7 Secrets to Wealth Building You Won't Learn in Medical School

In fact, in medical school, you probably won’t learn anything about wealth building…let alone any secrets. And that’s because of the massive and misguided ancient taboo about money in medicine that dates back to Hippocrates.

And this is a big problem. Seeing why isn’t hard for most doctors. Just look at my story of how I ended up burned out with medicine while I was still in training. Ironically enough, I alleviated my burnout and became a better doctor only when I started thinking about money and my financial well-being.

That’s when I realized that while we don’t get into medicine for the money, we still need to make sure we are financially healthy. Being a good doctor actually depends on it. One is not mutually exclusive from the other.

That’s why I started this blog. And it’s why I strongly believe that financial education should be tied into medical education.

However, since that is not the current reality, let’s review the top 7 secrets to wealth building that medical school won’t teach you!

7 secrets to wealth building you won’t learn in medical school

In no particular order…

1. Being a doctor doesn’t make you rich

I’m not going to get into the discussion here about if doctors are fairly compensated. That’s a nuanced argument. Especially when you get into the differences between pay among specialties as I do here.

However, regardless of what specialty you are in, you make in the top 1% of income in the United States and world as a physician. So you are a highly paid individual. And that is why 99% of people, including doctors, believe that being a doctor makes you rich.

That’s why everyone was telling me that “everything was going to be amazing” when I finished training. Because my salary was increasing. But they didn’t recognize the enormous debt I had as well as the poor financial habits and planned spending to live up to the “doctor image.” That’s what led to a huge discordance in how I felt in my situation and thought I should feel. And that led to burnout.

How I came back from this situation is well documented here. But the point is: being a doctor and being highly paid will not make you wealthy or rich and certainly is not enough to make you financially free, which is the real goal.

It takes more. Like…

2. Saving money is the foundation of your wealth

It’s not sexy. Like at all. Which I think is why no one really talks about it.

And if I ask 100 doctors either after or just before completing training what they are going to do with their growing paycheck, I’ll bet less than 5 will answer “save.” The reasons for this are multifold including delayed gratification, the desire to live up to a certain image, or just the misguided notion that the flashiness of what we own determines our “richness.”

Either way, saving is essential, even for doctors. It’s so important that I actually argue that doctors should save for themselves before saving for their kids! Why? Well, I fully go into it here.

The next question then becomes: How much do we need to save? The answer here is personal. But saving 20% of your pre-tax, gross income is an excellent rule of thumb. In fact, if I could impart one nugget of financial knowledge on doctors, that would be it. Tp save 20% of your income. Do that and you are ahead of the game.

And if you want to see how much you need to save to reach a $5 million nest egg, check the calculation out here.

3. Investing isn’t risky, not investing is

I’ve met way too many doctors who aced the savings part of the wealth-building equation but then just stop there. They save 6 or 7 figures But they don’t invest it. It just sits in a savings account or a money market fund.

Why? Because they are worried about the risk of investing the money and losing it.

And you can’t really blame them. We get no formal personal finance or investing education. And so our knowledge of investing is largely shaped by the media, who has a vested interest in making investing seem risky to generate more exciting headlines. As a result, doctors usually become too conservative. Psychologically, a loss hurts way more than a win feels good. So, we do everything to avoid losing our hard earned money.

The problem, however, is that by not investing, our money doesn’t grow. In fact, by not investing, our money actually loses purchasing power due to the sapping effect of inflation.

And it just takes some simple calculations using compound interest on this retirement calculator to see how much more your money will grow by investing it compared to just saving it. So really, the biggest risk to doctors’ wealth-building is often not investing, rather than investing and losing money.

But not all “investing” is the same…

4. Bad investments usually seem more exciting than the good ones

The way that you should actually invest your money is quite boring:

Determine your asset allocation (here is a guide)
Use your savings to buy index funds according to your asset allocation
Re-balance your investments back to your desired asset allocation once a year
Otherwise, ignore your investments and live your life

As some background, index funds are collections of stocks or bonds (usually) the represent either the entire or most of the overall stock (or bond) market. And investing in the overall market passively with index funds has been shown to beat strategies that involve trying to time the market or pick individual stocks (active investing) 80% of the time. Plus passive investing accrues less fees and taxes. So, win-win! More on all of that here.

However, despite these facts, other investments which are way riskier – like any of these – usually seem a lot more fun and exciting and sexy. Why? Well, because they may offer some potential huge upside with ultra low probability or because they are hyped up by someone who doesn’t understand them or has an incentive to sell it. And also because this seems counterintuitive to doctors who are engrained to think you get more for doing more. With investing, you often make more the less you do!

So, in general, you especially want to avoid any of the investments pitched to you in the doctors’ lounge!

5. You can do it yourself

Look, doing the above and investing very successfully is pretty simple. And it’s not time consuming. So, any doctor can do it themselves. I do it and it takes me maybe 5-10 minutes each year to rebalance my investments. That’s it.

However, the overwhelming consensus in medicine is that you need to have a “money person” AKA financial advisor. Because so many other physicians do have one, or many. And the reason is often just because they have not eprosnad finance education and investing seems to risky or complicated. But, like I have hopefully proven here, the reality is that it is not and you can do it very well on your own.

But you don’t have to. You can use help.

There is a caveat though. Even with a financial advisor, you need to know enough about personal finance yourself to tell if you are getting good or bad advice. The rub is that usually by the time you know this much, you know enough to just do it yourself.

But I get it. Some people just don’t want to manage their finances. I hate landscaping. I know I can landscape. But I still hire someone to do it. So it’s a similar concept.

If you do decide to use help, these 7 questions will help you to determine if they are going to give you good advice for a fair price…

6. You are worth (a lot) more than you think

Most physicians make less than they are worth. I don’t have any hard data to support this necessarily. But the fact remains that if any employed physician (including myself) went into private practice or a PC employment lite model, they would make more money. The trade off for that extra income is having to manage more aspects of the practice. But the point remains.

As a result of this as well as the fact that it can be hard for physicians to actually determine their value, most physicians also believe that they are worth less than they are. Another reason for this is that doctors are notoriously tight lipped about their compensation with colleagues. This makes no sense to me. It only hurts our profession. But that’s a rant for a different time…

Bottom line…you are worth a lot. And deserve to receive appropriate compensation. So spend some time using these strategies to actually determine your value as a doctor. Then use your findings to negotiate a better deal or to sever as motivation o find a better setting for your practice!

7. Lots of people will pay you for your brain

As physicians, we tend to think of our value are limited to clinical settings. Whether that be caring for patients, training other doctors, doing clinical or basic research, or something similar.

However, the reality is that we are highly trained, highly educated individuals. And even better, a lot of people are interested in our area of expertise. This cross over means that companies are willing to pay, a lot, for our opinions and expertise.

I never realized this until I got into this space, but there are tons of companies actively looking for doctors to help them. And will pay for it. From their perspective, there is a physician shortage in this regard. On the flip side, nearly every doctor I talk to is looking for some extra side income!

So, whether it be medical surveys, consulting, or any of these other side gigs for doctors, one of the biggest wealth building secrets is to diversify your income outside of clinical medicine.

And I promise you won’t learn that or any of these other secrets to wealth building in medical school!

Looking for more ways to advance on the road to financial freedom? Check out these classic posts!

And don’t forget to check out my best-selling book, Money Matters in Medicine!

What do you think? Are there any other wealth building secrets you wish you learned in medical school? Should we teach personal finance in medical school? Let me know in the comments below!