Five financial steps to take as a student pharmacist

Pharmacy graduates today are facing the unprecedented financial situation of coming out of school with an average debt load greater than $160,000. So, despite making a six-figure salary, many pharmacists feel like they are living paycheck-to-paycheck.

That’s why more than ever, you, as a pharmacy professional, have to take control of your money or it will take control of you. The team at Your Financial Pharmacist is committed to helping you, as a student pharmacist, build a strong financial foundation.

Here is our list of five financial steps to take as a student pharmacist to get you started.

Step 1: Inventory your student loans

In order to start tackling your student loans, it’s imperative that you know what loans you have and who is servicing them. To get a complete list of your federal loans, go to http://www.studentloans.gov, where you will login with your Federal Student Aid (FSA) ID or create a new one if you don’t have one. Here you will be able to identify your total outstanding loan balance and the weighted average interest rate.

Furthermore, you can get information about specific outstanding loans, the servicer, and the status of the loan. To track down information on your private loans, the best source is your credit report. You are eligible to get a free report once per year from each company (Experian, TransUnion, and Equifax) by visiting http://www.annualcreditreport.com.

Step 2: Evaluate loan repayment options

Once you fully understand what loans you are responsible for, it’s time to figure out how you are going to pay them off. There are several strategies to consider, from pursuing Public Service Loan Forgiveness (PSLF), taking advantage of tuition reimbursement/repayment programs, refinancing your loans with a private lender, or choosing one of the federal loan repayment options.

Step 3: Start an emergency fund

Your furnace goes out. Your car won’t start. You had an unexpected trip to the emergency department. Could you handle a significant emergency expense without it causing severe damage to your financial plan? Forty-four percent of adults say they either could not cover an emergency expense costing $400, or would cover it by selling something or borrowing money (Federal Reserve Report on the Economic Well-being of U.S. Households, 2016).

The main purpose of an emergency fund is to help protect the rest of your financial plan by having cash available when, not if, an emergency strikes. The key components of an emergency fund are that it’s 3 to 6 months' worth of your expenses, and that it’s placed somewhere that is readily accessible, such as a simple savings or money market savings account.

Step 4: Minimize consumer debt

Many Americans today live by the plastic. The average American household that’s carrying credit card debt has a balance of $15,654 (Nerdwallet’s 2017 American Household Credit Card Study). But it’s not just the issue of overspending. It’s the crippling penalty of interest that can really get you off track. If you have been living beyond your means by way of credit card, you may find this to be one of the most challenging feats you will ever conquer.

Beyond making a budget (see step 5) to really see what discretionary money you have to spend, the next best step is to stop paying for things with credit cards! If it’s too tempting, don’t even carry them. Pay for all of your purchases with cash (or a debit card) instead.

Step 5: Develop a habit of budgeting

Setting financial goals is awesome. But if you don’t have a plan in place to achieve them (aka a budget), then it may feel impossible to succeed. While one budgeting method will never be right for everyone, the team at Your Financial Pharmacist believes that the zero-based budgeting technique is the one that can yield the greatest results.

Check out our step-by-step zero-based budget template at www.yourfinancialpharmacist.com/budget and get started today!