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What is the Bare Minimum Financial Knowledge that a Physician Needs?

I love talking personal finance. I love talking about it to people who also love personal finance. But I also really love talking about it to people who really don’t find personal finance interesting…at all. This is what another doctor, Andrew Tisser, and I were talking about recently. Specifically, we started chatting about what is the absolute bare minimum financial knowledge that a physician needs to know or should know. It became a really interesting thought experiment that we ultimately turned into an episode on his podcast.

But it’s also something that I want to address here in written form. Because there’s a common misconception that you have to like personal finance and find it interesting to be good at it.

bare minimum financial knowledge
The simple path is often the correct one

But that could not be further from the truth.

And honestly, I worry that I perpetuate this misconception. Because I made a huge financial turnaround. And I really find this stuff interesting and have a passion for it. But I promise that is correlation, not causation.

My goal at the beginning was to learn the bare minimum financial knowledge needed to improve my financial well-being. And to ultimately achieve financial freedom. The rest of the stuff that followed is icing on the cake.

When it comes to personal finance, less is often more and the path to success is most often maddeningly simple.

A quick aside before getting into the bare minimum financial knowledge we all need to know

The absolute best part of starting this blog is that people that I meet through it. And that is how I came to know Andrew Tisser.

We connected online through my blog and his podcast/consulting and realized that we actually live about a mile away from each other in the Buffalo, NY suburb of Clarence.

We even work at some of the same hospitals where he mans the ED and I am in the OR.

Crazy. Anyway…

Why don’t we need to know everything about personal finance to be successful?

Well, it’s like if I am watching sports. Let’s say the NFL. I don’t understand all the intricacies of all the plays that teams are running. But I can still enjoy it. Same thing, if I’m listening to a band or something like that. I don’t need to understand every note to enjoy the music.

And that’s one thing I really try to do. I try to break things down to the most simple components to make it accessible to everyone. Into a pretty easy formula.

That way. You just need to understand the simple formula once. Then you can just put it into action. You never really need to think about why it works again.

That’s the way I process a lot of things is, I say, “Okay, I need to understand it one time. And then every time I go back and use it, I don’t need to necessarily understand why it works. I just need to know that it works. As long as I can convince myself that it works one time, I’m comfortable just doing it over and over again. And that’s kind of what you can do with your finances. 

What is the bare minimum financial knowledge that physicians need to know?

It comes down to 5 simple words: Save and invest the margin.

And this breaks down to just a few concepts.

First, create a margin

The margin is the difference between what you make and what you spend.

So, step number one becomes using a budget to create a savings rate of at least 20%. And this doesn’t need to be all at once. When Selenid and I started doing this in my training, we just made our goal to increase our savings by 1% each month. That’s also something you could do if say you were a little bit later out in your career and you already were spending out a lot of things. So if you are having a tough time figuring out where this 20% is going to come from, just do it gradually 1% at a time.

Your spending is always 100% in your control. So that is the easiest way to create your margin.

You can also use my template and guide to help you create a budget: Budgeting Made So Simple A Surgeon Can Do It

But once you create your margin, you are not done.

Second principle: You need to invest your margin

If you create your savings rate and just stuff it under your mattress, you aren’t doing yourself any good. Especially today with inflation hovering around 7%. You need to invest your money. Your margin needs to make money for you.

Ah, but how to do this? It all seems so risky. And complicated. But it doesn’t have to be.

Let’s run an quick experiment

Go on your iPhone or Android and open the pre-downloaded Stocks app. Look at the overall stock market, like the S&P 500, and start zooming out the timeframe. So you start, look at it over one day and it looks just kind of like an EKG. Just random ups and downs.

Zoom out to month, zoom out to three months, still pretty random. Zoom out to a year, two years, five years, 10 years. All of a sudden you notice it just is a steady line going up. And, and that’s what the stock market has been if you invest in the overall stock market. And, and you did that for any long period of time, over the history of the stock market, like 10, 20 years, you would’ve made a lot of money. Because the overall stock market went up.

Why it works

What you’re really doing is investing in the ingenuity of humankind, in the global or the US economy. And that’s a pretty safe bet because if the global or US economy fails, then you know, pretty much civilization as we know it fails. And there’s a lot bigger problems. That’s a low risk thing.

The ingenuity of humankind, that’s been a very safe bet for a long time. So if you could find a way to just invest in the overall market for the long term, that would be a great way to invest. And there is a way to do that. And it’s called index funds. Index funds are just collections of stocks in one big bag that mirror the overall or a big part of the either us or the global stock market. And so what you can do is, is basically just invest your money in those index funds for a long time. 

And then you don’t need to be someone that even pays attention to what the stock market does on a daily basis. Because you’re not investing for a day. You’re investing for years and years in the long term.

And studies have compared investing in index funds like this to people who actively invest in the market. These studies have shown that people who try to actively invest in the stock market, they fail…they underperform the index funds 80% of the time.

And this is really the bare minimum financial knowledge that physicians need to understand

Truly. This is it.

If you understand the two concepts of saving and investing the margin using index funds, you can enact a really passive investing plan.


Overall, these steps tale about 10 minutes a year. Do this and I can virtually guarantee that you will reach financial freedom on your terms.

Why doesn’t everyone just do this?

It begs the question, doesn’t it? If it is this simple, why isn’t everyone doing this?

In my mind, there are two pitfalls:

  • Most people are never presented this bare minimum of financial knowledge, or
  • People are presented this knowledge but do not cement it and are convinced of alternative strategies

Each is dangerous.

But they both are remedied by a sound and simple financial education.

By reading this far, you already have the basic financial knowledge and resources to enact a simple plan to lead you to financial freedom. So, you’ve already overcome the first downfall above.

However, you need to cement and crystallize this knowledge in your mind. You will be presented throughout your investing career with alternative investment strategies. Some will come from nefarious financial players. Some will come from well intentioned friends or colleagues. If our commitment to this bare minimum financial knowledge is not solid, you may fall into the second pitfall.

So, spend some time really committing to this simple and effective strategy for wealth building. Then, put your plan into writing via a written financial plan. Doing this will really help you avoid the second pitfall.

Convince yourself that this is the right way to go. Once you understand this bare minimum financial knowledge once, you don’t need to re-prove it each time. Just keep following your plan and trust the process!

Here are some more resources to help:

What do you think? What is the bare minimum that physicians need in terms of financial knowledge? How did you gain this bare minimum? Let me know in the comments below!

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    Jordan Frey MD, a plastic surgeon in Buffalo, NY, is one of the fastest-growing physician finance bloggers in the world. See how he went from financially clueless to increasing his net worth by $1M in 1 year and how you can do the same! Feel free to send Jordan a message at [email protected].

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