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How to Achieve Financial Literacy as a Physician


No matter what lifestyle you lead or career path you choose, you can’t hide from your financial health. Unfortunately, physicians and other high-earning medical professionals often struggle with financial literacy. As a result, this can lead to ill-informed decisions that have disastrous, long-term effects on their financial wellness.

Financial Literacy is Low Among Physicians

To be financially literate in your personal life means you have a solid grasp on the following:

  • Your monthly income net taxes, retirement account, etc.
  • How much you spend each month on essentials (home, debt payments, food)
  • What you spend each month on non-essentials (concerts, jewelry, gadgets)
  • What is your savings rate?
  • Do you understand the interest rate on your loans?
  • What investments you own and their basic risk factors
  • Future financial goals, be it retirement, buying a home, etc.

If you can answer all the above questions then you are considered financially literate. Financial literacy is a vital aspect of modern life because it greatly impacts many important aspects of living. Unfortunately, doctors are often met with unique challenges that hinder their financial wellness. Among these include a lengthy, expensive education, the mountain of student debt that follows, and the all-consuming nature of their profession.

Why Doctors Tend to be Financially Illiterate

Doctors have a reputation of being bad with their money. Is it because you have spent too many years in school and residency grinding away? Or maybe it’s because you only ever took biology and anatomy classes, not even thinking about personal finance. Whatever the reason, doctors aren’t alone. But they are in a more precarious situation simply because they earn higher salaries which means they have that much more money to squander!

Medical school delays normal income patterns

After graduating high school, it takes 10 to 14 years to become a doctor. And that’s if everything goes as planned. Most professionals are able to enter the workforce in their desired field after receiving a four-year bachelor’s degree. Some are able to succeed with a two-year associate’s degree that cuts their college time in half. But doctors-to-be must spend an additional four years in medical school and anywhere from three to seven years as a resident.

Because of all this additional schooling, doctors are not able to work full-time jobs throughout most of their twenties. Most have to get by with whatever part-time work they can handle on top of their heavy course loads. Meanwhile, their peers are able to earn tens of thousands of dollars a year and begin seriously saving for retirement, paying off student debt, and financially investing in their futures earlier.

Medical school is very expensive

The average medical school debt in 2019 was $251,600, according to the Association of American Medical Colleges. That is a 2.5% increase from the 2018 average medical school debt, and it’s one that continues to rise year by year. This means that, on average, doctors owe more than $2,000 per month according to standard ten-year federal repayment programs. Most non-medical professionals pay a fraction of that to cover their education. Because of this debt, it takes doctors a lot longer than other professionals to begin freely investing in their own financial futures. They have to work long and hard to pay off medical school debt the size of which most people will never be able to fathom.

The job of a doctor is all-consuming

Unlike many other professions, working as a doctor can infiltrate every aspect of a person’s life. From long shifts to keeping up-to-date with the latest procedures and medicines, financial planning for physicians may not be top of mind. But understanding your finances is a vital part to attaining the lifestyles and successes you want out of life, so it’s important to make time to learn about your money, like:

  • How to escape student debt
  • How to invest properly
  • How to save for your retirement

Fortunately, there are many resources out there for doctors from all walks of life that will help you become financially savvy. Learn about everything you can from mistakes you need to avoid to how you can take control of your assets, and the more you learn, the more financially literate you will become.

How to Become Financially Literate as a Doctor

Attaining financial literacy as an attending physician is hard given your demanding work schedule. However, it must be done. One of the most important things you can do is establish a budget. There are many budgeting methods that work well for doctors. To help you get started, you may even hire a financial advisor for doctors who understands your situation. that specializes in working with physicians. Here is a road map to follow:

  1. Create a Budget: Examine what you make each month, what your necessary payments are, and how much is left over. Your budget should include income (paychecks, investments), fixed expenses (rent/mortgage payments, utilities, loan payments), non-essential spending (vacations) and savings.
  2. Understand your Debt: Whether you have a physician mortgage or student loan payments or you took out a physician personal loan and have started making payments, write down all your debt and their associating interest rates. Set goals for when you’d like to have each loan paid off and by when. Look into refinancing or consolidation if possible.
  3. Get Your Credit Report: Speaking of debt, it’s important that you always keep tabs of your credit score and credit report. This isn’t necessary for everyone, but for anyone who is managing several loans at once, it is important to catch errors in your credit report as soon as possible. If not, it could wreak havoc for you down the line.
  4. Invest in Your Future: Retirement planning for physicians is essential. If your employer offers a 403(b) retirement savings account, be sure to sign up. You may want to also consider opening an individual retirement account (IRA) and creating a diversified investment portfolio of stocks, fixed income, and commodities. If necessary, seek financial advice from a professional and let them help you set your own “doctor money goals.