If you answered “next to nothing,” “next to nothing,” and “I learned from my own mistakes,” you’re in excellent company. That’s the route many of us have taken, and I think our financial education is in need of an overhaul.
The Physician Philosopher agrees with me, and he goes a step further to state that not only financial literacy, but also financial independence should be part of the curriculum. I’ve expressed my opinion that FI can be useful in fighting burnout, but that’s not the only reason to teach it, TPP argues.
I want to thank Dr. James Turner, author of The Physician Philosopher’s Guide to Personal Finance, for sharing this guest post with us. This is his second submission to the site. We didn’t exactly see eye to eye in “Got Student Loans? Alter Your Asset Allocation,” but we are in full agreement here.
Financial Independence Should Be Part of the Medical Trainee’s Curriculum
The road to physician burnout has been well documented on The Physician Philosopher. It has been covered on other sites as well. In January of 2018, Medscape released a survey that showed 42% of attending physicians were burned out. Despite being a burn out survey, personal finances came up multiple times.
It first showed up when participants were asked to list the top causes of physician depression. Financial problems were listed as the number two cause – only behind our jobs.
And, again, finances played a part when physicians were asked about solutions to burnout at work. This time an increase in pay was listed as the number 1 survey response.
The irony of this should not be lost on Physician on Fire readers who understand that achieving FIRE is part frugality and part high savings rate. Not getting paid more.
The survey showed that physicians – who are typically in the top 1-5% of earners – felt that the most important answer to their burnout was being paid a higher wage. In my opinion, this is an example of the poor financial literacy that exists in the attending physician community. There is a very low likelihood any increase in pay would be used to build wealth, or to improve the lives of those who received it.
This isn’t just an attending physician problem, though. Residents in training have also shown a large gap in their personal finance knowledge. This knowledge gap likely exists in non-physician medical training programs, too.
For the reasons mentioned above, today’s guest post will detail the importance of teaching personal finance and financial independence in training. You might notice, however, that the RE of “FIRE” gets left out.
You’ll have to keep reading to find out why.
With ~75-80% of medical students graduating with student loan debt and the average debt burden sitting at just under $200,000, it doesn’t take a mathematician to understand the problem.
The issue gets compounded in residency training when physicians are forced into a job where the income provided often prevents them from covering even the interest that grows on their debt each month.
This explains why many medical trainees have financial difficulties constantly on their mind. Learning can be difficult when you aren’t sure if you can afford to pay for all of your expenses.
Add to the situation the fact that most physicians have a very low financial literacy, and the problem turns ugly fast. Physicians finish training with a lot of pent up delayed gratification and impending burnout, which leads to huge financial mistakes in the first year as an attending physician.
As a way of dealing with these issues, physicians try and buy their way to happiness. Enter the big house, expensive cars, private school for the kids, & designer clothes and gadgets. This is all on top of student loan and consumer debt. After the taxes and all of these monthly expenses are taken out, building wealth becomes very difficult.
There isn’t enough money left to accomplish smart financial goals. The reason? They were never shown a different way. So, they follow the examples provided by their peers.
Teaching Personal Finance in Training
All of this leads to one incontrovertible fact: teaching personal finance in training is paramount.
What might such a personal finance curriculum look like? Well, it would include – at a bare minimum – the following topics:
- Personal finance basics (budgeting, lifestyle inflation after training, managing consumer debt, emergency funds, etc).
- Wealth management (savings rates, the wealth and income myth, paying yourself first, net worth goals, etc.)
- Making a financial plan
- Conflicts of Interest in the Financial Industry (including where to get advice, if needed)
- Buying versus renting a house
- Investing in the market & market history
- Investing in Real Estate
- Student loan debt management
- Asset protection
- Private practice benefit models (buying into partnerships, profit sharing, defined benefit plans, etc).
A curriculum that is completely fleshed out would also include topics specific to practice management, such as contract negotiation, running a private practice, billing and coding, buying practice real estate, and business finance.
What’s the Focus?
