As an MD-PhD student, I am very fortunate to receive a stipend and health insurance from my institution, as well as have my medical school and graduate school tuition fully covered. Since I’ve started, I’ve received an annual stipend of $35,000-$40,000 (it increases a bit each year to adjust for inflation and for the institution to offer a stipend that is competitive against other NYC MD-PhD programs). I didn’t grow up with friends or family who talked about finance. In order to stretch the stipend in a high-cost city like NYC, I have taught myself a lot about personal finance and budgeting. I think this is such an important thing that should have been taught earlier in life and I hope that I am able to offer some valuable resources and advice through my own personal trial and error.
1. How much do I spend on X, Y, Z?
The first step of budgeting is to know how much you spend. The first step of knowing how much you spend is to know what you’re spending money on. There were a few tools that I tried out that really helped me. All these tools are very easy to set up and require syncing your bank, credit, investment, and other accounts.
- You Need a Budget (YNAB) – as a student, you get one free year of this. Using this forced me to get into the habit of checking where my money was going each month since it has you check each transaction. It also helps you set up a budget and keeps track of how much you are over- or underspending in relation to that budget.
- Personal Capital – a free tool that allows you to track your net worth by reviewing all your bank, retirement, credit, and investment accounts. It also has a budgeting tool which keep tracks of all your spending and tells you what categories you spend on. You can get $20 just by signing up here.
- Mint – this is also a free tool that I’ve tried to track budgeting and expenses.
- Chase – I have my credit cards through Chase and also have a bank account with them. I will occasionally check the app just to double-check my transactions and the amount in my savings/checking account.
2. Set up an Emergency Fund
Once you know where your money is going, it is important to set up an emergency fund in the event something unexpected arises – whether it’s medical, travel, or something else. In general, the rule I’ve read is that an emergency fund should be at least 3-6 months’ worth of monthly expenses. That’s why the #1 step is to know how much you spend. Then you can figure out what your emergency fund is.
3. 50-30-20 Rule
The general rule of thumb of budgeting is to allocate your monthly after-tax income as follows:
- 50% to needs: these are your necessary bills such as rent, groceries, insurance, car payment, utilities, etc.
- 30% to wants: this categories includes things that aren’t necessary but that you would like to have such as Spotify, Netflix, retail therapy, etc.
- 20% to savings: this includes savings and investments such as Roth IRA, 403B, etc. I allocate a certain amount to the Chase savings account. A portion of my paycheck is automatically put into a 403B retirement account. I also save a certain amount to put into my Roth IRA every year.
4. Keep Learning
I watched a lot of Youtubers like Graham Stephan and the Financial Diet who taught me what the difference between a 403B, Roth IRA, etc. was and how to save. To this day, I still watch them religiously.
Here are some videos to get started:
- Graham Stephan: How to Live Frugally and Achieve Financial Independence
- Graham Stephan: Becoming a Millionaire: Roth IRA vs 401K
- Graham Stephan: The 5 BEST Index Funds that Will Make You Rich
- The Financial Diet: How To Start Following The 50/30/20 Rule To Eliminate Budgeting Stress
