Planning can help aspiring doctors with finances

March is an eventful month in the world of healthcare. There are observances for appreciating the professionals that help keep us healthy like Doctor’s Day and Dentist Day. There’s also Match Day, the day that medical students learn where they’ll be going for residency, the final phase of their long journey toward becoming independently practicing professionals.

In the Springfield area, healthcare entities are among the region’s top 20 employers. That means we have many medical professionals to appreciate and that on Match Day, graduates from around the country could be learning they’ll be moving to our thriving community to start their careers. Some of our University of Missouri Medical School grads will be learning if they’re staying here or moving away.

According to the university, 31% of 2023 graduates stayed in Springfield for residency and 44% remained in Missouri. This group of aspiring professionals faces unique challenges that make financial planning during this period very important.

Many medical students aspire to achieve financial stability, save for retirement, and build wealth over time. However, the burden of college and medical school debt combined with modest salaries during residency can delay these aspirations significantly, requiring disciplined budgeting and strategic financial decisions.

In response, some banks, including Arvest, have created products tailored to meet the needs of this community. Each bank’s products may vary but at Arvest we provide loans using income before the actual start date by utilizing a contract from a healthcare organization as opposed to needing to have a pay stub showing historical pay. This could give a person a 60- to 120-day jump start on deciding to purchase or rent before they begin focusing on the next chapter of their career.

Many residents choose to rent and live with roommates until they move to attending physician status. But even with interest rates in the 8% range after the Federal Reserve raised them throughout 2023 to curb inflation, buying may be the best option because rates may drop, and the buyer may be able to refinance to a lower rate.

The transition from residency to attending physician status, where salaries typically increase substantially, brings its own financial adjustments and planning considerations. As residents transition into more lucrative positions, managing newfound incomes wisely becomes paramount to achieving financial goals while avoiding lifestyle inflation and further debt accumulation.

At this stage in their careers, these medical professionals are what we in the financial services industry refer to as H.E.N.R.Y.s or High Earning Not Rich

Yet people. The more we earn, the more we spend, and these habits can often result in H.EN.R.Y.s living beyond their means at the detriment of creating a savings plan that could be accessible during a financial emergency or shifts in the economy because they are unlikely to have a savings safety net after residency.

The period between graduation and the completion of residency poses distinct financial challenges for medical residents. From managing substantial student loan debt to navigating modest resident salaries, careful financial planning and prudent decision-making are essential to weathering this transitional phase successfully. By prioritizing financial literacy and adopting proactive strategies, medical school graduates can pave the way toward a secure financial future as they embark on their careers in healthcare.

Rhonda Sorensen is a private banking manager at Arvest in Springfield. She may be reached at rsorensen@arvest.com.