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Thursday
Dec302010

First Things First: Handle Your Finances As A Physician

As a physician wanting to control your career, you're going to need to get your finances in order first.

Over the past few posts we've discussed the idea of taking responsibility for yourself and not waiting for others to come save you.  You've hopefully begun reading the blogs of a few of the adventurous souls who have found ways to live interesting lives, and learned about some of your career options here on Freelance MD.  In this post, we're going to discuss the first and primary means of addressing your confinement in a frustrating career.

If you want to begin living a different life, if you want a new career path and you want to branch out from the doldrums of your current career, the first and most important thing you will need to address is your inability to handle your personal finances.

How do I know you aren't handling your finances well?

Well, I don't mean to stereotype you, but let's face the facts: you're a Westerner living in a very materialistic culture that often defines itself by its material possessions, and you're in a profession that puts pressure on you to look and act in a successful manner.  

There are a few American physicians who have developed patterns of proper financial responsibility, but most have not, and one certainly doesn't develop these patterns by accident. These patterns and habits are developed through many deliberate choices day after day until they become second nature, but they are fought tooth and nail by the culture around us.  As physicians we feel the "need" to drive a certain car, have our kids in a certain school, have a certain type of house in a certain neighborhood, and be members of certain clubs.  The current of life in medicine carries us away from sensible financial decisions, and many, many physicians are drowning in their careers due to bad decisions regarding money.

This toxic financial culture in medicine was discussed in the popular book, The Millionaire Next Door .  In this text, authors Stanley and Danko discuss who the really rich in American society are, and usually it's not the professional class.  They note that there's a difference between looking rich and being rich.  Many physicians look wealthy, but when you scratch beneath the surface they're drowning in debt and working 80-100 hour weeks just to break even.  They overspend because they feel entitled to nice things due to their prior sacrifice of years in school and long hours at work (or are simply very foolish), never realizing until too late that they're boxing themselves in financially and completely undoing their financial future.

Of course, while physicians themselves are mostly to blame for this (remember, personal responsibility...you are not a victim), medical schools could do a lot more to help the situation.  It is appalling to me that we have a medical educational system that takes bright, idealistic students, trains them to be physicians, and then casts them out into this current healthcare world without any sort of training or discussions in financial management, various specialty salaries, billing and coding, practice management and the like.  It's more than appalling really, it's completely unethical, and those leading our nation's educational establishments should be embarrassed by what's happening.  

Dr. Robert Doroghazi, author of the book, The Physician's Guide to Investing: A Practical Guide to Building Wealth , said it this way: 

"I believe the position of the academic medical establishment to deny medical students financial instruction is naive, hypocritical, and indefensible.  They should acknowledge that money is important.  It is never as important as your patient.  It is never as important as your family, your health, your freedom, or your integrity.  But is is important."

Unfortunately, I do not believe this ridiculousness in our medical educational system will change any time soon.  As a matter of fact, I received a phone call recently from a medical student who is torn between a couple of different specialties and called to ask my opinion about his situation.  One of the things he said that stuck with me was, "Every time I try to ask questions of people at my medical school about salaries or financial issues, I'm either looked at in a weird way or people tell me not to worry about it. It's like they're wondering, 'Why would you even be asking that?'"

The naivete of our training coupled with a culture that pushes consumerism and materialism has undone the careers of many physicians.  It's a tragedy. 

The good news is that it doesn't have to be that way. You can make choices that alter your financial future and therefore alter your life.

Here's a project...

If you are serious about career modification and you're serious about making significant changes to your future, then sit down and take a good hard look at your finances.  If you're honest, what you'll find is that a lot of things your money goes towards are "wants" not "needs" and if you're ever going to be free, you need to take that "want" money and use it to pay down debt and increase savings so you can break free of the rat race you're in.  

This must be done.  

There's no other way.

If you cannot take this first step, then all the other steps are superfluous. 

We're going to be talking more about this concept in the future, and we're pleased that Dr. Setu Mazumdar is one of our authors.  In addition to being a board certified Emergency Medicine physician, Dr Mazumdar is a financial planner and the founder of Lotus Wealth Solutions where he counsels physicians on money issues.  Be sure to check out his posts here on Freelance MD and watch for more good counsel from him in the near future.  

For those of you who want to go ahead and begin getting control of your finances, a good place to start is the Money 101 website from CNNMoney.com .  No website is perfect, of course, and we're not unequivocally endorsing any site or any person (please use your head), but the Money 101 site does have a lot of tools to get you started if you need someone to simply help point the way.

So there you go, your first homework assignment on your road to freedom: handle your finances.

It can be really tough at first, but in the end it is absolutely necessary if you want to modify your career and begin living a better life.  

Keep checking back here on Freelance MD since in future posts we're going to be discussing specific things you can do to improve your financial lot and how to move forward with your plan to develop a new, more exciting future.

Reader Comments (1)

Thank you for an excellent post. The famous quote, "an ounce of prevention is worth a pound of cure" is key for physicians taking on massive debt. Understanding how credit scoring works and how to properly acquire and manage debt are key factors for physicians managing their financial future.

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