The Cost of Graduating Pharmacy School and Getting Licensed
There's a dirty little secret about life in the first few months after graduation. Many, if not most, entered this profession with the promises of riches and fame (well, maybe not the fame). The initial offer from that major pharmacy chain has more significant figures than your algebra teacher ever required you to round to. And for nearly everyone it will be a tremendous jump in income. Especially considering you've been living on so many student loans that your net income has been negative for 4 years.
So graduation nears. You can practically taste that first bite of steak....
Feel the buttery leather grip of your brand new whip.....
And that slight resistance and click of your keys in the door to your brand new house.
But wait. There's something that most of us didn't anticipate or expect in May/June.
Post. Graduate. Expenses.
Waiting on that six-figure income and sign-on bonus? (Ha! You think this is 2005?!). Unfortunately you might be waiting for longer than you think. If you signed on with a major chain, you'll start as a graduate intern and make decent pay. But until you pass the NAPLEX / law exams and get the license, you won't get anywhere close to the number in your head. If you're on the residency track, you already know what your financial picture looks like for the next year.
Also, keep in mind that you will not get a paycheck until 2 - 3 weeks of your new job/residency.
in that time, here are a few expenses that you will run into:
Cap & Gown + "Matriculation Fee": varies per institution, usually ~$200
NAPLEX (as of November, 2018): $575
MPJE (as of November, 2016): $250 (non-MPJE state law exams are similar)
State Licensure Fees: varies, ~$150-300/state + background check, ~$50
All of this is, of course, IF you pass the first time. If you live near a state border (or multiple borders for the four corners, tri-state, DMV people), it's even worse. You should anticipate needing licensure in all of those states because you'll be competing against pharmacists that are licensed in them all.
Don't forget about basic living expenses like food, housing, and transportation.
And the non-basic living expenses like iPhones, Netflix, and cable (or chill?).
And the fact that you'll need a professional wardrobe for job interviews and your super-awesome new job.
Of course, if you went with the residency path, you are already familiar with how expensive this can all get. You had to fly out to Midyear. Pay PhORCAS application fees. Travel to wherever you were lucky enough to score an interview. It's likely that you're already in the financial hole.
So what do you do about it?
How to Financially Prepare for Your P4 Year
1. If you don't already have one, get a job.
Unless you have rich parents, you need a job to earn money. The obvious preference will be for you to get a job as an intern. You will get valuable practice experience (which will help with school) and start making work relationships with employers. Then bonus, you'll also get money. You just need to save this money. You've got student loans covering your living expenses, so try to bank away at least 50% of what you make with the job. Use it as a fund to pay for all of the expenses mentioned above.
2. Scour the land for every possible scholarship and grant.
Because, hey, free money. You often will need to fill out an application, and write an essay. But for the return you get on your time (hundreds or thousands of dollars) it's typically worth it. Some potential resources for the scouring include:
3. Stop spending money on useless things.
You are a student. Unless you want to be paying off debt until you're 60, it's best that you live like one. Reduce spending on unnecessary expenses. Yes, that means saying goodbye to things like cable (for now). You can always bring them back later when you're earning a positive income next year.
The "rules" that govern this step are different for everyone. Be willing to spend money on the things you value most...but cut dow every other expense Jason Voorhees-style with a machete. Try to focus spending on things that provide long-term enjoyment and benefit. If you are willing, be flexible with housing. Have roommates. Live closer to where you work and hang out.
The biggest costs for most Americans are housing, food, and transportation. If you can make a dent in these, you'll be amazed at how much you'll have left over. You can bank that money for things like "entertainment" (whatever the hell that is) and eventually the NAPLEX/MPJE.
4. Plan ahead for license reciprocity
This concerns you if you plan on moving to another state at any point after getting licensed. For example. You're from Florida, but you have a PGY1 residency in DC. But after your residency, you're planning on moving back to Florida. Since you know this in advance, you can save a lot of money by using the score transfer option when you take your NAPLEX.
The score transfer option is $75 per state (as of December, 2018) as opposed to the obscene transfer / reciprocity fees (upwards of ~$600 per state). If there's a chance that you might move to another state within a few years, go ahead and pay for the score transfer when you first register for the NAPLEX.
Later, you can buy Future You a nice present for saving $500. If you're already licensed and need to transfer or apply by reciprocity, check out the very handy table available at NABP to see what you'll need, and what states will accept what (hint, Florida and California aren't the best).
Of course, you could just plan to work for the federal government (VA, PHS, IHS, etc...) for your entire career. In that case, pick a cheap state with a relatively easy law exam (like Virginia). As long as you work for a federal government agency, your license can cross state borders and allow you to practice anywhere in the US.
5. Plan to have at least $1,000 for licensing exams (more if you're applying for multiple states).
See the list of expenses above to get an idea of where this number comes from. It can seem like a lot of money to save, but you really don't want to go into credit card debt if you can avoid it. Plan to have at least $1000 for your initial licensure, and about $500 for each additional state.
6. Keep an "Oh Shit" fund
If at all possible, try to keep a (separate) emergency fund. You'll read in a lot of personal finance books that you should have anywhere from 3 months to 1 year of living expenses stashed away for an emergency. Things like your car breaking down or the water heater in your house exploding. Or for that 3 week period when you start your new job but don't receive a paycheck.
As a student, 3+ months might not be a realistic goal. And that's OK. But try to save what you can. And keep it separate from your other funds so you aren't tempted to spend it. Knowing you are buffered from life's little emergencies will remove a ton of unnecessary stress.
But how do you manage to SAVE that much?
That is a bit beyond the scope of this post (but if you're interested in us covering it in more detail, let us know!). There are a million-and-one personal financial advice blogs that can give you a head start. Some of our favorites are:
In particular, I can’t recommend highly enough that you follow Your Financial Pharmacist. Who better to understand the financial challenges you face as a student/new practitioner than a team of pharmacists? I’d recommend starting with their post on the 20 financial moves every pharmacy graduate should make and then dig in further from there.
I’d also recommend checking out their book Seven Figure Pharmacist. For just a few bucks, you can finally feel the peace of mind of having a plan to get your financial house in order. Even more, is that the YFP team has generously offered a 15% discount to tl;dr pharmacy readers. Check out this review I’ve written about Seven Figure Pharmacist to learn more.
There's also forums and subreddits if that's more your thing. Then, there's a bunch of budgeting tools like You Need a Budget, Mint, and good ole Microsoft Excel. The point is, you can learn from anywhere.
At the end of the day, there is only one rule to personal finance: Spend less than you earn. If you can accomplish that, you will be fine. Because math. It just takes planning, and actually thinking about your means and your expenses.
Again, we should emphasize. You DO NOT want to end up in credit card debt. You'll have enough debt as it is with your student loans.
What about the "Fun" side of graduation?
After graduation, you will likely want to celebrate by either:
Making it rain
Buying yourself something nice (laptop, camera, clothes, car)
Going on a trip (Europe? South America? Asia?)
So do that. Celebrate. Enjoy life a little. You just busted your ass for at least 6 years. You've earned it. Once you start your career, you won't have the scheduling gap that allows you the freedom to do this.
That being said, these are all also additional expenses, so plan well ;)
Graduating and getting licensed costs a boatload of money. Save at least $1000 for your first state licensure + $500 for subsequent states (score transfer, law exam, application). The 2 golden rules of personal finance are to spend less than you earn and to keep an emergency fund. Your biggest opportunities for saving are on food, money, and housing. Save up, and don't forget to celebrate a little once you graduate.