NYSC is about the least earning phase in the life of most Nigerian doctors. The drop in earnings by nearly a half ushers most young doctors into a daze that they are seldom prepared for. The desire to make ends meets often force some into canvassing for high-paying states and institutions or working multiple jobs.
Prior to starting housemanship and in the course of the same, most senior colleagues make it their mission to drum these words of advice into the ears of those who would listen, “Save! Save! Save!” I can’t help but ask, “Is merely saving enough? Beyond saving and frugal spending, how can a young Nigerian doctor make the transition easier for their self?”
As I approach the end of my service year, I realise that even though that advice is a good one, it could be modified and made better. In this post, I will be sharing some things I might have done differently and some helpful financial habits. My desire is that readers find this post as helpful as I hoped it would be while writing.
1. You are more likely to succeed with your saving when it’s tied to a goal.
There are a number of benefits in deciding the path that one would love to tow early on. Granted, house job helps a lot of persons make an informed decision. Still, having a broad insight helps define your savings goal better.
Do you intend to go into residency training in Nigeria? Do you have plans for emigrating? Do you want to explore the non-clinical aspect of medicine? Deciding soon enough helps you start taking steps in the direction of your goal. You need money to finance your dreams; you have to be sure that you are spending your money on the things that mean the most to you and saving commensurately.
2. You are saving, but is your saving enough?
It is often the case that most persons subconsciously raise their lifestyle expenses when their income increases and fresh doctors are not exempt. Housemanship is a time of minimal financial responsibilities for most doctors and consequently a time that they can be aggressive and daring with their savings and investments.
I opine that it is a prime time to engage in medium term investments (six months to one year). This goes without saying that you should jealously guard your hard-earned money against dubious and unreliable schemes. You will constantly be poached with business and investment ideas, please, do your due diligence before investing.
Some say that saving is simply procrastinated spending and many will identify with this. While you need your saving to act as a buffer in low times, you also need to allocate a proportion of your income to investments – to put your money to work for you.
There is a proposed 50-20-30 principle, where 50% of your earning should go to your needs, 20% to your wants and 30% to savings and investments, of which 10% of the last should be placed in an emergency fund. You can tweak this to suit your reality, the aim is for you to be intentional and practical with your finances – not to over or under-save and invest as both extremes have their pitfalls.
3. Maintain separate accounts for saving and daily expenses.
A common mistake among new doctors is putting all of their money in one account and having to spend directly from it. When asked how much savings they have, they mentally calculate the money left in their bank account. Doing this, on one hand, makes you mistake your net worth in cash for your disposable income; the line that decides what can be spent or lent per time becomes blurred.
On the other hand, you miss the primary benefit of a savings account which you most likely own – interest capitalisation on savings. With newer financial institutions promising juicer return on investment, it’s easy to get blinded to the interest Nigerian commercial banks pay on a savings account. When you consider the fact that your money is unreachable for a length of time with these institutions or you are made to pay a breaking fee for withdrawing before maturity, you realise that there is still a place for saving with good old commercial banks.
It is untrue that most commercial banks pay infinitesimal or no interest at all. What is true is that most offer an interest of about 3.7% per annum (previously 4.2% until May 2020), but this is forfeited when you make more than four withdrawals per month. So, having all of your money in one account and consequently making over four withdrawals per month becomes counterproductive to owning a regular savings account.
4. Have a monthly budget.
With the financial security that your house job income gives you, you are tempted to live on a spree. “There will be money to replace money that is spent,” you make yourself believe. What a budget does is give direction to your expenses.
It is financially irresponsible and unhealthy to be unable to put a figure to your monthly expense. It sabotages your saving goal. A budget helps you tell how much money goes into your savings account and how much you require for day-to-day expenses.
Do not think of a budget as constricting, but as a key to true financial freedom. An effective budget is one that is comprehensive, tested and practical.
5. Plan your gifts and giving.
While you are not going to make yourself into some sort of Father Christmas, there are people you ought to give to, like God and your parents. It helps to plan this by making provision for it in your budget.
Create a system around this so that you give what you can afford to per time. Letting your family in on your plans and the roadmap for achieving it can help them support your dreams by being kinder and more understanding with their demands and requests. I recently read something that resonates with me: “Giving is the antidote to materialism and selfishness.”
6. Lastly, invest in yourself.
As you make a quest to invest in businesses, keep in mind that you are a worthy investment. Hone the skills you have in the workplace and outside of it. The more value you can create, the more money you will generate.
There is only so much that saving and frugal spending can do. Sometimes, you have to increase your earning capacity. What can you offer? What pain points can you meet in society? People will pay for what they need. Identify your unique offering and place a price tag on it.
While we hope that the welfare of doctors in Nigeria, even in the course of national service is reviewed up, we will continue to do the best with what we have.
Tell me, what lifestyle habits and choices bridged the earning gap between housemanship and NYSC for you? What extra advice will you give upcoming or current house officers and pre-NYSC or serving medical officers?