CHAPTER 11

The nuts and bolts of managing your money.

We have tons of financial information and advice tailored specifically to medical residents because we’ve been there (plus we’re finance nerds who feel compelled to share what we’ve learned). But it can start to become overwhelming at some point, and you may be wondering just where to begin.

There are many resources available and different ways of organizing your insurance, investment accounts and budget. We have some favorites that we’ve identified by trial and error. These are not paid endorsements (though we wish they were!) but simply suggestions on resources that we have found helpful.

Below, we’ve included a list of some suggested resources in each of the areas we’ve covered in this book: income and budgeting, life and disability insurance, retirement accounts and investing and other financial topics. These should not be taken as an endorsement of specific products and companies, but as a guide to the attributes you’re looking for in choosing resources.

Consider this a sort of “wrap-up” of the highlights of our advice, and a great checklist to compare your own financial progress and get an idea of what to work on next. (If you’re completely lost and haven’t read any of our other financial advice, consider getting started by checking out our book Advanced Wallet Life Support: How to Resuscitate Your Finances (And Your Sanity) During Medical Training.)

Budgeting / Account Aggregator

1. Make sure you have a way to keep track of all your various accounts (banking, credit cards, loans, etc).
2. Whether manually or automatically, make a monthly budget and try to stick to it.
3. Automated tools can help you create a budget more easily (and keep you in line when you splurge).
4. Watch out for money drains (e.g. $5 Starbucks every morning, frequent takeout, recurring subscriptions).
5. Make sure you use a resource that is secure.
6. Suggested resource: Mint or Personal Capital (for account aggregation), Splitwise (for tracking expenses with a partner or group).

Reward Programs / Credit cards

● This is a tricky game to play and requires that you have good financial discipline. You MUST pay your credit card balance IN FULL every month in order to consider this. One missed payment or interest charge will wipe out all of the benefits you have accrued and more.
● Many credit cards will offer a “sign-up bonus” to sign up for the credit card. They will typically require you to spend a certain amount of money in a specific time frame (anywhere between $500 and $4,000, typically in the first three months). In exchange, they will give you some valuable bonus.
● One of our favorite options is Chase Sapphire Reserve which offers 50,000 point bonus (worth $750), as well as a bunch of great travel benefits (like free TSA Precheck and lounge access). Other offers to consider are the Southwest Credit Card (usually 40-60,000 free points, good for ~$900 in free Southwest flights) and the Chase Sapphire Preferred.
● It is important to make sure that you are not spending more money in an attempt to meet the signup bonus. Obviously, if you are spending more money, you are not saving money!
● Additionally, you must have a good credit score to be accepted for these credit cards, so if you have had some mistakes in the past (e.g. missing a payment), it may be harder for you to be approved for some of these credit cards.

Banks

1. Get the best interest rate you possibly can. Ideally in an FDIC insured account.
2. Make sure the account is fully liquid (i.e. available immediately).
3. If you can, get a bank with free access to ATMs or one that refunds ATM fees. That way, it doesn’t matter much if you’re near a physical branch.
4. If it’s your main bank, make sure you have an app and access to mobile deposits.
5. Suggested resources: SoFi Money (no fees, free ATMs), Citizens Access (no app or checking accounts), Marcus (no app), Ally (free ATM network, app). See NerdWallet.com for the most up-to-date information.

Insurance

1. Life insurance: Make sure you get high-quality term life insurance with a reputable company (i.e. not just the cheapest company). We like Minnesota Life.
2. Disability insurance: In order to get true own-occupation disability insurance, you’ll need to stick with one of the 5 companies that offers it. See Chapter 3 of our aforementioned book.
3. Umbrella insurance: Optional, but if you’re considering it, the best option is usually to combine it with your auto and rental/home insurance and use the same company for all these policies. We like Amica.

Loan Refinancing

1. Try to get the very best rate you can.
2. Choose between 5, 7, 10 and 20-year terms typically.
3. SoFi is a lender with specific products oriented towards medical students, residents and physicians. They offer competitive rates. They also have a hybrid checking/savings account that nets a solid interest rate for you.
4. First Republic Bank offers some of the best rates available. The catch is that they want you as a banking customer. Your loans will be tied to keeping checking accounts with them and maintaining a (big) balance with them. But this can be a pretty sweet deal for you and get you interest rates below anything else offered.

Investment Accounts

1. Make sure you have access to a variety of low-cost index funds, mutual funds and ETFs.
2. Transaction fees for these funds should be ZERO or minimal. That being said, you should be focusing on index funds and not doing any high volume trading.
3. Overall account fees should be ZERO or minimal (i.e. much closer to 0.1% than 1%).
4. Avoid assets under management (AUM) structure, i.e. an annual fee to manage your portfolio (even if it sounds appealing/easy or if the financial “advisor” bought you a steak dinner).
5. We don’t recommend roboadvisers, but to those partial to the concept, there’s Wealthfront, Betterment and SoFi.
6. Suggested resource: Vanguard, Fidelity

Low risk investments

1. These can be an alternate place to stash some savings, emergency fund monies. But don’t put all your investments here, low-risk investments by nature don’t earn much returns.
2. Money Market Accounts (e.g. VMMXX – Prime Money Market, current annualized yield 2.45%, expense ratio, 0.16%)
3. Municipal Bond Funds – low risk government bonds, tax free income
4. Bond funds or ETFs – slower growth rate but lower risk (more typically used to protect assets and guarantee income during retirement).
5. Suggested resource: VMMXX. A respectable ~2.5% return on your savings.

Long term investments / index funds

1. Whole market funds – track the total stock or bond market (e.g. VTI total stock market)
2. Stock or bond ETFs – track a large sector of the stock or bond market (e.g. VOO S&P 500 Index Fund)
3. Balanced target retirement funds – more aggressive the further out retirement is and get more conservative as retirement gets closer (e.g. VFIFX Vanguard 2050 Retirement or VFFVX Vanguard 2055 Retirement)

You got this! For more details about everything listed here, get your hands on a copy of our book Advanced Wallet Life Support: How to Resuscitate Your Finances (And Your Sanity) During Medical Training. You’ll be glad you did!