I’m 27, have yet to have a salary, about to finish residency, and know nothing about managing finances

Submitted by redcavzards t3_zw6vy5 in personalfinance

So long story short, I’ve been in school for a long time. Went through undergrad, dental school, and now residency. I’m currently 27 years old. In that time I’ve never really had a job because I was blessed with a full ride scholarship that paid for my college and parents who paid for my living expenses through dental school and residency. I have yet to manage a penny in my life which is both a huge blessing and curse.

I will be graduating with 300k in student loans (all government loans). I just signed a contract where I will be making 350k a year and will be living in an area with a relatively high cost of living

My lack of financial knowledge has been an increasingly large source of stress. Anytime I hear terms like “Roth IRA,” “1099,” etc it all goes straight over my head. Is there a recommended resource that I can use to help me learn all of the basics and essentials of managing my money (that goes into more detail than just “step 1: create an emergency fund”)? Is there an app or method people recommend to help with budgeting and managing purchases and payments? Is there a recommended method for paying down my loans?

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phd_bro t1_j1t8hwu wrote

Start with the Prime Directive in the sidebar.

>Is there an app or method people recommend to help with budgeting and managing purchases and payments?

Many love YNAB. I'll use Excel until either I or Microsoft dies.

>Is there a recommended method for paying down my loans?

Mathematically, pay off highest interest first. Psychologically, some find a boost in paying off the smallest loan to gain momentum and positive reinforcement. If they're very low interest - e.g., 4 percent or less - pay the minimum and invest the difference.

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Uncomfortablynumb1 t1_j1t8njb wrote

But to be a bit more helpful, you’re not the first resident in this boat! (Why I mentioned heading over there.) they will likely direct you to “the white coat investor.” Doctors are notorious for being terrible with money for all the reasons you’ve expressed. Step two is finding a FIDUCIARY financial advisor (they have a duty to you, not their own profit). A lot of it will be reading and trial and error for what works best for you and one step at a time. Figure out how to make and keep a budget that makes sense . Then tackle emergency fund. The rest requires some insight a fiduciary should be able to help with.

White coat investor will sell you classes for a lot of money. You can find the same, or better, services by fiduciary insurance/financial planners who work specifically with doctors… for free. They take a commission on insurance plans you should be buying.

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BastidChimp t1_j1t97ab wrote

Invest in your company's 401K especially if it has a matching contribution. That's free money you can't pass up. Invest in a fund that tracks the SP500. Just set it and forget it even during market corrections until you retire.

Then try using either the Avalanche or the Snowball method to bring down your student debt asap. There are YouTube videos that have extensive information on these two methods. Prep your own meals and refrain from going out to eat. Once you have ended your debt your options will open up immediately to save and invest more aggressively.

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TyrconnellFL t1_j1tc3nj wrote

Doctors and dentists are known for going from being very indebted and poor to middle class and then suddenly exploding into the top 5% of salaries with no knowledge.

Don’t do anything sudden with sudden wealth. Lenders and companies know you are likely not to be expert with it and you’re an easy mark. Review the basics. If you do seek an advisor, make sure it’s a fiduciary acting in your interests and not working on commission to sell you financial stuff you don’t need. Watch out for whole life insurance hucksters!

The wiki here gives a good starting point. White Cost Investor has good advice for your position too if you resist the stuff they couldn’t resist trying to sell you.

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Uncomfortablynumb1 t1_j1t6axc wrote

Might wanna cross post to r/residency.

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redcavzards OP t1_j1t6hve wrote

They unfortunately do not allow cross posting but I will repost there, thank you!

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DarkTyphlosion1 t1_j1ug050 wrote

Max out all retirement accounts first up to the 22,500 limit). After that save an EF .

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