Whether you’re a new doctor or are still in medical school, you should be thinking about how to use your money now.
You’ll likely still be paying off school once you get a job. Even so, hopefully, you’ll get the income you want. And if you do, you can come up with a plan on how to use it wisely.
For example, you should know how to invest and save it for the future. Keeping your credit cards paid off is another habit you should form.
If you’d like to start planning now (we recommend you do!), here are five effective money moves to make!
1. Get Disability Insurance
Even though you’re a doctor, that doesn’t mean doctors don’t get sick! What if you were to get hit with a health issue, and you weren’t able to work?
If that were to happen, it’d be nice to have disability insurance to keep you afloat while you recover.
This type of insurance would pay your income if you were to get seriously ill. A few disabilities that count are having a heart attack or getting cancer.
If you’re younger, it’s best to get it now while you still qualify. There are many disability insurance companies to choose from. So start doing your research now!
2. Invest Your Money
Investments have an endless amount of benefits. They help you grow your money and offer extended returns in the long run.
And even though you should set up a separate retirement fund (more on this next), it’s still a good idea to invest.
Investments can help you pay for your children’s tuition or buy a home. While it’s good thinking to let it grow, you can still use it for essential purchases. Besides, buying a home is an excellent investment in and of itself!
If you’re unsure of how to invest your money, consider hiring a financial advisor.
3. Save for Retirement
Besides investing your money, you should also save for retirement. Retirement accounts such as 401(k)s and IRAs are an incentive to save for retirement.
Tax-deferred savings for when you retire is ideal. In an IRA, since it’s an account, you can put whatever investments you want in there. Stocks, cash, bonds, and mutual bonds, are all adequate to have in your IRA.
You might be thinking that you don’t need to save for retirement. Your investments are doing that for you, right?
But having a Roth IRA, for example, has its advantages. Use an IRA as non-taxable long-term savings for your retirement. If you consistently save, you’ll have a nice nest egg when you retire!
4. Donate Extra Money to a Charity
If you have more money than you know what to do with, donate some of it to a charity. And even if your salary isn’t where you want it to be, you can still donate to an organization. Every little bit helps!
Donating to causes that hold a special place in your heart benefits charities. And not only that, it’s rewarding for you as well, knowing you’re doing something to help others.
Donating, of course, is for the good of humanity, but there’s another benefit. If a charitable organization qualifies, the donation is tax-exempt!
5. Pay off Your Credit Cards
Putting purchases on credit cards certainly is convenient. But even if you’re making a lot of money, that doesn’t mean you should use credit cards.
You may feel tempted not to pay them off because it’s not a concern with your income.
Some credit card companies try to lure you over with points you can gain. Trading in your points for a juicy reward is fun, but not at the expense of your credit.
Having too much money on your credit cards can result in your credit score decreasing over time.
The credit bureau calculates your credit score based on specific criteria. Two of the largest criteria are payment history (35%) and the amount owed (30%).
So, as you can see, you should make it a priority to pay off your credit cards. Not only pay them by the due date but also pay them off in full each month. Your credit score depends on it.
Plus, it should be a habit of yours to stay out of debt!
If you’re a student or new doctor, investing and saving your money is probably the last thing on your mind.
You may be buried in student debt, and if that’s the case, you’re anxious to pay it off.
When you reach a point where you can start saving, it’s time for you to make some smart money moves. Only then will you set yourself up for a profitable future and use your salary wisely!