The 7 Biggest Financial Enemies of Doctors

Success in personal finance and reaching financial freedom is not complicated or complex. But that does not mean it is necessarily easy. Especially for doctors. In fact, those of us in medicine 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. In the contrary, they should embolden us and strengthen our resolve to reach financial freedom.

And further, by being aware of them, we can make sure they do not discourage us in starting our financial journey or trip us up along the way.

So let’s examine the 7 biggest financial enemies facing doctors today as well as how we can combat and defeat them!

The 7 biggest financial enemies of doctors

In no particular order…

1. Lack of financial education

This is certainly enemy #1. As doctors, we are very highly educated. But through all of our long years of education – in college, in medical school, in residency – we never receive any formal education on personal finance.

financial enemies

The result is largely twofold: personal finance seems intimidating and complex. So we avoid it. Just like the majority of people – including our family and mentors – before us. With no foundation, we fail to set financial goals, create healthy financial habits, and 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! This is really the solution to all of our financial enemies.

I did this by choosing one personal finance book (The Millionaire Next Door was my first one) 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 feeling overwhelming and the rest is history!

If you are looking for a good place to start, check out my best-selling book,Ā Money Matters in Medicine and my course, Graduating to Success!

2. 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.

All of us get the same 24 hours each day. And each day, we will accomplish the things that we deem important enough to get done. Does this mean that every little thing on our list will get done? No. But it does mean that everything important enough to us can get done.

We have to 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.

And let me tell you. Starting and progressing on your path to financial freedom – to be able to practice medicine and live life on your own terms – will move the needle in your life, like it did for me!

Stop telling yourself you should get started. Tell yourself you must get started. t’s that important.

3. Our image

Let’s play a game…

Imagine a plastic surgeon. What do you picture?

My guess is you think of an impeccably manicured woman or man 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. What beach? I don’t know. But it’s on a beach.

Now, some of that description fits me. But a lot of it doesn’t. And, even though that description is somewhat hyperbole for a high income specialty, what you imaged probably wasn’t far off from that…even as someone who is also a doctor.

What I’m getting at is that, even if just at a subconscious level, we are still humans and still 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 a real pressure to fit that image.

But trying to fit this image causes a lot of problems – financially and otherwise

While in training, I was ashamed to admit that I was nowhere near achieving this status and had no idea how I would. The problem was that I didnā€™t even know if I wanted it.Ā But I do have to say that I felt for a long time like I needed it.Ā 

I struggled to fit in.Ā And up until just a. few years ago, the disconnect between this ā€œrich doctorā€ image and my reality had me distraught.

That is the existential risk of this image problem. But there is also a big financial risk

The problem with this doctor image is that it’s not realistic.

Remember the description of a plastic surgeon from above. If I spent what was necessary to achieve all of those status markers, I would be living paycheck to paycheck at best. Even on my generous salary and living in a low cost of living city like Buffalo, NY. And I certainly would not be saving at least 20% of my gross income so I could reach financial freedom.

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.

Prioritize your financial well-being above meeting some nebulous standard that is likely just an illusion in your own mind!

4. Delayed gratification

As physicians, we sacrifice a lot for medicine.

Perhaps no sacrifice is as great as the time we sacrificer during medical school and residency/fellowship. This education and training tends to correspond to our prime years, from age 21 to 32 for me. During that time, we are either actively going into debt (more on that below) or making just enough money to cover basic expenses. During this time, we also see our similarly aged friends who are not in medicine progressing in their personal lives. Buying homes. Cars. Going on vacations. Things like that.

And we feel stunted.

But then we graduate. And our income increases by 4-10x. So we decide to make up for lost time through a series of unintentional and consumer driven purchases.

This is delayed gratification. It’s a very real phenomenon and physicians are honestly the best example of it that I can think of. No one is immune to it. I felt it certainly at the end of my training. I nearly even succumbed to it as you can see in the story about my doctor car

The solution?

Really take time to think about your goals when you graduate training. Or whenever you are reading this. Honestly, yes, we deserve to make up for some lost time after going through training. But at what cost?

Ultimately, the only people we end up hurting by ignoring our financial well-being for the sake of delayed gratification is ourselves.

Chances are, for most of us, our goals coming out of training are to take good care of our patients, enjoy our lives with our loved ones, and live of our own terms. All of that is synonymous with the path to financial freedom.

