Listen, I get it. After many years of undergrad, post-grad, and possible residency and fellowship, the last thing you want to think about is money. For many, seeing their medical or post-graduate school debt is nauseating. The thought of actually paying it back, terrifying.

In working with young medical professionals, I’ve found the problem is the fear of the unknown. It’s like Space Mountain at Disney World. Riding in the dark you’re unable to prepare for what’s around the next corner. If we flip on the lights, is it really that scary?

Let’s turn on the lights on your personal financial situation. As stressed out as you may be, setting up your budget and organizing your finances right out of med school can be straightforward. It’s all about how you approach your unique situation and how willing to get organized and ahead of the game you are.

Getting a Budget in Place

It’s no secret that I’m a huge fan of the 10/20/30/40 budget. It looks something like this:

10 PERCENT: I recommend giving 10% of your after-tax income to a qualified charitable organization. Pick a charity or organization you feel passionately about and have a goal to give regularly (I recommend every month). You won’t really miss it, you’ll be giving back to the community and to people who need a helping hand, and you’ll feel emotionally satisfied with your spending decisions which means you’re less likely to make less satisfying impulse-spending choices later on.

20 PERCENT: 20% of your after-tax income should be saved. This can be put toward building an emergency fund, saving for large expenditures (think: a new car), or saving for retirement. Once you have an ample emergency fund, feel free to split up this 20% figure into any number of savings channels that work for you.

30 PERCENT: 30% of your after-tax income should be put toward debt repayment. At this point in your life, this is the most important piece of your budgeting puzzle, especially if you’re like your peers and you’ve got medical school debt coming out your ears. You should organize your debt repayment with a debt hit list to make paying it down easy, but we’ll get to that in a second.

40 PERCENT: 40% of your after-tax income should be put toward everything else. Start with necessities first – food, clothing, shelter. Then move on to the nice-to-have things that make life worth it: fun money, internet, cable, the occasional libation – you name it. As long as it fits within this 40% part of your budget, you’re good to go.

My rule of thumb with this budgeting process is this: don’t dork it up too much. Sit down with a pencil and a piece of paper and use whole numbers to estimate your budget. Fight your inner nerd, don’t calculate things down to the penny. The more specific and detailed you are, the less likely you are to stick with the budget and find financial success as a result. So, keep things simple. Also, don’t stress too much if you miss a marker or make a financial misstep. You will recover.

Give it a few months and reevaluate, then move on from there. You can always change pieces of your budgeting puzzle around within these percentages to make it work for you. For example, if you find your car suddenly breaks down and you have to clean out your emergency fund, maybe consider scaling back on other savings and investments until it’s rebuilt. You have plenty of flexibility here to make whatever you need to have happen, happen.

Set Up a Debt Hit List

I might be wrong, but I have a feeling you’re a little overwhelmed by the amount of consumer and student debt you’re carrying around right now. That’s okay. The first step toward not feeling overwhelmed is to get a handle on what exactly is going on. Write down a list of all your debts – starting with the highest interest, then organizing by highest amount within those interest brackets. Put consumer debt first, then list any “good” debt (like your student loans or mortgage – these really are the only two kinds of “good” debt you can have).

Once you have your debts all written out, identify a few quick wins.  Is there something you’re capable of paying off in a handful of payments? If you have the money sitting in savings (that isn’t emergency-fund money), feel free to use that. This will free up a little bit of extra cash flow. Next, get to work on your consumer debt. All consumer debt is “bad” debt, and the goal should be to pay it off as fast as possible. Set all other debt payments to pay the minimum each month. Pick one debt and make additional payments to it.  Once you’ve retired one debt, roll the total payment on to the next.

After your consumer debt is paid, you can focus on knocking out student loans. Again, if there are some small-fry loans in the mix that you can knock out easily, do those first to free up cash flow to throw at your other, bigger loans. Then go about it the same way you went about paying off consumer debt. Start with your highest interest loan first, then work your way down from there.

The ultimate goal with debt repayment is to a) pay off all your debt and b) never be in debt again. That might sound like a magical concept right now when you’re staring all of this debt in the face, but it’s possible. Set your sights on this goal and imagine how amazing it will feel to live debt-free. That will motivate you to keep you going.

Putting it All Together

Once you have a budget set and a debt hit list plan in action, you’re good to go. There will be other hurdles you’ll have to deal with because life is always changing and that’s just the nature of finances. But this is an excellent start. Pat yourself on the back – you’ve officially taken your first post-graduate step toward getting a handle on your finances. Congratulations! That’s more than a lot of people can say. To make sure you have all the tools you need, or if you’re looking for some more advanced financial solutions, feel free to contact me.