As cardiology fellows, there is advice we give to most patients: Don’t smoke; avoid drugs; exercise; lose weight; take your medications. The secret to perfect health is obvious! While some succeed at these tasks, many can’t stay on track.

Much as our patients struggle to improve their health, physicians are notoriously bad at personal finances. As Thomas J. Stanley states in The Millionaire Next Door, “among all major high-income-producing occupations, physicians have a significantly low propensity to accumulate substantial wealth.” Why? We get a late start earning and then rarely spend time learning how to achieve financial success.

Financial advice for doctors analogous to the advice we give our patients might include: Learn how to invest; minimize investment fees; start saving early; optimize your loans; obtain disability and life insurance; avoid credit card debt and don’t overspend. While these linchpins of personal finance might seem obvious, a surprisingly small number of physicians successfully follow these suggestions.

Patients frequently push off our advice until a later date that seems to never come, resulting in the accelerating forward march of their disease. When this happens, we don’t stand by idly; instead, we motivate our patients each time we interact, hoping to help enough to alter the disease course. With personal finance, I’ve taken the same approach, through development of a curriculum for teaching trainees and young attendings to manage their financial lives. While challenging to summarize, I’ll expound briefly on this advice.

Taking control of your personal finances may seem complicated, but it pales in comparison to the complexity of a percutaneous ASD closure, TAVR, or high-risk PCI. If you can handle those, then it will be a trivial task for you to get control of your personal finances now and generate a lifetime of economic success.

1. Learn How to Invest for Retirement Every physician is capable of managing her/his money without an expensive financial advisor. Start by picking up a book like Taylor Larimore’s The Bogleheads Guide to Investing and read it cover to cover. You’ve been led to believe that investing is complicated, including tasks like choosing winning stocks and buying complicated investments, but you’ll quickly find the optimal investment portfolio for retirement is often so simple it verges on boring, containing only a few index funds.
2. Minimize Investment Fees Is there any service for which you would you pay 26 percent of your net worth? Probably not! Many advisors charge upwards of 1-2 percent of your net assets annually to manage your investments. That might seem small, but over 30 years a 1 percent fee results in a reduction of your investment by 26 percent. If you do use an advisor, consider one who charges hourly, not a percentage of your money. It has become possible to manage your money with extremely low fees, so don’t settle for expensive investment products.
3. Start Saving Early and Maximize Retirement Accounts Few concepts are as powerful as compounding returns in the stock market. Starting to invest early can have dramatic long-term benefits. As soon as you can, maximize your retirement accounts (Roth IRA, 401(k), etc.). You might not maximize these as a fellow, but learning how they work and starting now will reap immense rewards later. Saving a little now could literally mean retiring years earlier. If you don’t want to retire early, the freedom of earlier financial independence is still a strong motivator, allowing you to focus on the work you enjoy, not just work that generates income.
4. Optimize Your Loans Student loans are complex and advice is difficult to generalize. For fellows taking advantage of Public Service Loan Forgiveness (PSLF), there are small mistakes that can have devastating consequences. First, avoid consolidating into loans not eligible for PSLF. That might seem obvious, but I have encountered residents planning on PSLF that consolidated $200,000 into non-eligible loans, eliminating the ability to have the loans forgiven. They wept at their mistakes! Second, for PSLF-eligible loans, don’t pay more than your monthly payment. Every dollar above the minimum is wasted, since payments are based on income, not the loan balance. I’ve met residents who paid $50,000 extra into PSLF-eligible loan payments, thinking it would benefit them. Money wasted! For those not planning on PSLF, consolidate your loans early to lower interest rates as soon as possible.
5. Obtain Disability and Life Insurance Now I frequently get asked, “Should I get disability insurance now or as an attending?” Do you depend on your fellowship income? I assume you do, so get disability insurance now. Unless you have a financial safety net, even a few months of disability could cause financial hardship. Don’t count on your employer’s policy, as it can be canceled any time and won’t move with you to your next job. I’ve seen trainees financially ruined over disability. If you have children, or plan to, get term life insurance immediately, while still young and healthy. Avoid whole life insurance, despite what a salesman might tell you!
6. Avoid Credit Card Debt and Don’t Overspend Credit card debt and overspending is the cancer of personal finance. If you do nothing else, avoid taking on taking on unnecessary debt and spending beyond your means. You might think you’ll pay off the debt quickly with an attending salary, but bad habits die hard, and you may find your lifestyle inflate to fit your salary as your debt grows. Overspending now also means inability to start saving early, potentially leading to unwanted extra years of work before you’re able to retire.

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Daniel Kirshenbaum, MD, is a cardiology fellow at Boston Medical Center in Boston, MA.

Keywords: ACC Publications, Cardiology Interventions, Financial Management, Fellowships and Scholarships, Insurance, Life, Retirement, Transcatheter Aortic Valve Replacement, Training Support, Income, Financing, Personal, Motivation, Salaries and Fringe Benefits, Insurance, Disability, Reward, Life Style, Occupations, Curriculum, Percutaneous Coronary Intervention

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