Budgeting, feat. Mike Foley

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We’re back with another special Wednesday episode this week, again brought to you in part by the SMFM Thrive Initiative! SMFM Thrive is a wellness program for MFMs - but we hope that this week’s podcast will be helpful even to those outside of MFM land!

Michael Foley rejoins us today to talk budgeting!

Michael is a comprehensive financial advisor who runs his practice out of Scottsdale, Arizona, under North Star Resource Group. Michael was trained at Duke University and holds his Certified Financial Planner designation alongside his Certified Student Loan Professional designation. Although Michael serves a diverse group of clients with their financial and student loan needs, with two physician parents, Michael has found a specialty in working with those in the healthcare space. Separate from the financial plan and his role as financial planner, Michael may recommend the purchase of specific investment or insurance products or accounts. These product recommendations are not part of the financial plan and you are under no obligation to follow them. Financial Professionals do not provide specific tax/legal advice and this information should not be considered as such. You should always consult your tax/legal advisor regarding your own specific tax/legal situation.

How to build a budget

  • Spreadsheet or app to identify normal and regular expenses and regular income to identify surplus income.

    • What comes in?

    • What goes out?

    • What is left over?

Research for budgeting hacks

  • Brain scan study https://www.ncbi.nlm.nih.gov/pmc/articles/PMC2656877/

    • Same cognitive energy to save for our future self as it does to give money to someone else.

  • Make the decision once and then automate, automate, automate.

  • Setting up hurdles

    • We tend to see better results when there is a separation between your everyday checking account and your emergency reserve.

    • Look at a separate high yield online savings account at a separate bank

      • Takes 1-2 business days to transfer

      • Enough time to feel a bit guilty but it is there if you need it.

  • Positive psychology research

    • Identify those things that actually bring you happiness and fulfillment

    • Some may cost less than you think.

      • Get the most bang for your buck from a fulfillment standpoint.

  • PERMA exercise

    • Positive Emotion, Engagement, Relationships, Meaning, Accomplishment.

    • These are your real goals... not a dollar amount in your bank account!

Triaging your surplus income in residency vs in practice.

  • Establish the basics- like checking basic vitals – if a patient tells you that they want to start to train for a marathon, but they have high blood pressure, knee issues, and they have no training plan. Can you go out there and start running? Absolutely. But you might want to address some other issues first.

    • Emergency reserve

    • Cash ready for upcoming expenses

    • Insurances- DI, Life, Umbrella

    • Debt repayment plan

    • Then preventative care- like starting to work out, eat healthy, etc.

    • Retirement savings

    • Medium term savings- nonretirement

    • Once maxed out all other retirement options, then look towards other tax advantaged accounts as a business owner or through 7702 max funded life insurance contracts.

  • How to know if you can afford something?

    • Are you on track for your short and long term goals and have savings automated, then you can spend the rest and not feel guilty about it?

Common mistakes

  • Only focusing on your student loans: I’m going to continue living like a resident and pay off all of my loans”

  • Building up fixed expenses right out of training before working with an advisor to help you identify some of your longer-term goals.

  • Raising fixed expenses can limit your surplus income very quickly

  • Not able to hit goals? Make more money or spend less money. Going backwards in lifestyle expenses is rough.

Need some budgeting help?