Residency Years 1–3: Money Milestones in Low-Paying Specialties

Residency will never feel “rich,” but the lowest-paid specialties can quietly put you years ahead—or years behind—depending on what you do between PGY-1 and PGY-3.

Big Picture: What You’re Actually Up Against

You’re in peds, family, psych, IM with no fellowships planned, maybe neurology or OB in a lower-paying market. Translation: your attending salary won’t magically fix everything. You do not have “I’ll just out-earn my mistakes later” as a safety net like ortho or derm.

Broad strokes of what these three years should do for you financially:

• PGY-1: Stop the bleeding. Build systems. Avoid dumb contracts.
• PGY-2: Attack the biggest leaks. Build real buffers. Position for attending life.
• PGY-3: Lock in your launch: contracts, housing strategy, loan plan, and protection.

Here’s the timeline—month by month, then year by year—of what you should actually be doing.

Typical Annual Resident Salary by PGY Level

Category	Value
PGY-1	62000
PGY-2	65000
PGY-3	68000

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The Pre-Residency Setup (March–June Before PGY-1)

If you’re already in PGY-1, skim this and make sure you didn’t miss something crucial.

March (Match Month): Lock the foundation

By this point you should:

1. Know your starting salary and benefits

   • Pull the actual GME contract from the institution website or HR:
     • Base salary
     • Meal allowance (if any)
     • Parking
     • Health, disability, and life insurance
   • If you do not see disability insurance details, make a note: you’ll fix this later with your own policy.

2. Estimate your net monthly pay

   • Rule-of-thumb:
     • $60–70k salary → $3,400–$3,900/month take-home after taxes, retirement, and insurance.
   • Put an actual number on paper. Not vibes. Not “should be enough.”

3. Decide your high-level living plan

   • Options:
     • Live alone, close, expensive
     • Share with roommates, cheaper, maybe farther
     • Live with partner/family and share costs
   • Lowest-paying specialties cannot afford the “luxury apartment alone because I work hard” fantasy. Not without tradeoffs.
   • At this point you should already be thinking: housing must be ≤30% of my take-home pay.

April–May: Transition logistics, not lifestyle upgrades

Your goals in these two months:

• Kill expensive med school habits
  • Replace Postmates/DoorDash with actual groceries.
  • Replace constant Uber/Lyft with a bus pass or used car + careful insurance.
• Plan your move with a hard cap
  • Move budget: aim ≤$2,000 if in-state, ≤$3,000 cross-country.
  • Use:
    • U-Haul + friends
    • Sell heavy furniture, rebuy used at destination
  • Do not put an entire move on a credit card with no payoff plan. That balance will still be there in PGY-3. I’ve seen it.

June: Final prep before the check hits

At this point you should:

• Set up the right bank structure
  • One checking
  • One “bills” checking (optional but smart)
  • One high-yield savings (emergency fund)
• Turn on autopay for federal loans (if in grace / deferment ending later)
  • You want this in place before life gets chaotic.
• Create a bare-bones starter budget
  • Use last year’s GME salary posted online.
  • Categories: Housing, Utilities, Food, Transportation, Insurance, Minimum debt, Misc.

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PGY-1: Survival Year With a Purpose

The goal of PGY-1 in low-paying specialties is not to build wealth. It’s to avoid landmines and set up a financial structure that won’t collapse when you become an attending.

Month 1–2 (July–August): Get control, not cute

You’re exhausted, disoriented, and on nights. Do less, but make it count.

At this point you should:

1. Nail down your real monthly numbers

   • Track every dollar for 30 days. Not forever. One month.
   • You want:
     • Actual rent + utilities
     • Actual food spend (grocery vs eating out)
     • Gas/transportation
     • Random leaks (subscriptions, parking tickets, late fees)

2. Choose your student loan strategy (temporary version)

   • By end of August:
     • Decide: income-driven repayment (IDR) vs forbearance vs PSLF path.
   • Low-paying specialties often should consider:
     • PSLF if:
       • You’re at a 501(c)(3) hospital (most academic centers).
       • Debt ≥1.5x your future starting salary.
     • Aggressive payoff only if:
       • Debt is relatively low (<1x expected attending income).
   • Do not bounce between forbearance and random plans. You waste time and forgiveness credits.

