Budgeting as a First-Year Medical Student

Reasons to Budget

Creating a spending plan (or budget) helps you set a financial foundation and think about the money that comes in and the expenses that go out monthly. Living on a budget is possible, and often very helpful because it can help you meet your financial goals and accomplish the following:

  • Track and control your spending.
  • Identify problem areas with income or expenses.
  • Avoid credit card debt and over-borrowing.

The first step in creating a budget is to document all incoming funds. If you are married, this would include your spouse’s income as well as your income. If you consistently receive income each month from a specific source, be sure to include that as income. A refund check from student loans counts as income when you are a student. To make your refund check last a certain amount of time, you would need to divide the amount of the refund by the number of months the refund is expected to last. Find out when your next loan disbursement is anticipated and plan accordingly because it may be disbursed after a specific bill is due.

The second step to building a budget is to identify your outgoing monthly expenses. There are two types of expenses--fixed and variable.  Fixed expenses include monthly expenses that are the same amount each month and include things like rent, car payments, insurance, and installment loans. There are also expenses that fluctuate each month; these are variable expenses and could include things like clothing, gasoline, possibly cell phone bills (unless on a fixed budget), groceries, and some utility bills. Total your monthly expenses, and then subtract that amount from your income.

Once all income and expenses have been accounted for and properly subtracted, the remaining number is your “bottom line” or discretionary funds, and this amount can be used for the extra things in life, or perhaps put into a savings account.  If you have a lot of “leftover money,” it could mean that you’ve borrowed more than is necessary and you may want to talk to the financial aid staff about how best to handle that excess money.

Creating a budget may seem overwhelming at first, but there are templates, guides, free apps, budgeting tools, and websites to assist you with the process, especially if it’s new to you.