Infectious Disease

Medical trainees should enter the workforce with a plan for financial stability

March 15, 2021

3 min read

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Dahle JM. Early career financial management. Presented at the CSRO Fellows Conference; March 13, 2021 (virtual meeting).

Disclosure:
Dahle reports that his blog and podcast are for profit and that he is not a licensed accountant, lawyer, or financial advisor.

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A simple and cheap life in the first few years after medical training can put young rheumatologists on the path to financial stability later in life, according to a speaker at the CSRO Fellows Conference.

“Money doesn’t necessarily bring luck” James M. Dahle, MD, FACEP, A practicing ambulance and veteran from Salt Lake City, Utah said in his presentation. “But ignoring money can make your life miserable.”

“The process of getting rich isn’t automatic,” James M. Dahle, MD told attendees. “You have to spend time learning about finance and economics.” Source: Adobe Stock

Dahle, who has blogged, podcasted, and authored books on financial advice for clinicians, suggested that the “secrets of financial independence” for graduate and local residents may not be as complex as one might think. “Make a lot of money and don’t spend a lot of money,” he said. “Live like a resident or a guy, even if you are starting to make the big bucks.”

According to Dahle, many doctors make the mistake of buying a multi-million dollar home or an expensive sports car right after a workout. He suggested waiting at least 2 to 5 years before taking these steps. “You are not what you drive,” he said.

James M. Dahle

Recent data has shown that the average rheumatologist makes approximately $ 260,000 per year while the average fellow earns $ 65,000. “Don’t assume that your lifestyle should only go up four times just because your salary goes up four times,” he said.

Dahle does what he does, at least in part, because the medical school’s residency and fellowship programs offer almost no personal finance and investment training. He challenged attendees to accept the reality that they are their own CFO.

Reading books on financial literacy, following reliable online advice, and continuing education on financial matters are vital. “Read a financial book every year,” said Dahle.

For clinicians who tend to hire a professional to assist them with financial matters, Dahle suggested hiring someone to teach, rather than just do all the work. He urged caution in deciding who to hire for financial advice. “Brokers, financial advisors and insurance salespeople are not there to help,” he said, suggesting that they are mainly in business to grow their own wealth. Dahle quoted a doctor as saying that these professionals should be treated like “die-hard criminals.”

Up until this point, doctors should not receive advice from unsolicited emails, from other doctors, or even from family members and friends. Churches, television commercials, local banks, and credit unions are also bad places to get financial advice, according to Dahle.

A financial advisor with a Certified Financial Advisor (CFA) or Certified Financial Planner (CFP) license is recommended.

Perhaps the most important decisions for first-time clinicians to make are student loan repayment. “In 2020, the median educational debt for DOs was $ 260,000 and for MDs about $ 205,000,” Dahle said, noting that interest rates ranged from 5.4% to 10%.

Income-based repayment programs (IBR) can be considered, as can pay-as-you-earn (PAYE) and public loan programs (PSLF), which are incentives for the government or nonprofits to work. “You need to become an expert on student loan programs,” said Dahle. “It can save you tens of thousands of dollars.”

Medical malpractice insurance is also necessary, but Dahle says it can be a simpler proposition than many new doctors think. “Buy what everyone else in your area has,” he said.

In terms of investing, Dahle suggested devising a plan that could be effective regardless of the volatility in the stock markets. “Make sure it’s broadly diversified across asset classes,” he said. “Make sure it is broadly diversified across the asset classes.”

Buying individual stocks should be avoided. “Most stocks are actually losers,” said Dahle, recommending mutual funds instead. Day-to-day trading is a “bad idea”, as are short positions and options, and real estate investments should be approached with caution.

“The process of getting rich is not automatic,” said Dahle. “You have to spend time learning about finance and economics.”

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