CHAPTER 1

The post-medical school world is a complex and confusing one, and the financial side? Downright daunting. From yearly residency salaries paid to you by the government (wait, you mean the hospital I eat, sleep, and breathe in doesn’t pay me? Nope!) to the monumental student loans you have likely just started getting payment reminders about, your wallet could absolutely use some life-saving measures.

The first step is to get a solid footing in the basics of personal finance as they pertain directly to you, a medical school graduate and shiny-new resident! You are finally bringing some money in the door rather than hemorrhaging it all semester long in tuition payments and medical textbooks. So how do you determine exactly how much is coming in, and what you should be doing with it? (Hint: a shiny new car paid for in cash as a graduation present to yourself is probably not in the cards.)

Since we don’t know the exact dollar amount you are making (because it varies from city to city, and will likely increase over time), we are doing our calculations based on the national average for resident salaries in 2018: $59,300. This means your pre-tax monthly salary would be $4,942.

And then comes the deductions. Not to burst your bubble, but you will likely be seeing just a fraction of your pre-tax salary due to the following deductions that will come out of your monthly check.

1. Federal Income Tax: The government will take a percentage of your check based on your income tax bracket. As a resident, you will likely pay between 16-18% of your salary in federal income tax.
2. Social Security: Though this is a 12.4% deduction, your employer will pay half, so this will result in a 6.2% deduction.
3. State Income Tax: Your income is taxed based on where you earn it. This varies from 0%-13% depending on where you live.
4. Medicare: This is the final deduction from your paycheck, which like social security is a 50/50 contribution from your employer, so it will deduct 1.45% from your check.

So about 30% of your check will be deducted in taxes, leaving you with $3,460.

But that’s not where it ends! There’s still benefits to discuss. For that, you’ll have to check out Chapter 1 of our book, Advanced Wallet Life Support: How to Resuscitate Your Finances (And Your Sanity) During Medical Training.