Financial Wellness for Medical Professionals

As medical professionals, you spend countless hours caring for patients, but how much time do we dedicate to caring for our financial health?

With the average medical school debt reaching $203,062 in 2023 according to the AAMC, and physician burnout rates at historic highs, having a solid financial foundation isn't just about wealth—it's about creating sustainability in your medical career.

Building Your Financial Vitals: The Three-Tier Approach

1. Emergency Medicine for Your Money

Just as we maintain crash carts for patient emergencies, medical professionals need their own financial emergency protocol. The traditional advice of 3-6 months of expenses in emergency funds takes on new meaning in medicine.

For residents and early-career physicians:

• Target 3 months of expenses initially, accounting for your guaranteed residency salary

• Prioritize liquidity over returns during training years

• Consider disability insurance costs in your emergency planning

For established physicians:

• Expand to 4-6 months of expenses, particularly if in private practice

• Utilize High-Yield Savings Accounts (HYSAs) earning 4-5% annually

• Factor in tail coverage costs if changing practices

Case Study: Dr. Sarah Chen, a third-year resident, maintained a $15,000 emergency fund that proved crucial when an unexpected move between residency and fellowship required first/last month's rent and temporary housing overlap.

2. Preventive Care for Retirement

Think of retirement planning as preventive medicine for your financial future. The key is maximizing tax-advantaged accounts in the correct order:

For Residents:

• Start with employer 403(b) matching (typically 2.5% at teaching hospitals)

• Open a Roth IRA while in lower tax brackets and before hitting maximum income limits ($161,000 in 2024)

• Focus on low-cost index funds (think VTI/VOO) with expense ratios under 0.1%

For Attending Physicians:

• Max out Roth IRA contributions ($7,000 for 2024)

• Increase 403(b) contributions post-match

• Consider backdoor Roth conversions when income exceeds limits

Even $200 monthly in a Roth IRA during training years can grow to over $100,000 in 30 years at historical market returns.

3. Long-Term Care for Major Goals

Beyond retirement, physicians face unique financial planning needs for practice buy-ins, real estate investments, and children's education.

Strategic Approaches:

• Use CDs for 1-3 year goals (practice buy-in funds)

• Consider geographic arbitrage when choosing practice locations

• Balance loan repayment with investing, especially during loan forgiveness programs

Action Items for Different Career Stages

Residents:

1. Set up automatic emergency fund contributions

2. Capture any employer retirement match

3. Open and fund Roth IRA before tax day 2024

New Attendings:

1. Review disability insurance coverage

2. Maximize retirement accounts in proper order

3. Establish separate savings for practice opportunity funds

Established Physicians:

1. Rebalance investment portfolios annually

2. Review asset protection strategies

3. Consider additional tax-advantaged investment vehicles

The Bottom Line

Just as we tell our patients that prevention is better than cure, the same applies to financial health. Start with a strong emergency fund foundation, layer on retirement savings, and build toward your specific long-term goals.

Remember, financial wellness isn't about deprivation—it's about creating a sustainable path to both personal and professional satisfaction.

Meme of the Week

Talk soon,

M&H