Financial Decision of a Medical Resident

A recent engineering graduate has accepted a high-paying job that starts in three months. Until then, she has very little income but has a firm job offer letter. Which of the following actions best demonstrates the principle of consuming in anticipation of future income?

A person who anticipates a significant future income increase and has access to borrowing should, according to the principle of consumption smoothing, immediately increase their spending to a level equal to their expected future income.

Rationale for Early Career Borrowing

Evaluating the 'Access to Credit' Assumption