Medical students and residents often feel pinched financially because of the debt burden they carry.  As a medical student or resident, effectively managing your personal finances typically begins with understanding debt.  Debt is anything you owe, and is considered "good" debt if it provides long-term value, or the repayment matches the useful life of the asset.  It is likely that you have debt in the form of student loans, auto loans or a mortgage.

Effectively managing your personal finances requires that you know where your money is going and making deliberate decisions about how it should be spent.  A vast majority of people who keep track of their money don't have a debt problem.  How do they do it?  By using a budget.

A budget helps you track where your money goes - rent, telephone, books, tuition, groceries, insurance, entertainment, etc.  By using a budget to track the inflows and outflows of your cash, it becomes easier to identify where the "fat" is and begin eliminating it.  Some budget categories to watch:

• Transportation - can represent 50% of your expenses.
• Credit - pay attention to interest rates, particularly credit card rates.
• Groceries - consider generic brands to save money.
• Other - shop around for the best insurance deal.  Dining out can consume a lot of your discretionary income.

After you have established a budget, open a savings account.  Deposit funds saved as a result of budgeting.  Set up an automatic funds transfer to pay yourself each month.  Here are some other rules-of-thumb for budgeting and spending:

• Limit discretionary spending to 5% of your total annual spending.
• Monthly fixed payments should fall between 30-36% of pretax income.

Use credit cards wisely.  Keep only the cards that have the lowest rate, and close all high-rate credit card accounts.  Ideally, pay off the full balance each month to keep from paying interest.