Great. Training programs need a personal finance curriculum. And we’ve discussed what it might look like, but what’s the focus? In my opinion, the focus should be placed squarely on achieving financial independence (FI).
Here are some reasons why:
- Autonomy at work is important, and being financially independent is the ultimate form of autonomy. The FI doctor might use their new found leverage to design a career that they would love.
- Going part time becomes an option. This allows for someone to optimize their work-life balance. People can consider pursuing new hobbies, passions, or projects.
- Part time work also allows people to focus on the aspects of the job that they enjoy – while they drop the portions that are problematic.
- Financial independence provides the freedom to give and to give generously, though I sincerely hope you’ve been giving along the way.
- The most important reason? Physicians who are on the path to FI are often better doctors. With a proper plan in place, concerns about debt burdens and the ability to realize a bright future become less of an issue. A financially independent physician can place their focus on taking good care of patients.
Not Early Retirement
On a site focused on FIRE, you might wonder why I haven’t mentioned the “RE” (retiring early) yet.
The reason is that when I started teaching these financial topics to my trainees (and on my site), I realized something pretty quickly. Teaching early retirement while people are in training to do a job that they haven’t even started yet often isn’t helpful. And sometimes it can be harmful.
Heresy, you say!
Hold on. Hear me out.
Here are five reasons why preaching early retirement in training can actually be harmful.
Number 1. Their Career Hasn’t Even Started
Teaching trainees to get out of a job before they even start can be a depressing idea. The thought of leaving early might make some focus on the aspects of their job that they can’t stand and can’t wait to leave behind. Making them dread a job that they haven’t even started isn’t ideal.
Our goal is to reduce burnout, not to add fuel to the flame. Preaching financial independence alone allows people to reach their goals. It’s not really important to teach them early retirement at this stage.
Number 2. The Timeline
As humans, we crave accomplishment and purpose. The timeline for retirement is often too far away for it to be helpful while people are in training. Remember, in the beginning, most medical professionals are usually hundreds of thousands of dollars upside down in debt.
Instead, a focus on FI alone will allow them to continue their drive while making smart financial decisions.
Number 3. Retiring Completely Isn’t Always the Answer
It took all of us years to get to become competent. Thousands of hours have been sacrificed learning our craft.
Yes, there is a burnout problem in medicine. However, retiring early is not the answer to many of the problems we face. In fact, cutting back and going part-time often helps many people rediscover the love they originally had for their profession.
Leaving medicine completely might not be the answer, and so it likely isn’t something that should be taught to everyone. Maybe the answer is going to 50-90% of an FTE? This can occur while someone is clearly on the road to financial independence. And it just might save their career.
Number 4. The Early Retirement Roadblock
There is a resistance among older generations, who currently run most hospitals and training programs, to let people teach personal finance to trainees. The reason why is often because they are afraid that early retirement will be the main message.
While I am a firm believer that people should be able to design the life that works for them, preaching early retirement often prevents this subject from being introduced to trainees. Leaving it out and letting people decide for themselves what they want to do with their financial freedom should be the goal.
This is one way to dodge the generational roadblock and make sure people get the stage to introduce personal finance topics at all.
Number 5. Learning Resilience
There is something to be said about creating resilience in life.
If the first thing we teach people is that the answer to a less than ideal career is “getting out,” I am not sure this proves helpful to our personal or societal goals with medical training programs.
Medicine needs to change. It also needs people who are strong and resilient enough to stick around to change it. Preaching an early exit might not be helpful in this regard.
All that said, I have no problem with doctors retiring early if they decide it is the right thing for them. In fact, I’ve written in the defense of those who choose this path.
The need for teaching personal finance in training clearly exists. I am in favor of teaching with a slant towards financial independence and leaving out early retirement rhetoric. After people reach FI, they can choose what they want to do with it.
Instead, we should empower those we teach to make wise financial decisions so that they can “choose to practice medicine because they want to, and not because they have to.”
