Equipping healthcare students with new skills to succeed in the new healthcare environment.

You are broke? Here’s your Roadmap

You are broke?  Here’s your Roadmap

You are broke? Here’s your Roadmap

By: Neil Pithadia


As you will recall, we are breaking down this series into three parts:

I.) Creating your Objective(s) as seen in the last post
II.) A Financial Plan
III.) Financial Plans in action (next article). This is my gift to you the readers. It will be well worth the wait.

You’ll notice the term “Financial Plan.” I’m not going to beat around the bush, originally I intended it to be termed “Budget,” but have found that when people think of the word “Budget,” they immediately lose interest. Bear with me. I know numbers aren’t everybody’s thing. They aren’t mine! Also, your goal is not to cut on minor splurges. I’m not asking you to cut back on the little things that make you happy. If you’re a coffee aficionado and need that $4 Frap to get you by every morning, I’m not asking you to cut that. What we’re going to do is focus on the large expenditures given your objective, not nickle and diming your way to unhappiness. It requires just two steps. Easy-peasy, right?


The 2-Step method (not a dance nor a way to better launch your car at the drag strip)

The 2-step method requires you to have a set Objective in place.

1.) Make a Budget.  Here is where we report our Actual expenses both Variable and Fixed to get a snapshot of what’s going on. I know, I know, boring numbers, but ask yourself, without knowing what you’re spending, how do you set a target for your objective?

2.) Making a Plan.  Figure out what you need to spend in these areas to obtain your objective in your time-frame.  Recall, I asked all of you to be specific on a time-frame for your objective.  Now we have a Plan.


The Budget, Ermmm….I mean, Financial Plan

Make a list of your household spending per month.  Yes this includes you, too, couples and families.  I am showing you an interactive Spreadsheet that you can use. Type in values and download for yourself.  You will notice three columns: 1.) What 2.) How much and 3.) Type.  The first two are pretty self-explanatory,  the third column, Type,  refers to fixed and variable expenses. Fixed refers to expenses that are in place that will be “fixed” from month to month such as rent, utilities and insurance. Variable are expenses that “vary” from month to month such as entertainment (movies) and food (groceries, restaurants).

Try to be as accurate as possible.  Go to the movies the other night?  Record it.  Spend $4 on coffee 3 days of the week? Record it.  Buy lunch every other day from work/school?  Record it!  These expenses will be grouped into categories like “Food,” “Entertainment,” etc.  Accuracy is everything here…


Here is a Medical Student’s Budget:


Here is a healthcare professional’s budget:

Congratulations! For many of you, you have just created your first Actual Budget!  This is what you are actually spending every month.  What are your thoughts?  Any surprises?


The Financial Plan

Here is where we piece three components: 1.) Our Objective  2.) Our Actual Budget and 3.) Our Gross Pay (Pay before any deductions).

But Neil, I’m not making any money!  Well, for those of you that aren’t fortunate enough to be working on TPS Reports like the rest of us, consider all incoming cash flow: Significant other’s income, Parents’/Family gifts, Loans, Savings/Interest, Side-jobs.  If it is a lump sum, try to divide it over a horizon to get a monthly inflow.  E.g. Your rich Uncle gives you $6,000 at the start of NP school, which will take you two years to complete.  Your math should be $6,000/24= $250/month as a Gross Pay.  Sum up all of these to get you a net monthly gross pay.

We will take the objective from a comment from Lauren Randle, a 2nd Year Resident, from our last post.  Her objective is to have $30,000 to pay for a wedding in July of 2014.  I had asked Lauren what her Gross Pay was, she is currently making $3500 Gross Pay a month.   So let’s take a look at what her Actual Budget is including Objective and Gross Pay:


So there we have it.  This is Lauren’s snapshot.  First off, kudos to her for thinking about Retirement early on.  We’ll discuss why this is important in later articles.  Also, it presents a unique factor of a single Resident getting by rather well.  Lauren is fiscally wise, she decided to relocate to TN for Residency after living in Chicago and attending Medical School in IL.  Her cost of living improved drastically.

