Millennial Spotlight: The Best Things In Life Come In Threes
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I have been very fortunate to meet another quite remarkable Millennial, who runs the website Young And The Invested, through interactions on Twitter as well as comments on this blog.
Riley, who happens to be married to a physician, offered to write a multi-part series of posts that chronicled the financial lessons that he and his wife have picked up both as individuals and as a couple.
Don’t let the “Young” in Young and the Invested fool you.
Riley already has some serious firepower in his financial resume, including being a CPA, earning a masters in economics in a high ranked graduate school, as well as being a senior financial analyst in a Fortune 500 company.
On his website he has some great insights on Public Loan Forgiveness, dealing with student debt, as well as other investing matters.
So please show him some love and check his blog out.
This Gen X’er is now going to step aside and let this young gun of finance have the stage:
Some of my fondest childhood memories involved clipping coupons with my mother on Saturday mornings.
While Shaggy and Scooby investigated a spooky mansion, I’d sleuth through coupons in search of products I recognized from our kitchen.
When we finished cutting, we’d sort them into her accordion-like binder, go shopping, and tally up our savings afterward.
My wife had a similar routine with her mother looking at weekly sales promotions.
At the time, we had no idea these activities would shape our way of thinking.
For me, I did it for the enjoyment of matching products to pictures, filing coupons into a binder, and maximizing savings numbers on receipts.
For my wife, she made it a quest not to pay full-price.
We didn’t do this with the intent to learn but as it turns out, these activities instilled some strong personal finance lessons in us at an early age.
Learning About Personal Finance
I’m happy to report some 25 years later, we’re young adults and we still look forward to sorting through the coupons and sales promotions in the mail.
And what excites me even more is when my wife tells me not to recycle them until she has had a chance to look through them.
Talk about teamwork making the dream work!
Both of us inadvertently learned about personal finance by watching our parents.
We continued to learn more over the years and feel it would be nice to share some of those lessons with you.
Specifically, this post lists three financial lessons my wife learned during medical school and residency (the remaining components of the trilogy will list three financial lessons I learned while in college and graduate school, and three we have learned together since getting married).
Medical School Takes You to the Limit
Like many doctors, she’s worked hard and walked a long road to get through residency.
She finds her work rewarding, enjoys connecting with patients and practicing her cosmetic dermatology skills.
But her education hasn’t always been this rosy.
My wife describes medical school as a trying time in her life.
She speaks of prolonged periods of sleep deprivation, tight schedules, challenging course material, and generally feeling stretched too thin.
When she looks back on her medical school experience she feels happy knowing those times have passed and better days lay ahead.
Many of you reading this know the feeling and can likely relate.
While in school, she had to make smart decisions with her finances and live within her means.
She did this because she wanted to avoid unnecessary expenses and taking out more loans than she needed.
Part of this involved finding ways to cut expenses and manage a budget.
Here are some lessons she learned.
1. Share Expenses Whenever Possible – She Lived with Four Roommates
Many medical students choose to live alone because it provides them greater freedom, privacy, and solitude, all of which are particularly important when it comes time to study.
Doing so, however, comes at a higher price point than housing with roommates.
My wife chose to live with four other girls while in medical school.
She did this because doing so saved her money, made her lifelong friends, and afforded her a nicer house than she could by herself.
Living with roommates allows you to share expenses, namely utilities and rent, and have a lower cost per roommate.
For example, a luxury 1-bedroom apartment in her neighborhood during medical school currently costs $3,000 per month, whereas a 2-bedroom unit in the same complex costs $4,300.
By opting for the 2-bedroom, you receive the same location and quality of housing but pay $950 less in rent per month or $2,150 per month in total.
Additionally, you split utility expenses.
|Apartment Options||# of Bathrooms||Rent/Month||Size|
|1 Bedroom||1 Bathroom||$3,000||626 sq feet|
|2 Bedroom||2 Bathroom||$4,300||987 sq feet|
|3 Bedroom||2 Bathroom||$5,500-$6,000||1627 sq feet|
These costs per person scale favorably as well.
A 3-bedroom apartment costs $5,500 and comes to $1,833 per person, saving $1,167 per person as compared to living alone.
My wife took full advantage of these economies of scale and came out of school not only better off financially, but with some amazing friends.
She learned the importance of getting a little help from her friends and how economies of scale lead to lower costs.
2. Credit Cards – How to Manage Them, Not Rely on Them, and Use Them to Her Advantage
Managing finances can be tough on a shoestring budget.
You constantly face decisions about how best to spend what little you have.
It’s made all the more difficult when you see others living lifestyles like they’re already doctors.
In the medical field, where most graduates stand to make a sizeable income, some folks justify borrowing more money now in order to finance the lifestyle they see down the road. [Ahem. Guilty as charged.]
Why wait when an eager lender will finance your fabulous life now at the low cost of 7.99% interest per year?
Or sometimes, medical students come from families with doctors and can live on a more comfortable budget.
Neither of my wife’s parents worked in the medical field and she chose the prudent path of avoiding excess debt.
She decided to live within her means and not borrow heavily against her future.
She did this by not only minimizing her student loan debt, she also made it a point to use credit cards responsibly.
She applied for her first credit card through her bank and used it to build her credit.
She knew one day she would like to buy a house and would need a good credit score to receive the best loan terms.
She made most of her purchases on her debit card and would rarely use her bank’s credit card.
She didn’t want to become dependent on easy (and expensive) credit and managed never to carry a credit card balance nor pay interest on her purchases.
My wife learned the importance of not comparing yourself to others and living beyond your means.
Credit cards come direct to you in the mail and can easily lure someone into making purchases they don’t need.
She applied for a credit card for emergencies and used it to diversify her credit history.
3. She Would Have Contributed to her Roth IRA Sooner
One lesson my wife wished she would have learned earlier was how to get ahead financially by investing in an individual retirement account (IRA).
My wife would describe herself as goal-oriented and enjoys planning for the future.
We both do.
IRAs help make those plans reality by setting aside money in a tax-advantaged account to compound over many years.
She realistically only missed out on a handful of years’ worth of eligibility, but she still regrets not taking advantage of her chance sooner.
I’m happy to report in the past few years, she’s chosen the balanced approach of both investing in her tax-advantaged accounts and paying off her student loan balance.
She has come to understand the advantages given to retirement accounts by the federal government and wants to contribute the limit each year going forward.
She didn’t have access to a 401k plan while in medical school or now in residency but plans to exhaust every tax-advantaged account available to her going forward.
She learned this lesson a little too late in her opinion, but still ahead of most.
I’ve made up for lack of early contributions by maxing out my IRA accounts each year for the past 6 years and coming close on my 401k during this time.
For the first time this year, I will max out my 401k.
Next year, we plan to max out all of our tax-advantaged accounts, including our Health Savings Account (HSA).
Lessons Compound with Time
My wife managed to avoid learning some lessons others have to experience the hard way.
Some don’t learn important lessons on smart money management, living within their means, or how to manage debt until they’ve made a costly mistake.
They’re often left attempting to minimize the damage instead of maximizing their opportunities.
Fortunate for my wife, she developed good financial habits by being born to great parents, having exposure to their good financial habits, and always looking to improve her position in life.
She’s worked hard to get to where she is in her residency and sees the next step as finally reaching some semblance of a reward.
In addition to her hard work, she’s managed to avoid unnecessary expenses, use credit responsibly, and invest in her future.
She’s set herself up for a great life.
All of this work and these traits have compounded with time and only look to continue.
Be sure to look for the next part of this post which details three financial lessons I managed to learn while in college and graduate school.
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