Do you agree that financial independence should be taught as a part of the medical curriculum? What are the most important topics that should be covered for young professionals about to start their careers?
22 thoughts on “Financial Independence Should Be Part of the Medical Trainee’s Curriculum”
Great post! I could not agree more. As a two doc household with almost $500k in loans (out of state medical school x 2) after residency, I used to joke that we owned a lake house but it was “all in our heads,” and we could never sell it. We have since paid off all our student loans (about 5 years out of residency), and the freedom just of that alone, let alone working towards FI now has been amazing.
But I can’t help but feel that we are all re-inventing the wheel, and I think a part of it is the lack of time you feel in residency. Work, eat, work, work, sleep, work, work, eat, sleep, work, work, and on and on. I did not have any time to start reading about personal finance until after residency, when I found “Get Rich Slowly” and then Mr. Money Mustache and on and on deeper I have dove into the blogo-sphere. I would have LOVED it if one day at lunch as residents someone talked to us about student loans and life-style inflation and 401k and Roth IRA. Thank you for helping fill the void of financial health education for physicians.
Nice post. I agree that FI should be taught w/o the RE. Especially in med school with all the borrowing that occurs. Also, in residency/fellowship to prepare for attending life. I feel like there’s a philosophical difference between FIRE vs. FI. (grandted I’m biased myself since I’m more about FI than FIRE). FIRE seems to view time, specifically time not working, as the ultimate commodity. To me maximizing my lifestyle is most important. So saving on stupid money-sucking things and budgeting in order to have money to see Hamilton or go on vacation is what FI gives me joy. The FIRE person may forgo more to get out early and live more modestly. Neither is wrong, I think it’s just a lifestyle choice.
I may be a little biased, but I completely agree that finance education should be taught. 🙂 Students feel that it should be too. Nearly 100% of the respondents I have conducted at the end of my Business of Medicine course over the last several years feel the course should be mandatory in medical school. I also agree with the need to hold off on pushing the Retire Early concept. It is deflating for a student or resident to hear that after so much work you should focus on getting out of medicine rather than staying in and providing the care you’ve worked so hard to be able to provide. The blessing we have of having a high salary shouldn’t be viewed solely as a means to an end.
Jason, you know you are my hero!
I think there is a trifecta every academic physician should try and find. (1) People need it, (2) People want it, (3) and there is someone out there who is passionate about teaching/researching it.
Personal finance and business of medicine topics certainly fit the first two points. And people like you (and me, your aspiring apprentice) can accomplish that third point.
When these three things are combined, great things happen.
Keep up the strong work!
Jimmy / TPP
Thanks TPP! Kudos to you for your hard work and getting the message out. Glad to be a part of the growing number of people addressing this issue. Will be interesting to see where things are in 5 years!
Such a good post!! Not an MD but in vet school we had a business course that not only covered basic things like a cover letter, how to interview/negotiate (complete with industry actors) but also had us come up with the best way to pay down debt and make a budget. The class even had a segment on investing and mutual funds. Many of us were so overwhelmed with paying off debt that it was hard to imagine having extra for investing, but even having that tiny intro was fantastic.
I totally agree that not including the RE is important, because looking at loan debt and low starting salaries as a DVM would have been too much to bear. But, knowing FI is possible with careful planing and prudent decisions would be a huge assest to fight burnout as you discussed.
Agree wholeheartedly . I am FI and just went part time to do financial education to young people who are in training.
Excellent post, Jimmy. I completely agree with teaching basic finance and the concept of financial independence to med students and residents, as well as others entering high-income professions with large debt burdens. All of the reasons you gave for teaching financial independence are spot on, and I agree that teaching early retirement right at the start of someone’s career wouldn’t be beneficial.
I’m a lawyer and see a lot of the same behaviors and money choices you describe with the first years who start at our firm. I know my husband sees the same things with the residents in his program, as well. I’ve always thought we do people fresh out of med/law/dental/etc. school a disservice by not advising how to manage such a large income. In many instances, they’ve never seen this kind of money in their lives.
