Most of us choose to become physicians because we care more about serving others than making the most money with least effort. In fact, one could argue a career in medicine is the antithesis of maximum money for minimum work.

There are many financial pitfalls that doctors are susceptible to, making financial disasters and trapping doctors in a rat race, without the option to retire or to cut back on work.
After chatting with many attendings and residents, I’ve identified top 5 most common money pitfalls that 90% of the doctors fell into at one point or another. If we are warned of these pitfalls, and mindfully avoid them, we would have much less financial stress and enjoy greater satisfaction in all areas of our lives.

1.      Borrow against our future, without practical understanding of how much the loans cost us in interest.
A friend from med school told me, “The financial aid people encouraged me to take out student loan and live comfortably so I could focus on school. It was like monopoly money. Anytime I needed cash, I shoot her an email, within 30 days, I’ve got a check waiting for me in her office. I could cash it for anything: a vacation, fixing my car, childcare expenses. If I knew how much my debt would snowball at the high interest rate while I was studying hard, I could have gotten by with less to prevent amassing such a large debt upon graduating med school.”

2.      Hire “the” professional, without knowing how much their service cost us.
Check out PoF’s calculation on how an average physician may end up paying 13 million dollars to a “financial advisor” over his/her lifetime, (3 decades working, 3 decades in retirement.)
I 100% agree with White Coat Investor’s mantra that if you take the time to learn how to find a good financial adviser, you would have gotten enough education and financial literacy to be the best financial adviser for yourself, free!
Before ever paying a “professional” an AUM (asset under management) fee, pick up one personal finance/investment book and find out for yourself how easy it is to make and manage money (hint: especially when your return is not eroded by 1-3% AUM fee.)

3.      Making more instead of spending less.
Money doesn’t buy happiness. Time is key to happiness. We all only have 24 hours/day. Even with sleeping only 4 hours/day for 15 years, I only had 20 waking hours/day.
Before you sign up for an extra shift thinking you need that extra money, ask yourself if there’s extraneous, meaningless spending in your budget. You know you can cut out an expense if it does not support what brings you lasting happiness.

4.      Overworked and under-satisfied with life; then seeking material objects to compensate for our sacrifices.
We are so over-worked in medicine that we have come to accept it as the norm. We internalize the expectations of our profession to care for others and justify neglecting our own needs. To the point that we are sleep-deprived, with no personal time, no exercise, and little social activities.
It was not uncommon for my friends in medicine to say, “Yeah, my family and friends know that I’d be MIA for a couple months because of Boards, interviews, crazy rotations and calls (fill in the blank.)” Medicine has plenty of grandiose excuses for us to neglect what makes us happy and what makes us who we are.
When we deny ourselves of our personal needs and all we know is studying, taking tests, 28 hour calls, extra shifts, we are in survival mode and we over-compensate our personal needs with purchases. It takes less than 5 minutes to buy a pair of ear rings and it give us the endorphin rush of short lived ecstasy.
“I deserve this.” I work so hard and have so little time to do anything. I deserve a lavish vacation. I deserve to enjoy this 750 series BMW, even if that means I’m delaying my retirement for a year.

5.      Vicious cycle.
The vicious cycle goes like this:

  • Over-working
  • Under-satisfied
  • Compensate with over-consuming/ spending
  • Saving less
  • Not reaching financial goals (or even paycheck to paycheck)
  • Working more.

Break the cycle anywhere you like. The pitfalls are linked, avoiding one likely helps you avoid another. Getting out of one will help you get out of another.

Best wishes,
You deserve so much more than what money can buy.


 If you like this article, you might enjoy other DWM articles on Personal Finance, Investing, Retirement, Practice Management, & Lifestyle.

All articles by DWM are for informational purposes only and not intended as a substitute for professional advice. Please consult a professional accountant, financial adviser or lawyer, before making financial decisions.
Top 5 Money Pitfalls Every Doctor Should Steer Clear

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