Success in personal finance and reaching financial freedom is not complicated. But that does not mean it is necessarily easy — especially for doctors. Healthcare professionals actually have some significant financial enemies working against us.
These financial enemies do not excuse us from working on our financial well-being. Nor should they prevent us from being successful. On the contrary, they should strengthen our resolve to reach financial freedom. And by being aware of them, we can make sure they do not discourage us from starting our financial journey or trip us up along the way.
So, let’s examine the seven biggest financial enemies facing doctors, as well as how we can combat and defeat them!
Lack of Financial Education
This is certainly a major enemy. As doctors, we are highly educated. But through all our long years of education, we receive little to no formal education on personal finance.
The result is twofold: personal finance seems intimidating and complex. So, we avoid it. With no foundation, we fail to set financial goals, create healthy financial habits, or start on the path to financial freedom. Instead, we spend up to our paychecks, acquire debt, and spend our lives trying to catch up.
The solution? Start your financial education! I did this by choosing one personal finance book and reading 10 pages each day. I also chose one personal finance blog and read one post each day. This micro-dosed the information without making me feel overwhelmed.
Perceived Lack of Time
As doctors, we are busy. There’s no denying that. But are we really so busy that we can’t take care of our financial well-being? Probably not. Actually, let me amend that…definitely not.
We have to prioritize and allocate our time appropriately. And we must fight the mere urgency effect. Then we can find the time to focus on what actually can and will move the needle in our lives.
Our Image
Let’s play a game: Imagine a plastic surgeon. What do you picture?
You may think of an impeccably manicured person in a designer dress or custom suit sitting in a luxurious office. They drive a luxury car and live in a mansion. Their kids go to private school and they belong to a country club. Their second house is on a beach.
Now, some of that description fits me. But a lot of it doesn’t.
What I’m getting at is that, even if just subconsciously, we often think of ourselves fitting within the “image of a doctor.” And we know our patients and society thinks of us like that. So, there is pressure to fit that image.
But trying to fit this image causes a lot of problems — financially and otherwise. The problem is that it’s not realistic. If I spent what was necessary to achieve all the status markers in the “perfect image” above, I would be living paycheck to paycheck.
If this is the hard truth for a plastic surgeon, it certainly also goes for the average physician making the average physician salary. And therein lies the danger. We can either live up to the “doctor image” or we can achieve financial freedom. Unfortunately, many doctors make the wrong choice.
The solution? Break free from this image! Spend your money intentionally on what actually brings you joy — not what you think you are supposed to spend money on.
Delayed Gratification
As physicians, we sacrifice a lot for medicine. Perhaps no sacrifice is as great as the time we sacrifice during medical school and residency/fellowship. This education and training often corresponds to our prime years. During that time, we are either going into debt or making just enough money to cover basic expenses. We also see our friends who are not in medicine progressing in their personal lives: buying homes and cars; going on vacations.
And we feel stunted.
But then we graduate. And our income increases. So, we decide to make up for lost time through a series of unintentional and consumer driven purchases. This is delayed gratification. No one is immune to it.
The solution? Really take time to think about your goals when you graduate training. Or whenever you are reading this. Yes, we deserve to make up for some lost time after going through training — but at what cost?
Ultimately, the only person we end up hurting by ignoring our financial well-being for the sake of delayed gratification is ourselves.
Massive Student Debt
The cost of medical school has been increasing by about 2.5% annually since 2014. As of 2024, the average cost of medical school is nearly $240,000. Put this together with undergraduate student loans and it is no surprise that most doctors emerge from medical school with student debt in the six figures.
Next, factor in that residency is a period of low income during which loan repayment is challenging, meaning the problem compounds. As a result, the average physician is going to graduate training in a financial hole. The most immediate financial needs are to save money and pay off debt. Unfortunately, this is precisely the opposite of what most residency graduates do.
The solution? Create a debt plan. Your plan may involve some form of loan forgiveness. Or it may require aggressive payments early in your career. Either way, student debt is the biggest liability of most physicians. So, get rid of it one way or another.
Whole Life Insurance
Whole life insurance is a catch all phrase for a variety of mixed insurance-investment products. The hallmark of these whole life insurance products is that the benefit (i.e., the money paid out when you die) lasts your entire lifetime. This is in contrast to term life insurance. With term life insurance, you are covered in the event of your death only for a certain period of time (i.e., the term of the insurance).
While you do need life insurance if you have dependents who need your income to cover expenses, whole life insurance is not the right life insurance product for the majority of physicians.
The reason is that whole life insurance is very expensive. And the cash value of the life insurance (i.e., its value which you can draw down on or borrow off) is usually much less than what you have paid in premiums for a long, long time. During this time, the cash value accrues a (typically) fixed interest amount.
And this is where the problem arises. I often talk to doctors who are later in their career and bought whole life insurance in the past. The value has finally accrued and they think this was a great investment. That problem is that it wasn’t. Because if they just bought term life insurance and invested the money they paid in premiums to whole life insurance in low cost broadly diversified index funds, they would have come out way ahead.
The only time that whole life insurance may make sense is if you think you will die with savings above the estate tax limits. In that case, whole life insurance can pass some money on to heirs tax free.
Another problem is that whole life insurance carries a big commission for those who sell insurance. So, they push it. And push it hard on young doctors. Many I know have fallen victim to this.
The solution? Only buy insurance that you actually need.
Burnout
This may be the biggest financial enemy of doctors in today’s age of medicine. Because what is the biggest financial asset of physicians? It is our ability to practice medicine and earn income. And the biggest threat to our ability to generate income by practicing medicine is burnout.
So, what are we to do?
Unfortunately, there is no insurance we can buy to protect against burnout. So, we have to take matters into our own hands!
The solution? Financial freedom is self-insurance against burnout.
Let’s say you can’t meaningfully adjust any of the factors that are contributing to burnout, such as lack of autonomy or the relationship between effort and success. If you are financially free, then you have free rein to do anything and everything you want or need to do to make your work meaningful:
- Need to drop down your clinical hours? Done!
- Don’t want to put up with some arbitrary administrative tasks? Done!
- Want to change jobs but have the flexibility to wait until the perfect opportunity comes around? Done!
Now, you can work only on your own terms. And, if you just are done with clinical medicine, that is fine too!
As I go through this list, it’s interesting that the financial enemies working against doctors are mostly existential and intangible. We talked more about our own attitudes and mindsets surrounding money than we did about brick and mortar financial enemies.
Of course, this is not to say that there are no tangible financial enemies facing us (there are!).
But it’s often the things that aren’t right up in our faces that catch us off guard and can really impede our financial well-being.
Jordan Frey, MD, is a plastic surgeon at Erie County Medical Center in Buffalo, New York, and founder of The Prudent Plastic Surgeon.
Looking to improve your financial well-being? Check out Frey’s online course, Graduating to Success, a comprehensive and interactive 12-module course that helps doctors achieve personal, professional, and financial success during and after their transition from trainee to attending, or read his 2023 book, Money Matters in Medicine.
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