This year, I invited the first years in my office to lunch and gave them some basic tips regarding student loan management and lifestyle inflation. It saddens me that there are people who have been making six-figure incomes for years but can’t afford to make a career change because of their golden handcuffs. I would love if we could provide a full out curriculum like the one you’re working on, but a law firm isn’t really the best forum for that.
It’s great that you took that initiative to teach others! We need more people like you. Keep up the good work.
And the golden handcuffs make me sad, too. There are far too many people who live paycheck to paycheck despite earning a six figure income.
Jimmy / TPP
I could not agree more. I’m a huge proponent of FI for everyone, RE if you want it. As a philosophy major and physician, I wish I had written this post myself! The points made are difficult to disagree with, and I share the author’s concern for the RE portion of FIRE. To allow physicians to enter the workspace with >200K in debt and no education for how to deal with that is a travesty. We have to push this movement to create a happier and energetic workforce. Well done!
Glad you agree! And I completely agree that it is the medical system’s responsibility to teach this topic given the amount of debt that they are okay with us coming away with.
See comment above
Learning basic economics and finance is important to everyone. It should be required in High School, along with driver’s training and a host of other things (i would include training in what to do when an officer points a gun at you). But if you missed it you should find another way to learn it, not teach it in medical school. Medical school misses so many things as it is that are medical, hard to see why this takes precedence over (for example) how to prepare for a deposition, or what to do when accused of malpractice, or how to interact with nurses for example.
Thanks for the comment. I am obviously going to disagree, though.
Personal Finance decisions (and in particular student loan management) has a profound impact on a residents wellness.
A well designed continuum would have introductory lessons taught during medical school, and then a subsequent lecture series in residency where some of the items you mentioned could be taught.
You cannot learn all of medicine during medical school. That is why residency training exists – to hone in on your specialized training. But everyone (and particularly those with an average of $200,000 in student loans) should be equipped with the skills to deal with this problem.
Also, your comment assumes residents are aware of the dilemmas faced in personal finance. I’d argue that half the reason to have a curriculum is to raise awareness about something that very few of them think about (because no one ever introduced the idea to them).
As i mentioned, finance is an important topic. But should it be taught in medical school? I would argue //how to prepare for a deposition, or what to do when accused of malpractice, or how to interact with nurses for example.// is at least as important when it comes to physician mental health. On a more personal level – i suspect my parents taught me about finance, because i never took a course in it and never had any issues there. But i was certainly blindsided by attorneys and hospital politics. It is all important . Not just finance. Can we all agree that the State of California should mandate an additional 6 months of medical school, the purpose of which is to be taught the non medical side to medicine? I think Gavin would sign it.
It is an absolute travesty that a doctor can go through 20+ years of education and not have a single hour dedicated to finance. That is exactly what happened to me and I had to learn my financial lessons through the “school of hard knocks” which is not very forgiving.
I am thrilled that there is a push for educating doctors in training in even basic financial principals. These MDs are sitting target for the real world as there are numerous people who can prey on them financially and take advantage of their financial predicament.
I am on board with preaching Financial Independence without pushing the Retire Early aspect (although for me I really do want to FIRE). Each individual can make his or her decision accordingly but the key is FI gives you options and relieves so many things that stress you out and lead to burnout.
Financial classes are not required in highschool for the majority of the country although in some places it is being required. I think that is a good step as every student, premed or not, needs to learn basic things to manage a good financial life.
College students fall prey to predatory lending early on and often get enticed by freebies like beer cozies and Frisbees.
Glad you are showing us the way Jimmy and great post.
Thanks, Xray! I appreciate the encouragement. Teaching this topic is obviously very important. The more of us that are getting the message out there, the better!
Thanks for the opportunity, PoF!
I think this is an important discussion to have as those of us who are creating medical school curricula around personal finance sort through what needs to be taught, and where the focus should be.
Looking forward to seeing what others think.
P.S. For the record, I now have bonds in my asset allocation 🙂 (The student loans are gone!)