How to Financially Prepare for a Fellowship (Without Going Broke)
By Jared Andreoli, CFP®, CSLP®
You've made it through medical school and residency. Now you're considering a fellowship to specialize further. But here's the part they don't always tell you: fellowship financial planning can make or break your ability to weather those extra training years.
Most residents pursue fellowships with the expectation of higher earnings down the road. But fellowships mean another 1-3 years of lower income while your peers are already earning attending salaries. Meanwhile, your student loans continue accruing interest, and if you have a family, expenses keep climbing. The financial strain is real, and without a plan, it can derail everything you've worked toward.
The good news is that with some smart planning, you can make it through your fellowship without financial disaster. Here's how.
Understand What You're Really Signing Up For
Before you commit to fellowship, get clear on the financial reality. Fellowship salaries typically range from $60,000 to $75,000, depending on your specialty and location. That's marginally better than residency but nowhere close to attending pay.
Calculate your take-home income after taxes, then map out your monthly expenses: rent or mortgage, utilities, insurance, food, transportation, student loan payments (if required), and any family obligations. If your expenses are pushing up against your income, you need a plan before you sign that fellowship contract.
Get Your Student Loans Under Control
If you have federal student loans and you're pursuing Public Service Loan Forgiveness (PSLF), fellowships can be a strategic opportunity. Your fellowship counts toward PSLF if you're working for a qualifying employer—typically nonprofit hospitals or academic medical centers. Stay on an income-driven repayment plan, keep your payments low, and keep making those qualifying payments.
If you're not pursuing PSLF, decide whether to continue making payments during fellowship or request forbearance or deferment. Forbearance lets you pause payments, but interest keeps piling up. If you can afford to make interest-only payments during fellowship, that's usually the smarter move.
Don't refinance your federal loans to a private lender during fellowship unless you're absolutely certain you won't need the flexibility of income-driven repayment options later.
Build a Bare-Bones Budget (and Stick to It)
Fellowship isn't the time to upgrade your lifestyle. Think of these years as a temporary investment in your future earning potential.
Start by tracking every dollar you spend for at least two months. Then build a budget that prioritizes the essentials: housing, food, insurance, and debt obligations. Cut back on dining out, travel, and discretionary spending. I'm not saying you can't enjoy life, but be intentional about where your money goes.
If you have a partner or spouse, get them on board with the plan. Financial stress during fellowship often stems from mismatched expectations about spending. Have an honest conversation early.
Don't Neglect Your Emergency Fund
When money is tight, building an emergency fund might seem impossible. But fellowship is a high-stress time, and unexpected expenses don't wait for a convenient moment. Car repairs, medical bills, and household emergencies can happen at any time.
Without an emergency fund, you're one unexpected expense away from high-interest credit card debt. Even $1,000-$2,000 saved up can be the difference between a minor inconvenience and a financial crisis. Start by automating small transfers (e.g., $50 or $100 per paycheck) into a separate savings account. Those small contributions add up over time.
Keep Contributing to Retirement (Even a Little)
When money is tight, retirement contributions might seem like a luxury you can't afford. But if your fellowship program offers a 403(b) or 401(k) with an employer match, contribute at least enough to get the full match. That's essentially free money added to your retirement savings.
If there is no match, you might decide to pause retirement contributions temporarily while you focus on more immediate financial needs. But if you can manage even 3-5% of your income into a retirement account, it's worth doing. Compound interest works best over long time periods, and starting early makes a significant difference. Those small contributions during fellowship may seem minor now, but skipping them entirely could cost you tens of thousands of dollars by the time you retire.
Talk to Your Program About Moonlighting
Some fellowship programs allow moonlighting, which can be a game-changer for your finances. If you can pick up a few extra shifts per month, that income can cover your emergency fund contributions, help you stay current on loan payments, or just give you breathing room in your budget.
Before you jump into moonlighting, make sure your program permits it and that you have the appropriate malpractice insurance coverage. Don't assume your fellowship's coverage extends to moonlighting work because it often doesn't.
Reassess Your Insurance Needs
Now is a good time to review your insurance policies. If you don't have disability insurance yet, get it. Fellowship is still training, which means you're at a higher risk of injury or illness that could sideline your career before it really starts. A true own-occupation disability policy is expensive, but it's worth it.