3. Set a minimum emergency buffer target

   • PGY-1 goal: $1,000–$2,000 saved by the end of the year.
   • Tiny? Yes. Life-changing when your car explodes? Also yes.

Month 3–6 (September–December): System-building

You’re settling in. Now your decisions start compounding.

At this point you should:

1. Lock your housing cost until PGY-3

   • If your lease is painful but survivable and safe, consider staying put.
   • Constant moving = constant moving costs = constant furniture churn.

2. Tune your budget to a simple rule:

   • 50–55% Needs (rent, utilities, groceries, transportation)
   • 10–15% Financial goals (loans, savings)
   • Remainder = lifestyle and sanity
   • You’re not aiming for FIRE. You’re trying to not be 35 and furious at your PGY choices.

3. Get minimal but real insurance in place

   • By December you should:
     • Enroll in hospital health insurance (done at onboarding, but confirm details).
     • Understand disability coverage:
       • If it’s “60% of salary” and not portable, you’ll still need a personal policy later.
     • Confirm any group life insurance (especially if you have dependents).

4. Do one-time setup tasks

   • Freeze your credit if you’re not applying for new cards/loans.
   • Clean up old credit cards with crazy annual fees (downgrade, don’t always cancel).

Month 7–12 (January–June of PGY-1): Clean up and prepare for a better PGY-2

This is where bad habits usually lock in. Do not let that happen.

At this point you should:

1. Have a clear student loan path for the next 2 years

   • PSLF path:
     • On an IDR plan (e.g., SAVE).
     • Employment certification forms submitted annually.
   • Non-PSLF:
     • Refinancing research started near the end of PGY-2, not yet.
   • Avoid forbearance unless you’re in true crisis.

2. Try to avoid new recurring payments

   • Gym? Fine. One.
   • Multiple subscription boxes, streaming packages, luxury car leases? No.

3. Start a Roth IRA if and only if:

   • You’ve hit that $1–2k emergency savings target.
   • You’re not in active forbearance bleeding interest with no plan.
   • You understand this money is for future-you, not 2-years-from-now-you.

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PGY-2: From “I’m surviving” to “I have a plan”

PGY-2 is the most dangerous year financially. You get a raise, you feel less incompetent, and lifestyle creep shows up with a grin.

Your job this year: turn your blurry money situation into a structured system that points directly at your attending life.

Early PGY-2 (July–September): Upgrade your structure, not your lifestyle

By this point you should:

1. Recalculate your pay and adjust your budget

   • New salary: maybe +$2–4k/year.
   • Do not mentally treat that as “raise to spend.”
   • Decide:
     • 50% of raise → loans or savings
     • 50% of raise → quality-of-life upgrades (selective, not everything)

2. Set a concrete end-of-PGY-2 savings target

   • For low-paying specialties, a realistic goal:
     • Emergency fund: $3,000–$5,000 by end of PGY-2
   • Label this clearly in your savings account. “Emergency fund” is less tempting to raid than “extra money.”

3. Clean up any PGY-1 financial damage

   • Pay off:
     • High-interest credit card debt
     • Med school application residue that never died
   • If your credit card APR is >15%, that balance is priority #1, even over small extra loan payments.

Mid PGY-2 (October–February): Planning for attending life starts here

This is where you quietly win or lose the next decade.

At this point you should:

1. Clarify your long-term job trajectory

   • Decide if you’re:
     • Pure outpatient (FM, psych, peds)
     • Hospitalist track (IM, peds)
     • Fellowship-bound (cards/gi, etc. from IM, child psych from adult psych, etc.)
   • Why this matters: it drives your realistic attending salary range.

