Saving up during residency

by Francis Lee Hok, MD

                  Most residents earn between 20,000 to 40,000 pesos depending on where they do their residency. Given the stress load each receives during residency, saving up is not in anyone’s priority. Most of the monthly stipend is spent on food, coffee, gadgets, night-outs or essentials such as utilities, gas, and load, basically anything that makes life a little happier and more bearable. But saving up should be in every resident’s priority. You need to build a healthy buffer of cash post residency may it be for fellowship application, getting married, starting a family, or starting a practice.

                  For those residents getting 40k or more, saving half or around 20k a month should be a walk in the park and very doable. Saving 20k a month adds up to 240k a year, and 720k in 3 years.  For those with a very strong sense of financial discipline, saving the 13th month pay on its entirety easily adds 120k to your fund.  Those earning 20k a month would find it a bit more difficult to save but saving 5k to 10k a month is still doable.

                  Being a married senior resident who gets 20k a month as his monthly stipend,  I automatically transfer 10k to our family account. That is my 50% contribution to my marital finances.  I am left with a 10k budget to work with every month. Save up when you’re still single, it would be doubly hard to do so once you’re married.

                  First step is to protect your money against yourself. You are your money’s greatest enemy.  Setup a different account from your residency ATM account. Once your monthly stipend arrives, immediately transfer 50% of it (or your predetermined amount) to your savings or checking account.  That way you put distance between you and your money. The remaining cash in your ATM account is now for you to budget and live by for the month.  The money you saved in your savings accont can therefore be deployed for investments such as bonds, dividend yielding stocks, or blue chip stocks which gives you more bang for your buck. Don’t forget to allot money for your buffer. Buffer money is usually 6 months worth of living expenses. The rest, you can now deploy in financial instruments that can produce growth.

                  Saving during residency is not optional. It is required. After residency, this monthly source of income suddenly dries up. You won’t know how fast you would be able to replace this, thus you need a healthy buffer. Start saving!

About The Author

Francis is currently a second year resident at St. Luke’s Medical Center. He is a graduate of the pioneer batch of Ateneo School of Medicine and Public Health. He strongly believes that your money should be the one working for you and not the other way around.