By Dr. Jim Dahle, WCI FounderMany blog posts here are written in response to questions we get. Here's one of the latest. The details have been changed enough to maintain anonymity.
“I’ve been a long-time reader of WCI and am a member of a faith (such as Orthodox Jews, Church of Jesus Christ of Latter-Day Saints, some Protestant, Catholic, and Muslim) where we often marry and start families younger than many of our peers. I started medical school with two kids, and by the time I was partway through residency, we had four. This is quite different from my co-residents, most of whom didn’t have children until the end of residency, if at all. The decision to balance career and family life early on is challenging, but it’s a choice many of us make.
While I can’t save as aggressively as some colleagues, I’ve managed to max out our family HSA, contribute 10%-20% to my 403(b), put what I can into a Roth IRA, and maintain a six-month emergency fund. This is all while paying for food, rent, tuition (after scholarships), clothing, charity, and more. My spouse works part-time from home, earning under $20,000 annually, and we live frugally. The pause on federal student loans definitely helped in maintaining our savings.
I haven't found much content that addresses the challenges of raising a large family while in medical school and beyond. I believe a post on this could resonate with a niche but important part of your readership. I suspect others are in a similar situation that would benefit from a post that dives into saving and financial planning for those of us with larger families starting at younger ages.”
Your wish is my command. Here we go. First of all, congratulations. You may feel like you're not saving as much as your peers, but as near as I can tell, you're saving close to $15,000 a year on a resident salary while supporting a family of six. That's not just good; that's fantastic. Way ahead of most of your peers. In fact, I think you may need to dial down the savings a little. I'll bet money now is more useful to you as far as spending for happiness than a whole lot more money will be down the road. Certainly, you're eventually going to be very wealthy with habits like yours. Katie and I felt pretty good about barely maxing out our Roth IRAs each year during residency.
Having Kids During Medical Residency
Speaking of Katie and me, our oldest, now 21, was born near the end of my intern year. It made zero financial sense to pay for childcare so Katie could keep teaching PE and we liked the idea of our kid being taken care of by us, so she stopped working and we lived off my $37,000 salary for the rest of residency. We had a little money saved up from our intern year (we were rolling in it with probably twice that much income that year due to two incomes), but we pretty much lived and even saved a little off just my resident salary. There was a small raise each year, and I did 10 shifts of moonlighting at $80 an hour during my last six months of residency. But mostly the three of us lived off $40,000-ish, minus what went into our Roth IRAs. Looking back at 2005 now, the Roth IRA limit was $4,000, so really we were living off of $32,000, or the equivalent of $51,000 today.
About half of my residency class was married, but only one other resident had a baby during residency. He was a doc and she was a nurse, and we watched their kid occasionally when their shifts overlapped. But we were definitely unique. At most residencies where I interviewed, most of the residents were single. There was a senior resident in my residency who would have fit the profile of the above emailer, but I never really talked to him much about his finances. I just figured they lived a little more frugally than we did.
When and if you get married and have children is a very personal decision influenced by a lot of factors, but that decision certainly comes with biological and financial consequences. It's hard to afford a family while in school, training, and early career. But it does decrease infertility issues and having to wait until you're 55, 60, or older to be an empty nester.
One alternative to having kids in medical school and residency, of course, is to have the family first. I went to med school with a woman with six kids. I'm sure there were still plenty of mouths to feed in residency, but at least the pregnancy, postpartum, and young childcare issues were minimized.
Now, let's move on from the hard decisions and talk finance!
Health Insurance
Residency programs generally provide top-notch health insurance plans. Our first kid cost us $10. I'll bet this is the easiest part of having a stay-at-home spouse and multiple kids when it comes to your finances.
Life and Disability Insurance
This is a much bigger issue. Most single, childless residents don't need any life insurance at all. They should probably buy disability insurance, but few ever buy more than a benefit of $5,000 a month these days. That was more like $2,500 when I was a resident. The problem is that it would be very challenging for a family of six to live on just $5,000 a month, even tax-free, for two or three more decades. So, buy as much disability insurance as they'll sell you, get the cost-of-living rider, and buy another policy and/or exercise your future purchase option rider just as soon as you can. And maybe don't commute on a motorcycle or take up rock climbing.
If there were any financial priorities during residency for someone who already has dependents, it would be insurance. Get a big term life insurance policy, too. Again, it might be challenging to afford as much as you need, but at least get a seven-figure amount and buy more as soon as you can. If you can't afford as much coverage as you'd like, maybe get a 10-year term policy instead of a 20- or 30-year policy and buy more when the big checks start rolling in.
More information here:
Top 12 Reasons to Buy Disability Insurance as a Resident
The Big Checks
Just like most residents, your financial life revolves around the fact that you're really just waiting for the big checks. Even if you spent every dime you made as a resident, that's really OK. You're not going to get rich as a resident, I promise. The January before I finished residency, our investable assets totaled $20,811.38. The getting rich part starts AFTER you finish training. So, take a deep breath and realize that's just the way it is. Don't make your budget so severe that your spouse and kids hate you just to put a few bucks in a Roth IRA that you can easily replace in a few years with your first couple of paychecks.
Autos
I'd love for most residents to eke their way through with that used Honda Accord they still have from college. That doesn't work if you have four kids. But you don't have to buy a brand new Sequoia either. A pre-owned but still reliable minivan ought to do the trick. And if it's just too much to go with one car (it probably is), you can commute to the hospital in the beater Accord. If it breaks down on the way every now and then and you can't figure out how to use your Uber app, your spouse can load up those kids and come rescue you.
