I made every mistake in the book. Literally, they were actually in the book. This was a personal finance book tailored to physicians. Many of you will know it, The White Coat Investor: A Doctor’s Guide to Personal Finance and Investing by Dr. James Dahle. I had been given the book for free about one year ago and had never opened it until this day, about five months before I was set to finish my plastic surgery training after 6 years of residency and 1 year of microsurgery fellowship. The reason for my procrastination in opening this book was exactly the fear of realizing that I had made every mistake in the book, even though I already sort of knew it before reading. And I was intimidated by learning about this seemingly complex topic that I had never received any formal education in. The funny thing was that I didn’t feel the dread that I was expecting upon finally opening and reading the book; instead I felt relief.
Unfortunately, I sense that many trainees, more than likely a large majority, are in a similar boat to the one in which I was in. The reasons that we go into medicine are not financially motivated, we want to help people in need. Through college and especially in medical school and residency/fellowship, we receive no formal education or even introduction to basic financial principles like saving, investing, and asset allocation. This leaves us flat-footed when we reach the end of our training, see a large raise in salary from residency, and have many outside influences – family, friends, colleagues, salespeople, and financial “advisors” – telling us what we should do with our money. It adds to the sense of overwhelming that can accompany managing personal finances. Therefore, we feel the need to outsource this service to a “money person” without really understanding what they are doing, too often to our own detriment.
The main message that I hope to share is that it IS important to learn about personal finances while you are a trainee. I am by no means saying that finances are everything; however, having your finances in order and aligned with your life goals will enhance your personal well-being and help you live your life on your own terms following your passions and purpose. I strongly encourage you not to overlook this aspect of your overall well-being. The best day to start is yesterday but the next best day is today! We often make excuses to not learn such as, “I’ll figure it out later,” “Investments are too risky,” “My spouse/significant other handles the finances,” “Money is not important,” or “It’s too complicated, I’ll just hire someone.” More than likely, we are just intimidated and too embarrassed to admit that we know nothing about the subject. I know that I felt that way. But what I realized upon finally opening a book was that by confronting my lack of knowledge and acknowledging my past mistakes, I felt free to finally dive into learning and take control of my financial well-being. If you can relate to this, you can do the same!
Providing a complete overview of personal finances for trainees is obviously beyond what can be covered in a single blog post. However, I do want to tell you that it is much easier to learn enough about personal finances to even manage them successfully all on your own without overexerting yourself than it is to graduate medical school. And it is certainly easier than completing residency.
With this in mind, I created this blog to share my experiences – successes and failures, information, and resources as I continue on my own path towards financial well-being and financial education.
I also want to leave you with some quick, easy, and actionable steps that will enhance your financial well-being right away, no matter what your current situation:
- Buy a book on personal finances. My top recommendations are: The White Coat Investor: A Doctor’s Guide to Personal Finance and Investing by Dr. James Dahle, The Coffeehouse Investor by Bill Schultheis, and The Millionaire Next Door by Thomas Stanley and William Danko. These are all under $20 and are great introductions to the topic. They were also some of the first books that I read.
- Read the book that you bought! This would seem obvious, but I know from experience that it is not – remember how long my copy of The White Coat Investor collected dust? I recommend setting aside 10 minutes on the same day that you buy or receive your book of choice to read the first chapter. Just set those 10 minutes aside no matter what – if you are on call, if you’re tired, whatever. I guarantee that once you begin, you will be hooked like I was and it won’t seem like work.
- Find a finance blog or podcast that you like. This was an easy way for me to get started learning more. I subscribed to the White Coat Investor daily email blog and read the post everyday. They are easily digestible so I would just read it everyday in between cases. Sign up to be alerted to our blog posts. Alternatively, find a podcast and listen on your daily commute. My favorites are Afford Anything and Rich Doc Poor Doc. I recommend just choosing one blog or podcast that you like to start so you don’t get information overload. The idea is to learn a little bit each day and before you know it, you will have a strengthened your financial foundation a great deal.
- Look over your past month’s expenses and calculate your savings rate. This is a simple maneuver. Just looked at how much you spent last month versus how much you made. (How much you made – how much you spent)/(how much you made) x 100 is your savings rate. A good rule of thumb is to try and have a 20% savings rate that you invest. It will be good practice to save now and have it become a habit before you get a huge salary increase with the associated temptations.
- Increase your savings rate. My savings rate was 0%, now it is 31%. There are many strategies to go about doing this, you can try to increase your savings rate all at once or increase by 1% each week or month. Once you set a goal savings rate, set aside that money at the beginning of the month and then you can spend the rest guilt-free.
If you follow these 5 simple steps, you will be far ahead of most of your colleagues and certainly ahead of where I was in your position in training. You will be setting the stage for your financial well-being for the rest of your lives. As you read and learn more, you will find that managing your personal finances, including investing, is fun, rewarding, and not nearly as difficult or confusing as you thought it would be. The first step of getting started is always the hardest but you can do it!
Stay tuned for upcoming posts full of resources, actionable steps, and more! Please feel free to contact me with any questions at [email protected] or leave a comment below!