Training to become a doctor can take more than a decade of an aspiring physician’s life. First, there are the four years of undergrad, then four years of medical school, then 2-7 years of residency depending on the specialty and two more years of fellowship for advanced specialists such as neurosurgeons. Here’s a typical course schedule for med school students:
Year 1
- BIO 111- Biological Principles (with lab)
- CHE 111- General Chemistry (with lab)
- BIO 212- Cellular & Molecular Biology (with lab)
- CHE 112, 113- General Chemistry II (with lab)
Year 2
- CHE 201, 202- Organic Chemistry I (with lab)
- BIO 214- Organismal Diversity (with lab), or start the physiology or physics sequence
- CHE 309, 310- Organic Chemistry II (with lab)
Year 3
- PHY 111- General Physics I (with lab)
- BIO 305- Human Physiology I (with lab)
- Bio 260- Preceptorship in Health or Veterinary Sciences
- PHY 112- General Physics II (with lab)
- BIO 306- Human Physiology II (with lab)
- CHE 340 – Biochemistry (with lab)
Year 4
Additional upper-level courses in:
- Biology
- Chemistry
- Physics
- Psychology
- Kinesiology
- Other Appropriate Fields
What strikes me about medical school coursework, is that no even one course on finance or business is required. This is incredible since many graduating doctors will eventually set up a private practice of their own one day.
Many doctors will become trusted authorities in their fields eventually, but many won’t be an authority on their finances.
I can sympathize with doctors entering practice for the first time and finally making real money. They’ve spent more than ten years of training, and they feel the need to reward themselves and their families.
After all, they’ve sacrificed sleep, taken on an average of $230k in student loans, and eaten more Ramen than their peers recommend. So, when all of a sudden, they’re making $160k+ a year, it’s time to splurge?
The problem is, they go into more debt to uphold a lifestyle they think is fitting of a doctor. They buy big homes, fancy cars, send their kids to private schools.
I’ve been thinking about this subject of why so many doctors make high salaries, but very few are wealthy. There are articles upon articles and numerous blogs on the subject. For many doctors, their incoming salary will barely meet their outgoing expenses.
The problem is doctors spend so much time working that there is little time to educate themselves on financial matters.
Doctors remind me a lot of professional athletes: they make a lot of money, but many of them blow all their money while they’re active. The big issue comes in when they stop playing because of an injury, being cut or retirement, the money stops, and many eventually find themselves broke.
The funny thing is, the NFL has tried to get ahead of this problem and now requires all rookies to attend mandatory financial literacy training. Doctors should be required to participate in financial literacy training as part of their board certification, but they’re not.
Doctors make high incomes, but they will never be able to stop trading time for money because their income barely meets their expenses.
Unless they come up with another stream of income, once they retire, their finances will be on a downward spiral. This is because their expenses will stay the same, but their income will go way down. Unfortunately, many doctors get caught this vicious cycle because they spend so much time working that they have little time to educate themselves on financial matters.
They grasp what is convenient and what’s familiar. That’s why they fall prey to financial planners – many of them incompetent and even unscrupulous.
Financial planners know doctors are easy targets because they’re time-crunched, so they pitch what’s simple and easy. Financial planners love to pitch annuities to doctors because they’re easy to understand, and it’s a promise of a fixed income for life.
For a doctor, this sounds perfect. The problem is that by the time doctors start collecting their annuities, the income is nothing to write home about. With the average rate of return for annuities at around 3%, that doesn’t even cover the long-term average inflation rate of 3.15%.
Doctors are better off putting their money under a mattress than entrusting it to a financial planner.
- Without a medical authority to promote financial literacy, similar to how the NFL does with its rookies, medical professionals are on their own. They must either teach themselves financial literacy or rely on trusted sources.
- All medical professionals should actively pursue financial literacy and take an active role to set themselves free from the system.
- Take a page from the .1%. What are they doing with their money? How did they get into the position of working because they choose to and not because they have to?
Just like the few star athletes who do become financially literate by educating themselves or surrounding themselves with trusted authorities, medical professionals can achieve the same financial independence and not dread retirement when their income falls off a cliff.
But to get to that point, they need to be proactive in gaining financial literacy. Medical professionals need to not fall victim to financial planners or in the system that so many of their peers have become lost in.
Invest for success,
Kent
