Membership & Fellowship: Five Ways to Improve Your Financial Health
As an ob-gyn, you likely earn an income well into the six-figure range. In fact, the average ob-gyn made $214,750 in 2014.1
Despite earning a high income, it’s likely that you face many challenges in obtaining financial stability. Due to long schooling and training process, ob-gyns earn a real living 10 to 15 years later than the average professional. In addition to this, if you’re like most medical practitioners, you have tens of thousands of dollars in student loan debt.
These financial setbacks don't have to compromise your ability to effectively manage your money. Follow these tips, and you'll be well on your way to having stronger and healthier finances.
- Improve Your Credit: Maintaining a credit score of 750 or higher can give your finances a major boost.2 A high credit score translates to lower interest rates, and lower interest rates save you money. Plus, your credit score can be the deciding factor on whether or not you are eligible for a mortgage, car loan, or even a job. So what should you do? Be sure to make loan payments on time, and never use more than 30-50 percent of any given credit line.3 You should also think twice before closing an old credit card, as a longer credit history equates to a better overall score.
- Live Below Your Means: After feeling deprived during your school and residency years, it can be tempting to spend lavishly once you finally begin earning an income. Resist this temptation. Spend enough to maintain a good quality of life, but limit the amount you spend on extravagant vacations, cars, and other luxury goods. When you receive a raise, use this same logic. Maintain your former standard of living and funnel the rest into paying off your debts or saving for retirement.2
- Put 15 Percent of Your Income Toward Retirement: For most, the general rule of thumb is to save or invest a minimum of 10 percent of your gross annual income for retirement.2 However, as an ob-gyn, you should be saving a minimum of 15 percent if you want to retire at age 65.4 Why? Because most people have around 40 years to save for retirement, compared to 30 years for most medical professionals.
- Pay Down Your Debt: Consider this: if you have a $5,000 credit card balance, an annual percentage rate (APR) at the national average, and you only make the minimum payment each month, you'll be stuck paying off that debt for 24 years.2 Even more shocking, you'll pay more than $7,000 in interest in that same time frame.2 Think of all you could do with $7,000. Do you really want it to go towards interest? Start paying off your debts as soon as possible, and focus on eliminating your higher interest debts first.
- Obtain Insurance: Insurance can help protect your finances when things go wrong. The type of insurance you need will depend on your specific situation, but most will at least need life and disability income insurance. As a member of ACOG, you have access to the ACOG Member Insurance Program. Through the power of group purchasing, ACOG can offer you quality coverage at affordable rates.
1"Occupational Employment and Wages: Obstetricians and Gynecologists." Bureau of Labor Statistics. 1 May 2014. Web. 16 Nov. 2015.
2 White, Martha. "10 Ways to Improve Your Financial Health (Even If You Only Do One)." TIME. TIME, 23 May 2012. Web. 16 Nov. 2015.
3Davidson, Liz. "12 Financial Tips For Debt-Burdened New Grads." Forbes: Personal Finance. Forbes, 9 May 2012. Web. 16 Nov. 2015.
4Dahle, Jim. "Top 7 Financial Errors Doctors Make (and How to Avoid Them)." The White Coat Investor. 18 Nov. 2011. Web. 16 Nov. 2015.