Budgeting sounds boring, we know. A simple budget is still one of the most useful tools a medical student has.
When you’re trying to survive anatomy lab and memorize the Krebs cycle, sitting down to track every dollar is the last thing you want to do. Not having a budget is far more stressful than having one, though.
Without one, you’re always wondering whether you can afford something, scrambling at the end of the semester when the loan money runs out, and putting things on credit cards in the hope it works out.
With a budget, you know where you stand. That peace of mind is worth the 30 minutes it takes to set one up.
Here’s a simple budget system for medical students, with just the basics that work.
Why Medical Students Need a Budget (Even More Than Other Students)
Medical school differs from undergrad financially in a few important ways.
First, most students live entirely on loans. A refund cheque from student loans counts as income when you’re a student, and to make it last, you divide the amount by the number of months it has to cover [1].
Unlike a paycheque every two weeks, loan money usually arrives in big chunks at the start of each semester. If you don’t budget it, you can easily run out before the next disbursement.
Second, medical school is expensive. In a survey of graduating 2024 medical students, 67% reported having medical school debt, with most reporting their debt load to be more than $150,000 [2]. Every dollar you borrow costs interest, so cutting unnecessary borrowing matters.
Third, you probably don’t have time for a part-time job. Most of us have no income besides loans, so the money we have is all we get until the next semester.
Money will probably be tight in medical school and residency, which is why a realistic budget you can stick to matters so much to your financial well-being [3].
The Simple Budget Framework for Medical Students
You don’t need a spreadsheet with 47 categories. Here’s a simple framework.
Step 1: Figure Out Your Monthly Income
Take your total loan disbursement for the semester and divide it by the number of months until the next one.
For example, if you get $15,000 per semester and your disbursements are six months apart, your monthly “income” is $2,500.
Find out when your next loan disbursement is expected and plan for it, because it may arrive after a particular bill is due [1].
Step 2: List Your Fixed Expenses
Fixed expenses are the ones that cost the same every month, such as rent, car payments, insurance and installment loans [1].
They include:
- Rent
- Utilities (if not included in rent)
- Phone bill
- Car payment (if you have one)
- Insurance (health, car, renters)
- Any minimum loan payments you’re making
Add these up. That total is your baseline, the amount you have to spend each month.
Step 3: Estimate Your Variable Expenses
Variable expenses change from month to month, and could include clothing, gas, groceries and some utility bills [1].
These include:
- Groceries
- Gas
- Eating out
- Entertainment
- Personal care
- Miscellaneous purchases
For these, start from what you spent last month on your bank and credit card statements. If you’re new to budgeting, sit down with those statements and tally everything you spend in an average month [4].
Step 4: Do the Math
Total monthly income minus fixed expenses minus variable expenses = what’s left over.
Once all income and expenses are accounted for, the number left is your bottom line, or discretionary funds [1].
If that number is positive, you have some breathing room.
If it’s negative, you need to cut back somewhere, and since fixed expenses are hard to change in the short term, that means your variable expenses.
The 50-30-20 Rule (Adapted for Medical Students)
If you want a bit more structure, try the 50-30-20 rule.
In the 50-30-20 system, you divide your expenses into three buckets: 50% for your essential needs such as housing and groceries and car payments, then 30% for your wants or nonessential costs such as entertainment, and the final 20% would ideally go to your savings [2].
Saving 20% while living on loans is tough, so here’s how we’d adapt it for medical school:
Put 50% toward essentials (rent, utilities, groceries, insurance, transportation) and 30% toward flexible spending (eating out, entertainment, personal care, clothing). Keep the last 20% as a buffer or emergency fund for unexpected expenses.
If you’re living on loans, the 20% doesn’t have to go into a savings account. Having that buffer means you aren’t living paycheque to paycheque (or disbursement to disbursement).
Practical Tips That Help
These made budgeting easier for us:
Set up two bank accounts. Deposit your semester refund into your savings account and transfer your monthly allowance electronically to your chequing account [5]. That way you aren’t tempted to spend the whole semester’s money in the first month.