We’re here to determine how she can develop a financial plan that lines her up to meet her objective.  Her objective being: pay $30,000 for a wedding in July 2014.


How much do you need for your objective.  Lauren has 19 months until her wedding.  Let us consider everything static.  That is, her fixed expenses and gross pay will not change.  Lauren has $5000 in Savings.  Effectively, she will need to save $1315/month ([$30,000- $5000]/19 months) every month until July, 2014 to raise the needed $30,000.

Currently, she is saving $275/month after Fixed and Variable Expenses.  This will yield her $5225 ($275 x 19 months) by July 2014.  Not even close!  Lauren could however lower her Variable Expenses and reallocate it to Savings.  She decides that given her objective, she is comfortable without eating out as much and can lower her Food expenses by half.  She also decides she really really really likes her fiancé so she can lower her Entertainment costs by $250/month!  She also decides to redirect her optional retirement contribution into Savings.  She, however, will not be willing to cut her car expenses.  She is leasing a Ford Mustang, a gift she gave to herself after finishing medical school.

If she lowers these two variable expenses it will save her $400/mo.

Even with ratcheting down her Variable Expenses to yield her an increase of $550/month to $825/month in savings, she is far from the $1315/month she needs. She has yet to figure out how to obtain the additional $490/month or $9310 for the wedding.

She is at a critical junction.  She cannot, as-is, meet this objective.  Time and money prevent her from doing so. Even if Lauren traded in her new Mustang, she would likely need a vehicle and gas and would be unable to attain the additional $490/month.  Lauren will need to determine if can she get financial help from her fiance, family, extend the wedding date, squeeze the cost of the wedding down. This is a reality of many people.  I am sure many of our student readers are in shock and awe when they put some of these numbers down on paper.  Like homeowners during the subprime mortgage crisis, you are putting trust into something reasonably expecting to be in a position to repay.   Educate, educate and educate yourself.

Fortunately for Lauren, her fiancé is able to tap into his savings and come up with $10,000.  They are posed for success of their objective.   Realize that even if her fiance was able to come up with $10,000, Lauren would be unable to come up with the rest have she  not cut her spending and lower her variable expenses.  I want all of you to take a good hard look at your numbers.  Are your Objective(s) attainable, are you on a roadmap to success?


I have received a lot of constructive feedback since the last article. To those raving about discussing these matters, thank you. I want to take a comment I received from a Resident.

This individual said, “Reads like an infomercial.”

Allow me a brief moment to respond, I have followed many teaching healthcare Institutions that pride themselves as leading innovators in this field. Do you know how the “best” institutions out there address Personal Finance to their students? They bring in a CPA to give you a couple hours discussion. In that discussion he/she will go on about how they can “beat the S&P 500” and will end the session flipping out more business cards than you can build a mini fortress with.

So for those that really feel this way, don’t let the door hit you on the way out.

Simon Sinek, thought-leader says it best: “If you want to achieve anything of value in the world, you have to get used to the idea that not everyone is going to like you.”

The other thing I want to address is the notion that setting up financial objectives is too remedial. My response to that is far from it. Without developing a well-thought-out objective, how do you know when you have achieved success? For those of you that thought it was too remedial, we’re going to get into some guts of personal finance today.

  1. Very cool! I’m a nurse student so not as much debt. Yet, I see my friends taking on more debt to go on vacations and it just seems crazy to me. I will send them this website.

    I’m surprised that Lauren in your article would get a new car after medical school that just seems crazy to me while she has over six-figures in debt.

  2. Neil, can’t see Lauren’s budget. Any help?

  3. Nevermind, just had to move the spreadsheet. Never mind. Cool site. Thanks.

  4. there should be more pages like this with better info! Thank you for the read!

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