Why Financial Health is Important to New Physicians

Written by: Nichole Coyle, CFP®

As a young physician beginning your medical career, you may find yourself facing a unique set of financial challenges. Years of rigorous training and education prepare you to become an exceptional doctor, but can also burden you with substantial student loan debt. Unfortunately one very important component of your career likely hasn’t been addressed still – your financial health.

Financial health plays a role in your physical and mental health as well. If you are not financially healthy, the stress and anxiety can really impact your overall health. You already have so much on your plate as a medical resident or young attending, but we also need to consider you may be supporting a family, protecting your hard earned assets, and have on average $250,000 in student loan debt.

Working with medical residents in two of our local hospital systems, I was surprised how little financial education was provided. One of our local hospitals would bring in a financial advisor to speak with the new first years, but after that, very little was provided. I’ve spoken to several of our physician clients who say they either don’t remember meeting such a person, or they remember the meeting, but that it all seemed too far off to deal with at the moment. To be fair, these advisors weren’t talking about true financial wellness, they often focused on investing assets, which for many young residents seems overwhelming with a resident’s salary and all the student loan debt hanging over them.

Additionally, young doctors, who may not have reached a minimum investable asset range of $250,000 to $500.000, may find it challenging to attract the attention of many advisors. At Impact Wealth Management, we think that is an outdated practice and believe that early in your career is a vital time to work on your financial health, setting the foundation for a secure future.

Our approach to financial health at Impact is to focus on the foundation first. This means we focus first on your cash flow (budgeting) and debt repayment plan (student loans, mortgage, vehicle, credit cards..). Once the foundation is secure and we have a solid plan in place, then we can move on to accumulating your wealth and protecting it.

We don’t believe in cookie cutter advice and therefore create customized plans for each of our clients. However, we do recognize there are still foundational starting points for each plan. In order to get you started on the right path to financial health here is a basic template:

1. Budget Wisely. Create a detailed budget that includes your living expenses, loan repayments, and savings goals. Sticking to your budget can help you to avoid overspending and accumulating more debt. If you would like a done-for-you budget and debt repayment plan, contact us here.
2. Emergency Fund. The Emergency Department at the hospital is meant for unexpected illnesses and injuries. Keep this in mind as you build up your Emergency Fund. Having these savings available for the unexpected can not only keep you from accumulating more debt, but also provide peace of mind.
3. Manage Debt Strategically. Understanding your student loan repayment options as well as possible forgiveness programs can help alleviate some of the burden. If you would like more information on repayment options or would like to delegate the payoff plan creation, schedule with us here.
4. Invest for the Future. Take advantage of compounding interest and employer matches by starting early and contributing even a small percentage into your 403(b) or 401(k).
5. Protect Yourself. Talk to a financial professional who can help protect your income and loved ones in case of unexpected events with disability and life insurance.
6. CMEs. Continue learning! Meet with your financial planner regularly for a financial checkup to review changes in your life, career, and goals.

Considering the significance of these fundamentals, we are consistently surprised by the lack of financial education for new physicians. In medical school, how valuable would it be to have a course on budgeting and student loan repayment options! Regardless, here at Impact, we specialize in supporting physicians in managing their financial health from residency through retirement.

Over the years, we have worked closely with physicians who often share that they hadn’t previously considered working with a financial planner until completing their residency. The extensive 3+ years of residency demands substantial planning, particularly concerning a suitable student loan repayment strategy. By entrusting the time-consuming and stressful tasks of researching and planning to a financial planner, you can regain your valuable time.

We provide you with the roadmap you need to take control of your finances, allowing you to focus on what matters most. Financial health is vital for new physicians, ensuring your long-term financial well-being. We understand the unique challenges you face and will work with you to create a robust financial plan. Just as you dedicate yourself to your patient’s health, we are dedicated to your financial health.

“Distributions from traditional IRA’s and employer sponsored retirement plans are taxed as ordinary income and, if taken prior to reaching age 59 ½, may be subject to an additional 10% IRS tax penalty. All investing involves risk, including the possible loss of principal. There is no assurance that any investment strategy will be successful.”