Leaning into Family Life as a Physician Mom: Optimizing Finances
In my previous post, I shared my reflections on embracing motherhood and how that has shifted my relationship with my work identity. As I navigate considerations of leaving the work force, one question looms: Can our family afford losing my financial contribution? Very early on in the consideration to pull back to part-time work (or less), you have to take an honest look at your family’s financial situation and make changes if necessary. This is easier said than done. Many of you may be the breadwinner, or simply cannot afford to not contribute financially to the family. Here are some ways our family has optimized our finances as we navigate possible career changes.
As background, my parents were quite frugal and passed along that framework for money from when I was young. As a result, it was engrained in me to live below my means, save money and minimize debt. Even so, I learned many other important principles from financial blogs that I read during my medical training and early on in practice. Just a few examples are the White Coat Investor, Physician on FIRE, Passive Income MD, WealthyMom MD. (The ones I gravitated toward were geared toward physicians, so those are the ones I have linked to).
The basic principles are:
1) save wisely and aggressively
2) live below your means
3) pay off debt
4) maximize your income, including with side gigs
1. Save Aggressively: My husband and I have independently been aggressive savers even since medical school.
a. First, we maximized our tax-free retirement savings. Make sure you are contributing to your 401 (k) or 403(b). We contributed to our 403(b) retirement accounts even as residents! The money is taken out directly out of your paycheck to grow tax-free in this account and you won’t even miss it. A few years into practice, we realized my husband also qualified for a 457 plan where additional money can grow tax-free.
b. Contribute to a Roth IRA. A Roth IRA is a special individual retirement account (IRA) where you pay taxes on money going into your account, and then all future withdrawals are tax free. We contributed to our Roth IRAs in residency (maximum contributed was $6,000 in 2022). You are ineligible to contribute to a Roth IRA if your income is above a certain threshold. For example, in 2023, a modified adjusted gross income of $228,000 for a couple filing jointly, or $153,000 for an individual makes you ineligible to contribute to a Roth IRA. Many physicians are excluded from being able to contribute to a Roth IRA, but there are So, when my husband and I graduated from fellowship, we learned about the Back Door Roth (more tips here).
c. Lastly, save whatever you can (10% is still something!) into a savings account, by direct deposit if possible, so you never even see the money or are tempted to spend it. Increase the percentage you save as you are able, if or when your salary increases.
2. Live below your means.
We “lived like residents” after becoming attendings, particularly the years before having children, and even when we only had one child. We didn’t splurge on a car (we live in a city with easily accessible public transportation). My husband and I did not upgrade our apartment (it is a high cost of living city). Our family even stayed in a one-bedroom apartment even after our first child was born, not moving to a 2 bedroom apartment until I was pregnant with our second child.
This is a very personal decision which includes examining your priorities, health and other aspects of your well-being. But for us, there was very little sacrifice in forgoing many of the luxuries of now, at least in the period before children and early on in child-rearing.
3. Pay off your debt.
Student loans are the bane of our existence, especially for those of us who had to go to graduate school. For medical school graduates, we also have the added hit of missed income while we are in medical school and residency while our fellow 20-somethings are already generating income and contributing to their retirement funds. In order to optimize our finances, we need to eliminate our debt.
I paid my medical school debt faithfully and accumulated a lower interest rate by paying automatically and on-time for 36 consecutive months. In 2022, I applied for the new PSLF waiver and anticipate the remainder of my education loans be forgiven soon! I know of people who have had up to $500,000 of student loan debt forgiven, which is a total life changer!
4. Maximize your earnings
The last step in optimizing your finances to prepare for a career pivot is to maximize your earnings.
a. Examine your current job position. Are you being fairly compensated? Is it time to ask for a raise or promotion? While this is more difficult to do in medicine than it may be in other fields, a book called “Never Split the Difference: Negotiating as if Your Life Depended on It” is a must-read. Especially for physicians I know, we tend to be passive and accept the status quo when it comes to being compensated for the hard work we do. This book is both inspiring and provides practical tools to enter your next negotiation.
b. Side gigs and passive income. For the last 5 years, I have dipped my toe in dreaming about ways to make money on the side to supplement my current income and allow more freedom for me to lean into family life. It has opened my mind to the possibilities of what a career in medicine can be outside of patient care. There are options to invest in real estate, real estate syndicates, consulting and medical writing and much more. This article is a quick peek (beware it can lead down a rabbit hole!) into the possibilities.
I hope this framework is helpful in guiding your next steps as you optimize your finances in saving, generating income and positioning you and your family for the next chapter, whatever that may be!
Related posts:
What I Wish I Knew About a Career In Medicine: What is a Healthy Work Mindset?
4 comments
Comments are closed.