So yes, spend some money on what brings you joy. But also save money and invest to create the flexibility that financial well-being allows which ultimately ends in the ability to live life completely on your own terms without needing to work if you don’t want to!

Here are some good financial habits to start building…

5. Massive student debt

The cost of medical school has been increasing by about 2.5% annually since 2014. As of 2024, the average total cost of medical school isĀ $235,827. Put this together with undergraduate student loans and it is no surprise that most doctors emerge from medical school with student debt in the mid to high 6 figures.

Next, factor in that residency is a period of low income during which loan repayment is challenging and the problem compounds. Literally. Because if you don’t pay off that student debt during training, the amount keeps rising.

As a result, the average physician is going to graduate training in the financial hole. The most immediate financial needs in this position are to:

  • Save money
  • Pay off debt

Unfortunately, due to the other financial enemies we laid out above, this is precisely the opposite of what most residency graduates do, which is to spend lots of money. This ultimately creates more debt in the form of car loans, mortgages, and the like.

A vicious cycle ensues. And this unfortunately often results in living paycheck to paycheck and future burnout.

The solution?

Create a debt plan. If you are pre-med, keep in mind the cost of medical school when applying and choosing schools to attend.

However, most of you are already going to be out of medical school. So, you need to come up with a plan to get rid of your student debt ASAP. Ideally within 5 and certainly within 10 years of finishing training. Remember, the worst thing you can do with debt is keep it around for a long time…that’s what the loan companies want you to do, so they make more money via interest.

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.

6. Whole life insurance

Whole life insurance is a catch all phrase for a variety mixed insurance-investment products. The hallmark of these whole life insurance products is that the benefit (i.e. the money you get paid when you die) last 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 99.9% of physicians.

The reason is that whole life insurance is very, very expensive. And the cash value of the life insurance (i.e. its value which you can draw down on or borrow off of) 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 career and bought whole life insurance in the past. And now the value has finally accrued and they think this was a really good 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 can maybe make sense is if you think you will die above the estate tax limits. In that case, whole life insurance can pass some money on to heirs tax free.

Another problem though 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. Make sure you are not one.

The solution?

Only buy insurance that you actually need.

And for the large majority of doctors, especially when finishing training, term life insurance is what you want. And you can learn more about how to do that here.

7. Burnout

This may just 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.

And what are the causes of burnout? There are many. But the big 3 are a lack of autonomy, complexity, and relationship between effort and success as I lay out here.

So what are we to do?

Well, we buy disability insurance to protect against injury as limiting our ability to practice medicine and earn income. Yet it is way more common for doctors to experience burnout and its deleterious impact on self care and patient care than it is to experience a practice-altering injury. Yet there is no insurance we can buy to protect against burnout.

So we have to take matters into our own hand!

What is the solution?

Financial freedom is self insurance against burnout.

Letā€™s say you canā€™t adjust any of the factors that are impeding meaningful work or contributing and leading to burnout.

(Now, this is never actually the case. There are always things we can do. If this is how you feel in real life, I argue that it is a limiting belief. Let me know and we can try to work on things together!)

But for the sake of this thought experiment, letā€™s pretend thatā€™s the case.

Now, pretend that you are financially free.

Welp, there you go! Problem solved.

You now have absolute free rein to do anything and everything you want/need to do to make your work meaningful.

  • Need to drop down your clinical hours? Done!
  • Donā€™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!

You now have the absolute ability to work only on your own terms. And, if you just are done with clinical medicine, that is fine too!

Wrapping things up

As I go through this list, it’s interesting to me that most of the financial enemies working against doctors are more existential and non-tangible than not.

We talked more about our own attitudes and mindsets surrounding money than we did on brick and mortar financial enemies.

Of course this is not to say that there are no tangible financial enemies facing us. For instance, doctor pay is decreasing. That impacts us. Taxes remain our biggest expense. But I’d argue that we can combat that in a fairly straightforward manner using the techniques and strategies we talk about here and through this blog.

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.

With that in mind however, here are some of my favorite posts for those looking to take action and make a dent in their path to financial freedom:

What do you think? What are the biggest financial enemies facing doctors today? How do you manage them? Where are you on your financial journey? Let us know in the comments below!

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The Prudent Plastic Surgeon

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 Ā and how you can do the same! Feel free to send Jordan a message at [email protected].

2 Responses

  1. Hey Jordan well said man! Nicely summarized and every young doc should read this! unfortunately it’s hard to get the word out on these solutions! do you think med schools are getting better regarding enemy #1?

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