Use a budgeting app. Apps like YNAB (You Need A Budget), or even a simple spreadsheet, make tracking much easier, and the apps connect to your bank account and sort your spending automatically.
Check in weekly. You don’t need to obsess over every purchase, but five minutes once a week keeps you on track.
Be realistic. If you know you’ll eat out sometimes, budget for it. A budget that’s too strict only makes you feel guilty when you break it.
Track for one month before creating your budget. If you have no idea what you spend, track everything for a month first and build the budget from that.
Where Medical Students Can Cut Back (If Needed)
If you’re running over budget, these are the usual culprits:
Food is the big one. Students save money by buying meat in bulk and stretching it between recipes, couponing, and avoiding eating out whenever possible [4].
Meal prepping, cooking at home and eating out less can save hundreds of dollars a month. Never eating out is unrealistic, but going from 15 times a month to 5 makes a big difference.
Subscriptions add up fast: Netflix, Spotify, gym memberships, subscription boxes. Go through your bank statement and cancel anything you aren’t using.
For transportation, if you live close to campus, can you bike or walk instead of driving? Can you carpool with classmates to clinical rotations?
For textbooks, buy used, rent, or use library copies when possible. Buy from upper-year students or second-hand on eBay or Amazon, and ask professors whether the last edition will do instead of the latest [6].
Special Budgeting Considerations for Medical Students
A few expenses are specific to medical school, and a budget needs to plan for them:
Board exams such as Step 1 and Step 2 CK each cost hundreds of dollars.
Residency applications make fourth year expensive, with application fees, interview travel and hotels. Each interview can cost hundreds if not thousands of dollars in airfare, gas, hotels and food [4].
Some students we know have had to borrow an extra $5,000-$10,000 just to cover residency interviews. Plan ahead, and try to save a little each semester from first year if you can.
Study resources such as UWorld, First Aid, Pathoma and Sketchy aren’t cheap, but they’re often worth it.
Build these into your budget early so you’re not scrambling to find the money when you need them.
What If You’re Already Behind?
If you’re reading this and realizing you’ve been overspending, don’t panic.
First, figure out where you’re overspending and cut back now.
Second, look at your next loan disbursement and ask whether you can borrow a little less. If you have a lot of money left over, you may have borrowed more than you needed, and it’s worth asking the financial aid staff how best to handle the excess [1].
Third, if you’re in a real bind, talk to your financial aid office. They may be able to help with emergency loans or other resources.
Deal with it now, before it snowballs.
The Bottom Line
A simple budget isn’t about depriving yourself or tracking every penny.
It tells you where your money is going, makes your loan disbursement last the whole semester, and stops you from constantly wondering whether you can afford things.
You don’t need a perfect system or fancy software, just something simple you’ll stick to.
Start with the basics: know how much you have each month and what you have to spend, and make sure the numbers work. Adjust as you go, and check in once a week.
Once it’s a habit, budgeting is much less stressful than not budgeting. Medical school has enough uncertainty without adding your finances to it.
References:
- American Association of Medical Colleges. (n.d.). Budgeting as a first-year medical student. AAMC Students & Residents. https://students-residents.aamc.org/first/publication-chapters/budgeting-first-year-medical-student
- American Medical Association. (n.d.). These 3 budgeting methods help medical students build good financial habits. AMA. https://www.ama-assn.org/medical-students/medical-student-finance/these-3-budgeting-methods-help-medical-students-build-good
- American Association of Medical Colleges. (n.d.). Budgeting basics and tips. AAMC Students & Residents. https://students-residents.aamc.org/first/budgeting-basics-and-tips
- Earnest. (n.d.). Medical school budget guide. https://www.earnest.com/blog/medical-school-budget
- Brown University School of Medicine Financial Aid Office. (n.d.). Budgeting. Brown University. https://finaid.med.brown.edu/financial-wellness/budgeting
- American College of Physicians. (n.d.). Navigating living expenses as you sail through medical school. ACP. https://www.acponline.org/about-acp/about-internal-medicine/career-paths/medical-student-career-path/navigating-living-expenses-as-you-sail-through-medical-school