Biggest Early Career Financial Risks

I remember nearing residency graduation and being thrilled and overwhelmed. My clinical training prepared me for my first attending job in many ways, and I felt confident in my clinical skills. However, as I looked forward to my first ‘attending paycheck,’ I recognized needing help with financial decisions.

With over a decade of experience in our profession, I see the challenges of anesthesiology – declining reimbursement, scope of practice issues, and higher acuity patients. However, the most personal and meaningful issue to me is preventing and recovering from burnout. A financially secure physician is a better physician. Building your financial security is also important to help mitigate and prevent burnout.

Despite the majority of medical students graduating with over two hundred and fifty thousand dollars in student loan debt and having paltry retirement savings, med students and residents are not taught how to manage their money or even provided basic financial education.

How do we ‘learn’ how to act with money? We look around at other anesthesiologists and physicians to see what they do. Buy a big house and a new Mercedes, and don’t forget about the big kitchen remodel, either! That must be the ticket to feeling like we’ve made it. This idea of ‘social proof’ is a powerful motivator, especially in unfamiliar circumstances.

Wealth and riches are two different things. As I’ve said before, rich is all the external possessions you can see – the house, the vacations, the pool, or the boat. Wealth is money not spent and invested instead. Wealth builds and compounds on itself. Wealth gives you time and better opportunities – to ride out a bad stock market, take more time off work, or support your children’s education. But wealth is often hidden.

Money is a funny thing in our culture. We are surrounded by it. We depend on it to pay our mortgage or rent and buy food. We can use it to buy some fun toys. But talking openly about money – what we make, what we save, and the like – we sure fail on that front.

In working with colleagues, my goal is to uncover clients’ deeper values and purpose. To help them create a life filled with meaning. Money is a tool to accomplish these goals but is not the end value.

So how do you get started building financial well-being as a new anesthesiology resident or attending? I think about the process in three separate areas: protecting the downside, paying off debt, and saving and investing.

Maybe it’s my legal training or all of the emergencies I’ve seen in the OR, but I think about risk constantly. What do you think are the most significant financial risks you face?

It’s not about picking the best stock or buying a house in the right neighborhood. Your most considerable financial risk as a young anesthesiologist is failing to protect your income. The two ways to accomplish this are buying a term life insurance policy and an individual own-occupation disability policy.

Purchasing appropriate own-occupation disability insurance is critical. Especially for young physicians, your risk of being temporarily or permanently disabled is much greater than your risk of dying.

This issue is especially meaningful to me because I’ve seen the role disability insurance plays in protecting families. My best friend, Ryan, a gifted anesthesiologist and an even better skier, passed away from brain cancer several years ago. Ryan was unable to work for the last two years of his life. However, he certainly lived big – long mountain bike rides in the Wasatch with friends and unforgettable powder days at Alta. There was lots of time with family and friends in those last few months.

Without an excellent disability policy, those last years would have looked remarkably different for Ryan and his family. As a young physician, you likely have a limited amount of hard assets. Truly your most significant assets are your future earnings as an anesthesiologist. And yet, I see far too many docs going “naked” with disability insurance because of the cost and feeling like the premiums are a waste of money.

Young physicians’ next risks in building wealth are the headwinds of not saving enough and a relative lack of time to save. Because of our extended training periods, many of us have little saved for retirement and must catch up quickly.

The way to make up for this shortfall is to increase your savings rate. Instead of 5-10%, think 15-20%. A high savings rate helps stoke the flywheel and gets your money working faster for you. Pre-tax retirement accounts have the double benefit of reducing your taxable income.

Which would you prefer, getting later in your career and choosing to take fewer overnight calls and taking more vacation time? Or, instead, looking at a small retirement account and having to pick up extra shifts and work during your vacation weeks just to cover your spending?

Putting in the time now to learn about personal finance, investing, and taxes pays off handsomely in the future. It’s not about hitting a home run with every financial decision or saving all your income. Rather, it’s about avoiding the biggest financial mistakes that can wreck your career and retirement.

Reach out here if you want to chat about your current situation.

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