You have worked like a dog through your undergraduate years, medical school, residency and perhaps fellowship to reach your professional apex as a working physician. Finally you get your first check, and it has more zeroes at the end than any document you’ve seen short of your student debt statement.
One friend from your study group who has the same crushing student debt that you do cashes her first check to finance the latest model BMW. Another friend celebrates his engagement to long-term shmoopy by taking out a gargantuan loan to buy a dream castle in the suburbs. There’s a huge yard, room for a pool, and so many bedrooms for presumed future children that your friend may never use a condom again.
Everyone, it seems, is using that new money to conspicuously announce that they have finally arrived. All are at long last ready to stop deferring the doctor’s lifestyle you all dreamed of over cups of ramen near the all night study rooms during med school. The temptation is huge to do the same…
But you are no chump. You take a moment to remember those pursuits that give you pleasure out of proportion. After realizing that riding your bike, reading books from the nearby library, increasing your cooking repertoire of fresh meals to share with friends and spending time with family are the things that make you happiest, you realize no house or fancy car is going to make you substantially more happy. You decide to treat yourself to weekly guitar lessons and buy a used acoustic guitar from craigslist. As for the remainder of that check, you put your cash to work. Saving 50-70% of your take-home savings will buy you freedom from needing to work and the accompanying luxury of F-You money. Resist the temptation. Dare to live the unconventional life.
(White Coat Investor had this to say about living like a resident in 2011. I agree, but advise a much higher savings rate to hit financial independence sooner.)
Financial Literacy for The Newly Minted Physician