If you plan on becoming a doctor someday, it can be helpful to complete a medical fellowship after finishing your residency—especially if you plan to be a specialist. The average salary for specialists prior to the COVID-19 pandemic was about $346,000 per year, according to the Medscape Physician Compensation Report 2020.
However, even though you’ll probably have a higher salary to look forward to at some point, a fellowship salary isn’t close to that amount. In fact, Glassdoor lists the average base pay for medical fellows at $64,910 per year. Here’s what you need to know about spending for the next two to three years on a medical fellowship salary.
Residency vs. Fellowship: What’s the Difference?
A residency is usually focused on learning how to serve patients in a practical setting. It usually takes place right after you graduate from medical school. A fellowship takes that learning and experience to the next level, usually in a specialty you’ve chosen.
There’s a good chance your fellowship salary will be higher than your residency salary. However, it’s still going to be much less than what you’re likely to earn once you begin practicing as a physician. Combined with the fact that the average total debt among medical school graduates is more than $240,000, trying to keep up with everything can be challenging.
Choosing the right approach to budgeting on a fellowship doctor’s salary can help you manage your finances more effectively while dealing with student loans.
7 Tips for Living on Your Medical Fellowship Salary
If you’re living on a medical fellowship salary, managing your finances well can help you to afford your necessities while paying down student loans. Here are a few things you can do to get started:
1. Create a Budget
Start by creating a budget so you can keep track of your income and expenses—and live within your means. List how much you receive each month from your fellowship salary and other sources of income. Then, review your expenses, including bills and entertainment.
Try to make sure that your income is always greater than your expenses. In some cases, you may find that you need to change your spending habits to achieve that goal.
2. Think About Your Housing Arrangements
Housing can be a huge expense, so it makes sense to look for ways to reduce what you pay monthly. If you’re living on a fellowship doctor salary, you might be able to save money by living with your parents a little bit longer or by looking for roommates to split rent costs.
Weigh how much commuting might cost against a more expensive housing arrangement close to your work. Finally, crunch the numbers to choose the option that’s right for you.
3. Save on Food Costs
Some employers will provide a free meal to doctors while working, so be sure to find out whether that’s the case or your fellowship. When you do buy food while on your doctor fellowship salary, make the effort to shop at the store instead of eating out.
Look for sales and deals. One way to save time and money is to use a crockpot to cook. This can reduce the amount of time you spend trying to make healthy, low-cost meals.
4. Cut Back on Items That Aren’t Necessary
While there’s nothing wrong with occasionally shopping for fun or going out with friends if it’s in your budget, consider your entertainment spending. Maybe instead of going out three times a week, you only go out once. Look for places to cut back so that you can live on your fellowship salary without going into debt.
5. Consider Saving and Investing
Another good reason to cut back is so that you can set aside money for the future. You might be able to contribute to a Roth IRA so you can grow your money tax-free over time, increasing your tax efficiency. Depending on your situation, now could be a good time to start investing for retirement.
6. Take Advantage of Income-Driven Repayment Plans
If you’re struggling to make your federal student loan payments, consider looking into an Income-Driven Repayment (IDR) plan. You will get a lower payment each month, freeing up some of your medical fellowship salary for saving or for living expenses.
Plus, if you’re planning on using Public Service Loan Forgiveness or some other type of loan forgiveness, your income-driven payments “count” as qualifying payments. Being able to receive loan forgiveness down the road can make a huge difference in your finances.
7. Create Other Income Streams
If your doctor fellowship salary just isn’t cutting it, you might be able to create other income streams to help you make up the shortfall. Consider taking on a part-time job to earn more money.
What about medical student loan refinancing?
Another way to improve your monthly cash flow on a fellowship salary is to refinance your medical student loans. If you have high monthly payments, refinancing to a lower interest rate or a longer repayment term could help free up some of your money.
Just be aware that if you refinance federal student loans, you’ll lose access to some federal loan benefits, including Public Service Loan Forgiveness and income-driven repayment. However, if you have private student loans, or if you don’t think you won’t need the federal loan benefits, it can make sense to refinance your student loans.
With the right planning and budgeting, you can make do with your medical fellowship salary. By taking steps now to stay out of debt, you can set yourself up for greater financial success in the future.