If you have kids or dependents, you need life insurance. Term life insurance is affordable, and it gives your family financial protection if something happens to you during fellowship.
Avoid whole life insurance policies that are sometimes marketed to young physicians. These policies are significantly more expensive than term life insurance, and they're generally not appropriate for physicians in training who need affordable, straightforward coverage.
Plan for the Fellowship-to-Attending Transition
Fellowship ends eventually and when it does, you'll be transitioning to an attending position with a much higher salary—and a new set of financial decisions.
Start thinking now about how you'll allocate that increase in income. Whether you prioritize aggressive debt repayment, maximize retirement contributions, or save for a home, having a clear plan before you receive your first attending paycheck can help you avoid lifestyle inflation that can undermine your financial progress.
You Don't Have to Do This Alone
Fellowship financial planning is stressful, but you're not the first physician to navigate it. If you're feeling overwhelmed or unsure how to balance competing priorities, consider working with a financial advisor who specializes in working with physicians.
Whether you're figuring out your student loan strategy, building a budget, or planning for life after fellowship, Simplicity Financial LLC can help. Our comprehensive financial planning services are designed to help physicians at every stage of their career.
Get started by scheduling a free consultation, or reach out to me by email at jared.andreoli@simplicityfinancialllc.com or by calling 414-207-6473.
Frequently Asked Questions About Fellowship Financial Planning
How much do fellowship physicians typically earn?
Fellowship salaries typically range from $60,000 to $75,000 annually, depending on your specialty, geographic location, and the institution. This is marginally higher than residency pay but significantly lower than attending physician salaries, which makes financial planning during this period particularly important.
Should I make student loan payments during my fellowship?
If you're pursuing Public Service Loan Forgiveness (PSLF), you should continue making payments during fellowship since those years count toward your required 120 qualifying payments. Stay on an income-driven repayment plan to keep payments manageable. If you're not pursuing PSLF, evaluate whether to continue payments, make interest-only payments, or request forbearance based on your individual financial situation. At Simplicity Financial in Milwaukee, we work with physicians to develop student loan strategies that align with their career timeline and fellowship plans.
Can I contribute to retirement accounts during fellowship?
Yes, and you should if possible. If your fellowship program offers a 403(b) or 401(k) with an employer match, contribute at least enough to receive the full match. If there's no match and money is extremely tight, you might pause contributions temporarily, but even small contributions (3-5% of income) during fellowship can make a significant difference in your long-term retirement savings due to compound growth.
Is moonlighting during fellowship worth it financially?
Moonlighting can provide meaningful additional income during fellowship, but it's only worth pursuing if your program allows it and you can maintain your primary training responsibilities. Before moonlighting, verify that you have appropriate malpractice insurance coverage, as your fellowship's policy may not extend to outside work. The extra income can help you build an emergency fund, stay current on loan payments, or reduce financial stress.
What insurance do I need during fellowship?
At minimum, you need disability insurance and health insurance. Disability insurance protects your future earning potential if an illness or injury prevents you from practicing medicine. If you have a spouse, children, or other dependents, you also need term life insurance to provide financial protection for your family. Focus on affordable term life insurance rather than expensive whole life policies that aren't appropriate for physicians in training.
About Jared
Jared Andreoli, CFP®, CSLP®, is president and financial planner at Simplicity Financial, a fee-only RIA dedicated to helping early-career physicians conceptualize their financial picture and achieve their financial goals. Jared specializes in devising individualized financial road maps for clients, and he loves nothing more than a full day meeting with clients who value his partnership to solve problems—big and small.
After college, Jared spent six years working as a mutual fund administrator for a large company. While he learned an immense amount about the financial world, he was missing the personal connection of working with individual clients. Combining his passion for finance and personal connection, he established Simplicity Financial in 2017.
Jared has a degree in finance with a concentration in financial planning from Western Kentucky University, along with the CERTIFIED FINANCIAL PLANNER®, CFP® and a Certified Student Loan Planner (CSLP®) certifications. Outside of work Jared enjoys cooking and traveling. He played baseball in college and still coaches occasionally. He and his wife recently welcomed a daughter, who occupies most of their time. To learn more about Jared, connect with him on LinkedIn.