Setting Up Your Financial Future After Pharmacy School

A recent estimate indicates that, on average, Canadian pharmacy students graduate with a significant amount of debt. But there are steps you can take today to help ensure you have a successful financial future.  

Here are six strategies that can help you start your career on a solid financial footing:

How often did you eat out last week? When was the last time you watched a movie on that streaming service you never use? By evaluating things that are wants and not needs, you can free up money to pay for more essential expenses.

While budgeting may sound complicated and time consuming, there is budgeting software that can make the whole process easier. For example, Scotiabank’s Money Finder Calculator can help you track fixed monthly expenses like rent and food. This will help you determine how much you have left over to spend on things you can control, such as entertainment.

“Getting a clear picture of your finances gives you the ability to target your spending on important things such as paying off your student debt,” says Sherveen Kamran, Senior Manager, Healthcare & Professional Specialist at Scotiabank. “You may even be surprised to find out that you have enough money left over to put toward your savings.” 

When it comes to financing your education, you have several different options. For example, you can take out a government student loan, a personal bank loan or a student line of credit.

Loans with fixed rates have interest rates and payments that do not change throughout your loan repayment period. Loans with variable rates may provide a lower initial interest rate at times but their rates and payments may rise if the prime rate increases and are more immediately subject to market changes. When taking variable rates you have to be prepared for these fluctuations in rate.

With a student line of credit, you may be able to pay only the interest portion on your outstanding balance during your studies when you are able to, depending on the financial institution, and then make payments on the principal and interest after you graduate.

To help keep your loan repayment options and interest costs as low as possible, Kamran says it’s important to get advice from a Healthcare & Professional Advisor on the best type of loan for your specific needs.

Credit cards can be useful in tracking your expenses and helping you meet your short-term financial needs, however, it’s prudent to always use them responsibly. Kamran recommends never carrying a large outstanding balance and always paying off what you owe by the due date to avoid incurring interest charges.

You may also be able to take advantage of a credit card that offers rewards. Compare card features to choose the credit card that’s right for you.

Your credit score is important as it helps determine your ability to qualify for credit in the future when you may be looking to open and finance your own pharmacy. That’s because lenders use it to help determine how financially responsible you are and whether or not to approve you for a loan.

Your credit score is based on how disciplined and consistent you are when it comes to paying your bills and how much money you owe compared to how much credit you have available. Credit scores range from 300 to 900 and the higher the value/number, the better the score and the more likely you are to be approved for a loan with the lowest interest rate.

If you have a history of not paying your bills on time, your score will drop, and you may have a hard time qualifying for a loan or be charged a higher interest rate. It may also affect other matters, including the cost of insurance and whether you can qualify for credit to buy inventory or lease space.

While you may not have studied personal finance in pharmacy school, you will need to have a basic understanding of how to manage money in order to make smart financial decisions. So, a great way to educate yourself is by leveraging online resources such as those offered by the Canadian Pharmacists Association. They offer courses on topics such as financial management, how to create a formal business plan and the business essentials of managing a pharmacy. Registration information is available through the Canadian Pharmacists Association. It’s also wise to regularly discuss your goals and plans with your Healthcare & Professional Advisor or Specialist and accountant as they can provide you with advice, knowledge and expertise and an opportunity to increase your exposure to financial literacy, tips and learnings.

It’s never too early to get financial advice. A Scotiabank Healthcare & Professional Advisor can not only look at how you’re financing your education, but also help you create a plan to reach your goals after graduation. “We want to know your vision for the future and can explain your options,” says Kamran. “We can make sure that you are connected with a team of professionals in the pharmacy segment that can really help and advise on your options and the best course of action.” Having a single point of contact who can provide this type of advice is one of the services pharmacists said they valued most in a 2023 Scotiabank Insights on Pharmacists report.¹

Even if you’re graduating with a fair bit of debt and have just a small amount of money to work with, when it comes to your financial future you should always work with your Advisor and accountant to take a long-term view. Considering investment vehicles such as RRSPs and TFSAs can result in tax savings and more long-term growth potential. “When you are starting a savings plan,” says Kamran, “time is really your ally. The earlier you start putting even small amounts of money aside to secure your financial future, the better.”

For customized advice and support to help you plan your financial future, contact us today.