How a Doctor Can Create a Budget That Fits Their Unpredictable Schedule

Photo by Jakub Żerdzicki on Unsplash

As a doctor, you may have faced financial extremes during your career. During school and internship, you lived on whatever savings you had, and now, you’re bringing in a paycheck in one of the highest-paid fields in America.

This discrepancy can make it challenging to create and stick to a budget. You want to enjoy the benefits of the hard work you’ve put in over the years, but you also know the importance of saving for the future. Then, there’s the “keeping up with the Jones’s” issue because doctors are expected to live a certain way.

How can you juggle all of these demands, and work them around a schedule that’s often unpredictable? These tips can help you create a budget that works for any income, no matter how busy you get.

1. Pay Off High-Interest Debt First

Credit card debt is one of the most common expenses in millions of homes across the country, with an average of 8 in 10 Americans owning at least one credit card. But what may be typical isn’t always healthy.

Unless your credit card has a rock-bottom 0% interest rate forever, it’s not financially wise to carry a balance. The interest you pay to the credit card company could be better spent creating an investment portfolio or paying off your student loan debt.

As you develop a budget that works with your current salary and expenses, consider tightening your spending to cover paying off all credit cards and other high interest debt as quickly as possible.

2.  Follow an Effective Budget Strategy

Are you trying to develop a budget by throwing spaghetti against the wall and seeing what sticks? Not only are you wasting valuable time, but you’re also likely losing money while you adjust your budget month after month as you notice things aren’t working.

Instead, look for already-designed, effective budgeting strategies, like the 50/30/20 rule.

Following the 50/30/20 Rule

This strategy focuses on creating three buckets in which to place your after-tax income: Needs, Wants, and Savings/Investments.

If you follow this strategy, you’ll first create a list of all the must-have expenses in your life, such as mortgage/rent, utilities, groceries, auto loans, and healthcare. Include the minimum payments for all of your debts as part of the “need” category.

The “want” category is a wishlist of all the things you’d like to have but don’t need. This list is for those splurges, like vacations, electronics, and anything that you can enjoy with your hard-earned money. Within the “wants” bucket, you’ll place 30% of your income.

The final category is where you incorporate savings and anything that improves your financial future, such as paying off the debt we discussed in the previous step.

Taking 20% of your income and putting it toward your credit cards and other interest-bearing debt may look like baby steps right now, but as soon as those bills are paid, you can start building an emergency nest egg. After that nest egg is funded, you can take 20% of your income and apply it to investments.

3. Include Asset Protection in Your Budget

The last piece of your budget is one of the most vital, non-negotiable financial aspects: asset protection. This part includes setting your wealth up to be safe from market disruption, creditors, lawsuits, and anything that might come between you and your money.

Asset protection looks different for everyone, but as a physician, it might start with creating an LLC to separate your business and personal accounts. It likely includes malpractice and disability insurance, as well as coverage for the future in the form of life insurance. For more information on how an asset protection trust may help you and how to plan for preventative ways to keep your money safe, read this article by OJM Group.

Setting up barriers between your wealth and those who would take it from you doesn’t take long. It can be done within the pockets of your unpredictable schedule and then included in your monthly budget.

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Conclusion

Budgets, like your schedule, don’t have to be overly complicated. The trick to developing them is to know your focus, use effective strategies (instead of guessing), and then include protection for emergencies that might crop up. With these three steps in place, you can get back to spending your time on things that matter most, like helping others get their health back on track.