Homes
All residents (and especially their spouses) want to own their home. I gave up trying to stop them years ago. So, buy a home. You'll probably make enough as an attending to make up for this financial error. And who knows, maybe you'll get lucky (about 1/3 of the time with a three-year residency and half the time with a five-year residency) and actually come out ahead for buying.
But otherwise, go look at rental homes. I'm amazed at how many residents have no idea you can rent a house and not just an apartment. Or get a big three-bedroom apartment. It turns out kids can share a room and still turn out OK. I've shared a bedroom with someone every year since I turned 5. It's not the end of the world.
More information here:
What I Should Have Told Myself When I Became a Resident
Financial Waterfalls for New Residents and Attendings
Spousal Work and Moonlighting
Sometimes it is just easier to earn a little more money. While burnout is always a factor, especially when home life is busy, consider moonlighting where appropriate and safe, and see if there is a way for your spouse to contribute some income to the equation.
Job Search and Bonuses
You may want to start your job search a little earlier than your fellow residents. The statistics are something like 50% of docs change jobs in the first three years out of residency. That often requires a move, and moving a spouse and multiple children is just a much bigger deal—especially if there is a significant associated period of unemployment. You probably need to start the process a little earlier and take a little more care than most docs, so you're more likely to find the job you really want the first time.
Priorities might be reasonable hours, little call, high pay, low cost of living, and a safe city with good school districts. In addition, many employers are willing to pay some sort of starting bonus, and getting that with a year or two of residency left can relieve a lot of financial pressure, although it obviously comes with strings attached.
Looking to increase your income or renegotiate an existing contract? Hop on over to the WCI physician contract review page, where you can find vetted lawyers and compare your contract to other docs.
Government Help
People are often surprised to learn that most medical students who have children are on Medicaid. They usually qualify for WIC, food stamps, CHIP, Home Energy Assistance Program (HEAP), discounted internet, discounted school lunch, and other programs designed for the poor. A single-income family with multiple children might still qualify for government programs well into residency. Like tax laws, I say “hate the game, not the player.” If you qualify, go for it. If you qualify, you're who the programs are designed for. The fact that you won't qualify forever is a good thing, not a bad thing, for the taxpayer. There is no law that says you have to wait until you're at peak earnings before you can start your family, and considering that most people hit peak earnings in their 50s, that's way too late to start a family, at least biologically speaking.
More information here:
Tax Savings for Medical Residents
From Free Resident Meals to $750,000: Unleashing the Power of Behavioral Economics
Student Loans
Here is some more good news. Many residents with federal student loans on an IDR program are thrilled to find out their IDR payments are little to nothing. They count toward PSLF, too. Even if they aren't $0, they're still probably very affordable. Don't make the mistake of putting them into forbearance or deferment. That's still a mistake for you, just like it is for other indebted residents. Remember to file that tax return as an MS4 for your $0 income when it comes time to show your income to the Department of Education.
Become Financially Literate
Doctors can make lots of financial errors and still turn out OK. Doing residency with four kids can definitely be considered a financial error. But you can recover from it. You can't recover from it by doing what comes naturally, though. You'll need to be intentional. You need to hit the ground running as an attending. You need to graduate from residency with a written plan for your first 12 monthly attending paychecks. You've got to be in a good school district sooner than other docs. You've got to save for college faster than other docs. You've got more mouths to feed, teach piano to, and buy hockey gear for than other docs.
None of this is impossible but it is a little harder, and it will take some work and sacrifice. Maybe you're “living like a resident” for four years instead of two. Maybe you can't put your kids into private school until high school. Maybe their college is paid for with more cash flow than 529 savings. Maybe you work until you're 63 instead of 58. It works out. It works out because you're earning more than 98%-99% of other Americans. Manage it well, and you'll be just fine . . . eventually.
You can do residency and have a family at the same time. But you can't “have it all.” Something has to give, both on the time side and the money side. Make sure you are deliberate about what you sacrifice in order to achieve what you care about most.
What do you think? Were you married in residency? Any kids? Stay-at-home spouse? What lessons can you pass on to others who are in a similar situation?
Just want to assert what I always do- more important for lower earners than future docs, but until attending status that includes some future docs: children need a dad as much or more than they need a stay at home mom. So please don’t work so much moonlighting your kids never even see you just to keep their mom at home or even worse start your 401K off maxed out. You’ll see little enough of them during residency, and better to live at a lower level and/or wife have some type of work than see so little of your family you lose your wife anyway or have none of the joy (and maybe for mom’s sake some of the labor) of having children.
The groups more likely to marry young also seem more likely at lower income jobs for dad to be working 2-3 jobs just so mom is at home, maybe homeschooling. No reason for future docs to avoid their kids so much.
The original poster is way ahead of me so they should be proud of that. I have 3 kids and changed careers so my oldest was 6 when I started med school. We are drowning in residency and saving nothing. Have $1000 in minimum credit card payments a month (all from applications to med school and residency) and our rent is about 55% of my monthly take home pay.
Oh and on top of that our health insurance sucks. We pay $300 a month and it’s high deductible. My wife just had surgery and they slapped us with a $3000 bill. Somehow we are still surviving but not by a lot
Hang in there. This too shall pass. Make sure you have adequate insurance, a student loan plan, and a written plan for your first 12 attending paychecks. Beyond that, surviving is winning.