How Much Residents & Fellows Should Save for the Transition Period
December 27, 2021
Transition planning involves preparing for the financial and lifestyle changes that take place as you transition from training to practice. This is a period when a lot of new decisions need to be made.
As mentioned in part one of this segment, all financial considerations for a physician’s transition to practice require cash.
How much should you save for your transition period? Based on our experience, we’ve worked with physicians who need anywhere from $5,000 - $40,000.
Here’s a breakdown of potential scenarios at the lower and upper ends:
Typical Transition Period Buffer: $5,000 - $15,000
Single or married without children
1 – 2 months max without pay
Able to stick with a budget
Typical Transition Period Scenario:
Congratulations! You have just taken a job at a private practice in Charleston. Your new position starts on August 1. You finish training on June 20 and have enough savings to stay afloat for the end of June and the month of July. Unfortunately, your new practice pays monthly, so you won’t receive your first paycheck until September 1. Now you are left using your credit card or borrowing money from your family until you get paid, even though you’ve already begun working. The earlier you can start planning for your transition period, the lessnegative impact it will have on your financial health.
Less Typical Transition Period Buffer: $15,000 - $40,000+
John Dameron has been a financial planner and partner with Spaugh Dameron Tenny since 2002. With the help of the SDT team, John created a lecture series called Physicians Financial Focus, authored a book entitled The Residents and Fellows Financial Survival Guide, and has coached hundreds of physicians from residency/fellowship into practice. His expertise has also been featured on KevinMD.