2. Build a simple projected attending budget

   • Use conservative starting salary estimates for low-paying specialties:

Specialty	Conservative Start (Academic)	Conservative Start (Community)
Family Medicine	$190,000	$225,000
Pediatrics	$185,000	$215,000
Psychiatry	$220,000	$260,000
General Internal	$210,000	$250,000
Neurology	$230,000	$270,000

• Run rough numbers:
  • Federal + state taxes
  • 403(b)/401(k) 10–15%
  • Loans (PSLF vs refinance vs standard)

3. Decide your likely student loan endgame
   • By February of PGY-2, you should be leaning clearly toward:
     • PSLF through at least 10 years of nonprofit work, or
     • Aggressive payoff with refinance 1–2 years into attending life.
   • Waffling for 5 more years is what traps people.

Late PGY-2 (March–June): Career positioning + protection

At this point you should:

1. Budget for interview and exam costs

   • Board exams, in-training exams, potential fellowship interviews.
   • Block off $1–2k as a “professional costs” bucket.

2. Start thinking about disability insurance seriously

   • If you’re within 12–18 months of finishing, you’re in the window where:
     • A personal, own-occupation policy makes sense.
   • You want:
     • True own-occupation
     • Non-cancelable
     • Benefit enough to replace at least 60% of expected attending income

3. Push emergency savings a bit higher

   • End-of-PGY-2 stretch goal: $5–7k.
   • Why? PGY-3 comes with looming relocation or early attending transitions.

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PGY-3: Launch Prep – Money Milestones That Actually Matter

PGY-3 is not just “finish boards, get out.” In low-paying specialties, this is the last cheap chance to avoid feeling stuck as a new attending.

Early PGY-3 (July–September): Lock in the big decisions

At this point you should:

1. Be very clear on your post-residency plan

   • Academic vs community
   • Geography (state matters for cost of living and taxes)
   • PSLF vs non-PSLF employer
   • Fellowship or straight to attending

2. Start reviewing job contracts (or fellowship offers) early

   • Read every line on:
     • Call expectations
     • RVU bonuses (often meaningless in peds/psych outpatient but can matter)
     • Non-competes
     • Relocation assistance and clawbacks
   • If needed, pay for one-time contract review with a physician contract attorney. Worth it.

3. Update your loan plan with actual numbers

   • Use current:
     • Debt balance
     • Interest rates
     • Counts of qualifying PSLF payments
   • Calculate:
     • Remaining PSLF timeline, or
     • Years to payoff if you refinance at realistic attending payments (e.g., $2–3k/month)

Example Student Loan Balance Over Time by Strategy

Category	PSLF Path	Refinance and Payoff
PGY-1	260000	260000
PGY-2	262000	258000
PGY-3	264000	255000
Attending Year 1	265000	240000
Attending Year 3	230000	190000
Attending Year 5	180000	120000

Mid PGY-3 (October–January): Execute the attending transition

This is the heaviest planning window.

At this point you should:

1. Lock down your first attending job or fellowship

   • Ideally signed by:
     • December for jobs
     • Earlier if fellowship
   • Clarify:
     • Start date
     • Onboarding timeline
     • Bonus structure (sign-on, relocation, loan repayment)

2. Decide what to do with sign-on and relocation money

   • Non-negotiable rule:
     • Do not mentally treat a sign-on bonus as “extra.”
   • Options ranked:
     1. Fund 3–6 months of living expenses as an attending transition cushion.
     2. Kill any remaining high-interest consumer debt.
     3. Seed a down payment savings fund if you’re buying in 2–3 years, not month 2.

3. Finalize your emergency fund target by graduation

   • PGY-3 minimum: $7–10k
   • Ideal if you’re moving/starting job gap: 1–2 months of your expected attending expenses.

4. Get your personal disability policy in place (if you haven’t yet)

   • Do this before you get diagnosed with something annoying that jacks your rates or excludes coverage.

Late PGY-3 (February–Graduation): Tighten the screws

This is where you make final decisions that prevent a financial faceplant as a new attending.

At this point you should:

1. Plan your move like a project, not a panic

   • Create a line-item move budget:
     • Movers/truck
     • Temporary housing
     • Double rent overlap (often 1 month)
     • Travel
   • Use your emergency fund + any relocation stipend strategically. Do not assume credit cards will magically be fine.

