Dollars and sense

Start strong: Financial do’s and don’ts for med students and early-career physicians

Making sound financial decisions can help you increase your career satisfaction and make the most of your earnings.


I know, I know … it sounds a bit paradoxical to tell physicians to start their careers with sound financial decisions when they just voluntarily sacrificed more than a decade of earning power in training while borrowing hundreds of thousands of dollars to enter a field with increasing regulation, a compensation bubble about to burst and an overall trend toward accepting the high tax burden of employment in exchange for ‘security.’

Additionally, the return-on-investment analysis for becoming a physician drives ongoing debate about whether the cost and duration of training is sustainable, given the declining financial rewards relative to other professions. It seems there’s truth to the ‘we don’t do it for the money’ mantra most physicians live by.

Financial advice for doctors in training and in the early stages of practicing medicine

Even though you’re not doing it for the money, taking note of this financial advice for doctors in the early stages of their careers can help you increase your career satisfaction and make the most of your earnings.

Medical student

Don’t sign a stipend just to minimize debt

Because physicians are in such high demand, medical students are targeted by many organizations to sign employment agreements long before they even complete their training. Everyone from the U.S. government (Armed Forces, National Health Service Corps, etc.) to private hospitals and other employers entice students with stipends that pay tuition and/or living expenses in exchange for service after completing training.

While this may be appealing at the time, don’t underestimate the value of the flexibility you’ll give up for this stipend. When the match is rooted in passion for service, stipends are great for everyone involved; when signed for financial reasons alone, in the long run, they are rarely good for anyone involved.

Don’t choose a specialty based on money alone

Like signing stipends, choosing a medical specialty for financial reasons alone rarely leads to long-term fulfillment. In his bestselling book Drive, Daniel Pink debunks the widely held myth that money is the ultimate motivator.

Sure, fair compensation is a must, and everyone has a different perception of ‘fair’; but autonomy, mastery and purpose are far more important to driving success.  

Postdoctoral trainee

The start of residency training is a critical transition point on the path to becoming a practicing physician: from student to employee. At this point, physicians start providing services to patients and extending the capacity of our health care system.

While you’re still learning, you’re no longer paying tuition, and you have skills that contribute important services to our healthcare system and workforce – these contributions are a prime opportunity to maximize your revenue as early in your career as possible.

Do maximize employer contributions to retirement plans

Postdoctoral trainees are almost always considered employees; thus, they have the benefits of other employees. For many employers, this means the opportunity to participate in retirement plans. While financial advisors and tax planners may debate the general participation in retirement accounts, few will argue against participation when there is an employer match.

Be aware that there is likely a vesting schedule, so if you don’t stay with the employer after training, you may not get to keep all of the matched funds; however, any money vested is the closest thing to free money out there.

Do pursue moonlighting opportunities

After one year of postdoctoral training, many states allow physicians to become independently licensed to practice medicine. Practicing medicine outside the training environment comes with the opportunity to be compensated as an independently licensed physician (much higher than as a resident physician).

This is a great way to generate revenue to invest, pay down debt or to purchase training that will allow for higher future earning capacity.

Early-career attending physician

Don’t ‘live like a resident’

You’ll likely hear the advice at some point in training to live like a resident after completing training as a method of starting strong financially. While this conservative approach may work for some, there is a consequence to further delaying all financial gratification.

You’ve worked hard to become an attending physician – enjoy it! Here’s one way to find balance. During the last year of training, make a prioritized list of rewards you’re looking forward to purchasing as an attending physician.

Don’t stop there, though. Set some clear milestones around when you’ll buy them and set a budget. This will help with impulse control when that first paycheck arrives.

Do avoid consumer debt

Speaking of that first paycheck, resist the temptation to calculate the affordability of goods based on monthly payments.

Financing consumer items rarely makes good financial sense. Unless you’re one of the few who is financially free by the end of residency training, every monthly payment serves as a very real reminder that practicing medicine is as much a job as it is a service to society.

Minimizing consumer debt creates a faster path to financial freedom and the flexibility to practice medicine motivated wholly by the desire to serve rather than the need for a job.

One last tip

The most important thing to do, regardless of the stage in your career, is to educate yourself. Like in medicine, it’s wise to know enough to ensure your consultants are doing the right thing for your patients. When caring for patients, the most dangerous position is when you don’t know what you don’t know – and the same is true for your financial health.

It’s a great idea to have a financial team to support you as you pursue your financial goals. Shop around and beware of scams targeting high earners; but don’t be afraid to pay well for sound advice from financial advisors, bankers, asset protection attorneys, tax advisors, health care attorneys and others who will help position you for financial success.

Related reading:

Public Service Loan Forgiveness: What’s new, what’s left out, and what steps to take

This hobby helps me cope with my grueling medical training

One comment

  1. Willa Bell

    A great article except for the concept to “not live like a resident”. The author says “while this conservative approach may work for some, there is a consequence to further delaying all financial gratification”. But the article never says what the consequence is?
    I disagree. Many residents I’ve worked with are $300,000+ in debt. Unless they are doing a student loan forgiveness program… physicians are better off paying those student loans asap. My husband and I- both DOs paid off 2 sets of loans in 4 years after training. Best decision ever!!!!

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