Editor’s note: This is the eighth article in a fall financial series of New Dentist Now blog posts from Darien Rowayton Bank, which provides student loan refinancing and is endorsed by the American Dental Association. Qualifying ADA members receive a 0.25 percent rate reduction to DRB’s already low rates for the life of the loan as long as they remain ADA members. View rates, terms and conditions and disclosures at student.drbank.com/ADA.
After so many years of training, it’s such a thrill to start making a steady paycheck. Especially when you’re just launching your dental career, there’s a temptation to spend any money that’s not going toward paying bills or knocking down your student-loan debt. You deserve to enjoy yourself, but it’s also important to save money for when certain life events happen. Even small amounts add up quickly and can make a big difference.
Here are five things to start saving for now:
This is your nugget for unexpected costs—medical expenses, home or car repairs, unforeseen moves or career changes. These are the things most people never plan for but are inevitably faced with at some point. You’ll save yourself a lot of up-at-night anxiety if you have some savings in place. The target amount for your emergency fund will vary based on the size of your family and other factors, but a good rule of thumb is to have three to six months of expenses saved at all times.
At the beginning of your career, it can be hard to wrap your mind around the idea of saving for retirement. But the sooner you start portioning some of your paycheck toward retirement, the less stressed you’ll be down the road. Prioritizing retirement savings early is especially important because of the compound-interest effects of many retirement investments. Whatever you put away now can grow significantly over time. Most experts estimate that you should put about 15 percent of your income toward retirement, but you can use a retirement calculator to determine what’s right for you.
Home down payment
Even if you’re not quite ready to be a homeowner, start saving now. Having a sizeable down payment not only helps prevent a last-minute scramble to stockpile money for a home, but it also puts you in a better negotiating position for a mortgage. It can help with getting a better interest rate and avoiding expensive private mortgage insurance. Most lenders want to see at least 20 percent down to approve you for a mortgage, so based on home prices in your area, you can determine a down payment savings goal.
You work hard. You deserve a vacation sometimes. But leaving town, especially when it’s for an international trip, can get pricey. If you don’t set aside a vacation fund, it can be difficult to ever feel justified in spending a few thousand dollars on leisure time. The cost of a vacation varies depending on the size of your family and your travel ambitions. Spend some time thinking about your vacation goals, then figure out how much you need to save each month to reach your destination.
As you know all too well having recently finished dental school, the cost of higher education is astronomical—and increasing every year. If you have children or plan to have them, it’s never too soon to start a college fund on their behalf. With college costing what it does, it’s becoming increasingly prohibitive for parents to pay for all of it, but whatever you can tuck away for your kids will be helpful in decreasing their student-loan debt.
There are many things worth saving for in addition to the ones mentioned here. The bottom line is that saving money is important—it brings peace of mind and expands your options in the future. So, decide on your priorities, create savings goals, and start stashing away!
DRB (Darien Rowayton Bank) is a national bank, marketplace lender, and the fastest lender in industry history to reach $1 billion in student loan refinancings. FDIC insured and established in 2006, DRB Student Loan has helped thousands of professionals with graduate and undergraduate degrees across the country to refinance and consolidate federal and private student loans, saving these borrowers thousands of dollars each.
DRB’s student loan refinancing program has been endorsed by the ADA. For more information about the student loan refinancing program, visit https://student.drbank.com/ADA.