Medical training is a significant investment for both you and your spouse. It’s an investment of time and money so that one day you will have a secure and well-paying lifelong profession. Your financial timeline goes something like this: no income and living off of borrowed money to average pay in residency and fellowship and then to a substantial income seemingly overnight. Not many other people and professions find themselves in such a financial roller coaster. How can a doctor protect his/herself and their family and prepare for the future during such a wild financial ride?
Toward the end of medical school, your medical spouse is likely to start hearing a lot of financial talk from their medical program. Many schools offer presentations and specialized counselors to discuss loan repayment, insurances, and investing with you before graduation. Whether you are interested in these topics or not, they will begin to become important, and inescapable, as you and your spouse move into residency and eventually, a job as an attending
We’ll be discussing five rules for protecting your financial future, and to begin, here are the first three rules to get you started moving down the right path:
RULE #1: DO NOT BURY YOUR HEAD IN THE SAND.
Some people enjoy financial talk and delving into the world of business and investing. If you or your doctor spouse happen to fall into this camp, congratulate yourselves and then continue to research and implement what you’ve learned to make some magic happen.
If business and finance aren’t interests of yours, or your medical spouse’s, here’s some tough love: you cannot avoid these topics in hopes they will go away. You’ll actually put yourself at risk for losing a lot of money in the future, and possibility your livelihood if by chance something catastrophic happens. No one knows what the future holds, so you have to do your best to protect yourselves for any number of possible scenarios.
Here are some scenarios to consider:
1. Doctor spouse is in a fatal car accident their last year of residency. The student loans are forgiven upon death, but now you have no spouse bringing in the large salary you were expecting. You may have other shared debt (mortgage, cars, etc.) that still need repayment in addition to regular living expenses. A life insurance policy would allow you to get re-established financially with a different source of income.
2. Doctor spouse is a surgery resident and is in an accident where they cripple their hand. They no longer can perform their job. In this scenario, you would need disability insurance.
3. Spouse is in medical school and doesn’t match into residency right away. Alternatively, they match into a program and then realize a year or three later that they don’t want to do that specialty, and they want to change residency programs. In this scenario, you need to understand your options for paying off loan debt already accrued, as well as having savings and investments to rely upon.
These are just a few uncomfortable scenarios to help you get your head in the game about the importance of financial protection—especially for the medical family. Yes, your spouse will most likely make a large salary in the future, but more money does not protect you from massive amounts of debt, accidents, death, and taxes. “Mo’ money, mo’ problems.”
Likewise, more money does not protect you from making bigger financial mistakes. You can always find ways to spend (or lose) more than you are making. Please, for the sake of your future selves, do not ignore this subject! No matter how uncomfortable or ignorant you feel about the world of money, you must address this topic.
It might be helpful to know, too, that finance is not a terribly difficult subject. It can be dry, boring, distasteful, or just icky, but it gets easier and more enjoyable the more you understand it and can make it work for your benefit.
RULE #2: LEARN THE BASICS.
Although a career in medicine doesn’t necessarily come with a requirement to develop business and financial acumen, it’s actually imperative that you learn the basics. One of the most well-known websites for financial fundamentals specifically for doctors is The White Coat Investor (WCI). It’s a good place to start.
You also can benefit from hearing points of view from non-physician, but highly reputable financial experts. As you start digging around, you may find that many financial experts provide contradictory advice. One reason finance seems tricky is because there’s no one clear-cut way to do things for all people in all situations. There are so many variables that are constantly changing. Start educating yourself on the options and question advice you receive to see if it makes sense for you. Don’t just follow what you read or hear. Do your own questioning until a particular strategy seems right for you and your spouse.
Hiring someone to do the work for you is possible, but you still need to get at least a basic education in personal finance. The reason is twofold. First, you need some basic understanding of financial language and the various investing and protection vehicles out there. You want to understand what an advisor is talking about when they present options to you.
Second, to be able to protect yourself from unethical or just plain bad advisors. The more money you make, the more you are a target for people to take advantage of you. Doctors have historically been a popular target for financial predators because they tend to make a lot of money without being educated about finance.
RULE #3: LEARN (AND REALLY UNDERSTAND) YOUR OPTIONS FOR PAYING THOSE DREADED STUDENT LOANS.
During medical school, your partner is on their way to being a doctor, one $50,000 student loan at a time. It’s a “rack it up and deal with it later” sort of situation. But come MS4, your partner will start to have opportunities to hear presentations from loan repayment specialists, and speak to specialized loan repayment advisors through their medical school. PLEASE attend the presentations and talk to the advisors.
At my husband’s medical school, we were surprised to see only a handful of students attend a lecture on student loan repayment. It was so incredibly informative, and since I went with him, we both received the information and were able to have a great conversation about what path seemed right for us, right out of the gate.
Don’t kick the can and assume that you will “just pay them off.” There are so many different types of programs (some you have to enroll in) and there are many ideas about how to pay off student loans. Is Public Service Loan Forgiveness a real possibility for your family? Should you go private sector and refinance to a lower rate? Should you live like a resident for 2-5 more years after completing training to pay off the loans right away? What about using income from real estate as a way to pay off your loans over time? Lots of options and you can only consider them if you know about them. Read articles, read books, attend presentations, and talk to the advisors and specialists in your program.
Here are some helpful links to get you started:
These three rules will help you get smart about the need to educate yourself so that you can protect yourself. Next month, we’ll discuss the other two rules including insurances and investing, plus savings and budgeting. Now is the best best time to discuss these topics with your spouse. Get started today and share this article with them. And check back next month for more tips!