7 Financial Mistakes Doctors Make (And How to Avoid Them)

Nobody’s perfect, especially when it comes to managing money. I have yet to meet someone who’s never made a financial mistake. I’ve made my share of mistakes, but fortunately I learned from them and recovered early on.

How much time and effort doctors put into their medical education, it’s equally surprising and sad how little effort often goes into understanding basic personal finance and money management matters.

The more I learn about doctors and their finances, I see several recurring themes that cause them to have difficulty reaching financial success. This post explores these themes.

7 Financial Mistakes Doctors Make

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This one begins early for most medical students as they get into the habit of living beyond their means. Student loans, car loans, credit card loans, vacation loans, and poorly designed mortgages.

1. Poor Debt Management

Living within your means is very important.  But to be truly successful, you need to live sufficiently far below your means that you can carve out money to invest, pay down debt, and build net worth.

2. Inadequate Savings Rate

Saving 10% is the general rule for most people, but most people also have 40 years to save for retirement. Doctors only get 30 years, so they really need to be saving 15% if they plan to retire at 65. 

Doctors are well-known to make all kinds of stupid investments just to lower their tax bill. Yet far too many don’t take advantage of the simple tax shelters available to them. 

3. Inappropriate Tax Management

In investing, you get what you don’t pay for. Many doctors pay 1-2% a year or more for investing advice, mutual fund fees or loads, commissions, or other costs. 

4. Expensive Investments

The difference 2% a year can make in an investor’s final net worth is astounding.

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