How Do I… Create a Budget?
Let’s face it. Money will probably be tight during medical school and residency. That’s why a realistic budget—one you can stick to—will be critical to your financial wellbeing during the early years. Remember, if you stick to your budget and borrow less, you also will be paying less when you enter repayment.
Why should I do this—what’s in it for me?
Although the word “budget” may conjure up negative associations for you, in practice, it offers many positive benefits. For example, you will find that a realistic budget will help you to:
• Maintain better control of your spending and be less likely to run into credit problems
• Make sure you cover your essential expenses before making an optional purchase
• Prepare for an unexpected expense by building an emergency fund
• Accrue less loan and credit card debt
How do I get started?
First, add up your monthly income, then write down and total all of your monthly expenses. Next, calculate the difference between your income and expenses to see if you have a surplus, are breaking even, or ending the month with a deficit.
One helpful tip is to categorize your expenses as either “fixed” (the ones that stay the same every month) or “variable” (the ones that fluctuate monthly). Examples of fixed expenses include rent, car payments, and health
insurance. Examples of variable expenses include groceries, dining out, and clothing. Your variable expenses are where you may have more flexibility to adjust your budget, thereby allowing you to break even or build a surplus.
Where can I make changes that will save me money?
Everyone’s preferences and situations are different, but a few possibilities are to:
• Share housing costs with a roommate
• Carpool or use public transportation
• Buy clothes at end-of-season sales
• Buy generic rather than brand names
• Buy nonperishable items in bulk
• Take advantage of coupons
• Make your coffee and food at home
• Switch from a subscription music service to a free online option
• Borrow books and movies from the library instead of buying or renting them
Is there anything else to consider?
Every medical school determines the total cost of attendance (COA) for their institution. This figure usually reflects most expenses. The COA will be very helpful in formulating a budget. Request this information from your medical school’s student financial aid office if it is not included in your award letter. It is also available in the financial section of the MSAR Online® site.
More Information About Budgeting
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