2. Decide on your first 12 months as an attending: rent vs buy

   • My blunt recommendation for low-paying specialties:
     • Rent for at least 6–12 months.
   • You’re adjusting to:
     • New job
     • New pay structure
     • New city
   • You do not need a $600k mortgage on top of that.

3. Create a written attending-year money plan

   • On one page, answer:
     • Target monthly:
       • Housing max (≤25–30% of gross is reasonable)
       • Student loan payment (PSLF minimum vs aggressive payoff)
       • Retirement contribution % (start at 10–15% ASAP)
       • Savings (home, future kids, etc.)
   • Do this before your first attending paycheck hits and lifestyle temptation explodes.

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Specialty-Specific Realities You Should Respect

Different “low-paying” specialties have different financial traps. By mid-residency, you should be aware of your specialty’s quirks.

Family Medicine / General Internal Medicine

• Trap: accepting low-structure salaried jobs with hidden RVU expectations.
• Strategy by PGY-3:
  • Compare at least 3 offers (academic vs community vs FQHC).
  • Understand panel expectations: how many patients/day, how many days/week.
  • If PSLF: FQHC or academic + IDR + 403(b)/401(k) match can be a strong combo.

Pediatrics

• Trap: very low pay in certain markets + expensive cities.
• Strategy:
  • Be ruthless about geography. HCOL + low peds pay = you feel poor for a long time.
  • Strongly consider PSLF if debt is high.
  • Push harder to keep housing costs down in the first 5 attending years.

Psychiatry

• Trap: the illusion of “I’m low-paid” when in reality, psych’s floor has risen with demand.
• Strategy:
  • Explore community mental health centers (PSLF-eligible) for 3–5 years to crush loans.
  • If you moonlight as PGY-3, ringfence that income: 100% to loans or savings.

Neurology

• Trap: being underpaid in academic settings while doing complex, heavy work.
• Strategy:
  • Consider starting in a somewhat higher-paying community job for 3–5 years to stabilize financially, then pivot academic if wanted.
  • Do not accept “that’s just how neurology pays” without comparing offers across regions.

Relative Starting Salary Index (Low-Paid Specialties)

Category	Value
Pediatrics	85
Family Medicine	90
General Internal	95
Psychiatry	105
Neurology	110

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Moonlighting: Where It Fits in PGY 1–3

People will oversell moonlighting as the magic fix. It is not.

When moonlighting actually makes sense

• Program allows it (later PGY usually).
• You’re not drowning clinically or mentally.
• You can direct that income to:
  • High-interest debt
  • Emergency fund completion
  • Future moving/transition costs

When it’s a bad idea

• You’re using it to fund a lifestyle you can’t sustain on base pay.
• Your exhaustion is bleeding into your core residency performance.
• You have unstable mental or physical health and you’re ignoring that for cash.

At this point (late PGY-2 to PGY-3), you should be using moonlighting—if you do it—to accelerate specific goals, not to plug endless holes in an inflated budget.

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Final 30-Day Checklist Before You Graduate

You’re 1 month from finishing. Here’s what should already be done:

• Job or fellowship contract signed, start date confirmed.
• Moving budget set and mostly funded.
• Emergency fund at least $7–10k or 1–2 months of expected attending expenses.
• Student loan strategy selected and not theoretical:
  • PSLF: employment certification, IDR set.
  • Refinance plan: lenders researched, timing decided (usually after first attending paychecks).
• Disability policy in force or actively in underwriting.
• One-page attending budget sketched, with:
  • Housing max
  • Loan payment target
  • Retirement contribution %
  • Savings goals

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If You Remember Nothing Else

1. These three years are about structure, not wealth. PGY-1–3 should give you a clean launch path, not a miracle bank account.
2. Low-paying specialties cannot rely on “I’ll just earn my way out of it.” Your geography, loan plan, and housing choices matter more than you think.
3. Every year of residency should have a clear money milestone: small emergency fund (PGY-1), stable system and defined loan path (PGY-2), and a fully planned attending transition (PGY-3).