles. Keep in touch with her for more interesting and helpful articles…….
