February 16, 2021
Transition to practice as a junior attending is fraught with challenges, both career-related and personal. Maintaining wellness allows us to meet these challenges head-on, and one part of personal wellness is financial wellness.
Personal finance is a topic that may be foreign or distressing. At this junction in your career, you may have little or no idea about how to handle your personal finances, so here are a few steps to put yourself in a great position.
In becoming a cardiothoracic surgeon, you have dedicated yourself to one of the most grueling and intellectually demanding fields of study in the world. Luckily, the single best thing you can do for your financial wellbeing is well within your skillset: self-motivated education. Though some may counsel you to get a financial advisor, it would be best to gather basic knowledge beforehand and come to the table understanding the various aspects of personal finance. With this approach, you’ll at least know your blind spots and how a financial advisor can best assist you.
Historically, books have been a great source of information, but many great resources are available in podcast format as well. The podcasts usually are limited to specific topics that can be digested during downtime or on a commute. Some are quite popular, physician-specific, and cover a vast range of issues. Many blogs and Facebook groups also are dedicated to these topics. These electronic platforms can help those who prefer to review text and can also be interactive, allowing you to ask situation-specific questions. In the end, books remain one of the best resources. Still, as information changes, which tends to happen rapidly for personal finances, take into consideration that books may not have the most up-to-date information.
After your own personal education, talking to family members, friends, or a financial advisor may be an excellent next step. In conversation, you can double-check your understanding of specific issues, ask questions, and obtain advice. Pick your financial advisors carefully if you choose to use one. Physicians are well-known to have high incomes and low financial literacy, making us ideal for predatory advisors. Consider word of mouth recommendations from friends, family, or colleagues. Advisors can help with not only investment planning but also with estate planning, insurance, retirement, and many other aspects of financial wellness. Before entering into an arrangement with an advisor, it is crucial to understand how the advisor is compensated and if he or she is a fiduciary. Some advisors charge a flat fee while some charge based on a percentage of your assets under their management. Being a fiduciary means the advisor is obligated to act in your best interest despite whatever personal interest they have. These factors will influence what advice they will give and the products they may or may not offer you.
Develop a Plan
The following areas of your financial wellness may be the right places to start:
The average physician finishes medical school and residency with hundreds of thousands of dollars of student loan debt. This and other debt are likely the largest obstacles to building wealth for early career physicians. Whether you plan to refinance and pay the debt off or aim for loan forgiveness, this needs to be addressed early.
Your ability to practice as a physician is your biggest asset and needs to be protected. Many choose to do that by purchasing disability insurance. This is a time-sensitive task as the cost of disability insurance changes with age or with acquired medical conditions. Thus, it is usually best to get this in place early and have a policy with a favorable definition of disability. Other aspects of insurance such as life insurance, car insurance, and umbrella insurance are also worth addressing.
All good things come to an end. Whenever you decide to retire, you will likely need a “nest egg.” Considering what you expect your annual expenses to be upon retirement will inform your decision on how much you will need to save. There are many resources to make this calculation and an advisor can also aid in this analysis. Practically, there are multiple tax advantaged and non-advantaged vehicles that you can utilize; however, the most beneficial aspect of any retirement account is time and compound interest.
Learning about, talking about, and making a plan for your financial wellness as an early career surgeon will ultimately protect your assets, secure your future lifestyle, and relieve stress.
The opinions expressed in this article are those of the author and do not necessarily reflect the views of The Society of Thoracic Surgeons.