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Everything You Need to Have In A Doctor's Budget


Budgets are something that most people use to control their spending and manage the flow of their money. That includes doctors and other high earners. After all, when you have more money it is hardly the time to stop paying attention. Here’s everything you need to know about making a budget as a doctor. 

Why a Budget For Physicians Is So Important

Yes, doctors, on average, make a generous salary. Does that mean they’re immune to financial troubles? Not at all. Many doctors have mortgages, car payments, and a lot of student loans. Without a budget, spending can quickly get out of hand and the bills you need to pay end up taking a back seat. 

Budgeting, on the other hand, helps you make sure necessities and savings goals take priority over frivolous spending. Budgeting early on in your career can help you learn how to manage your money as your salary increases. 

Behavior and Budgets: How They Impact One Another

Money is tied to emotions whether we want to believe it or not. Chances are, if you were constantly exposed to negative spending habits early on, you’ll continue to have them into adulthood. The opposite is also true. Those who learned early on about how creating financial plans can lead to financial success often carry that forward into their own lives. 

Not everything is tied to what you saw family and friends do, though. You can make active changes to your financial life that can better your future. Plus, there are a lot more options than just spreadsheets and calculators (still a very good budgeting method). Having a budget has gotten significantly easier. From budgeting apps to simple methods like the 50-30-20 method

First Things First: Analyze Your Spending

Before diving headfirst into making a budget, you need to see where you stand. Spend a month tracking your spending can help you understand what you are actually spending your money on. So don’t change anything during the first month, just record. 

From there, you can start to come up with a plan. Break up your spending into necessities (mortgage/rent, utilities, car payments, etc.) and wants (eating out, subscriptions, etc.). Take into consideration your income. Does it surpass your spending? If it does or gets close to it, you’ll need to make some adjustments. If need be, cancel unnecessary subscriptions, cut down on your eating out, or take any other necessary actions to lower your highest spending categories. 

What Should a Doctor’s Budget Include?

A doctor’s budget needs to include the usual categories that any budget needs, with a few add-ons that should be considered necessities. Make sure your budget includes the following:

  • Necessities like mortgage/rent, utilities, food, gas, etc  – This will make up the bare bones of your budget and will likely be your highest spending categories.
  • Savings goals like retirement – After your basic necessities have been met, prioritize your savings goals next. 
  • Disability insurance – For doctors who have a high income, suddenly losing it because of an injury can be disastrous. Having a disability insurance policy can help replace that income, should anything happen. 
  • Life insurance – Again, your salary goes a long way in supporting your family. If you pass away, your family will suddenly have to go without that salary. Life insurance pays out a significant chunk to cover this lost income. 
  • Car insurance – Anyone that drives will need to have car insurance since it’s required in nearly every state. 
  • Homeowners insurance – There are a lot of insurance products that doctors need, and homeowners insurance is another one if you own your own home. 
  • Health insurance – Health insurance is one of the final products that’s a must. Luckily, many doctors who work for hospitals or clinics can get affordable insurance through work. 
  • Car payments – In addition to car insurance, you’ll need to factor in your monthly car payment into your budget. 
  • Subscriptions – Subscriptions like streaming services and food delivery have become a common category in every budget, and these services can add up, so make sure you’re accounting for them. 
  • Miscellaneous spending – The unknown spending you might do in a month should be a line in your budget since you should be saving for this regularly. 

Your household may have other expenses you should consider as well. Anything you spend money on regular or irregular expenses should be worked into your budget. 

Budgeting Apps To Consider

There are dozens of budgeting apps to choose from. For busy doctors who don’t necessarily have the time to dedicate hours to their budgets each month, apps can help you track your spending and savings habits. A few to consider include:

  • Mint – Mint is the grandfather of budgeting apps. You can link all of your accounts from credit cards to investments to bills and see everything at a glance. 
  • Tiller – If you’re a fan of spreadsheets, but hate making them, Tiller can do that for you. You can connect all your financial accounts and Tiller will make you a customized template to keep track of your budget. 
  • YNAB – YNAB has almost a cult-like following, but for good reason. For those who do want to be somewhat involved in their budget, YNAB gives you an easy way to see all of your spending. You’ll give every single dollar you earn a job so none of your money is wasted. 

What To Do After You Budget?

Budgeting is just the start of managing your finances. After you’ve got your budget down to a science, it’s time to jump into the next steps. 

Set up a sinking fund

Once you’ve taken care of your bare-bones budget, adding savings goals into the mix should be your next goal. A sinking fund is a chunk of money you automatically set aside each month, typically in a savings account, to pay for any future goals. This could be buying a home, paying off your medical student loan debt, or retiring early, for example. 

Automatize your retirement savings

Doctors are in a very good position to start saving for retirement early. Automizing your retirement account contributions can help you save without even having to think about it. If you have a 401(k) and a Roth IRA, your goal should be to max these out each year. As you go along in your career, this shouldn’t be too difficult. 

Review and check-in

You won’t just budget once and be done. As your needs change, your budget will need to change as well. Review frequently, at least every few months, if not every month. 

Consider putting more into investments

While doctors are among those who make more than enough to max out retirement accounts, investing is still one of the better ways to build wealth as long as you play the long game. If you don’t have investments, look into options outside of your retirement account. There’s a never-ending amount of options including stocks, mutual funds, ETFs, and more.

Learn More: Retirement Planning for Doctors