A recent study titled: “An assessment of residents’ and fellows’ personal finance literacy: an unmet medical education need” revealed that physicians in training lack basic knowledge of personal finance principals.
The primary objective of the study was to assess residents and fellow’s knowledge of personal financial principals. With a mean score of 52% (F), it’s safe to say that we can greatly improve financial literacy in all areas.
Working closely with physicians I was not surprised with the results of the study. Physicians in training spend countless hours working and studying to become the best doctor they can, with little to no time left to do anything else let alone learn about personal finance.
The study collected data from residents and fellows at the Washington University School of Medicine and the University of Arizona College of Medicine.
High Debt Levels
A high percentage of respondents (79%) reported high debt levels with a combination of mortgage, credit card, or student loan debt. Reducing and eliminating debt should be a high priority. Waiting until after residency or fellowship to tackle this problem is a sure way to get into financial trouble.
Low Savings Levels
Not surprising retirement savings were low. With high debt levels and low income when compared to their future income expectations saving for retirement is not a primary concern. Although you should already be developing financial planning strategies to tackle your debt and save for retirement.
Another area of concern is that a low percentage of respondents did not have wills, which is a basic estate planning tool.
It concludes that residents should at a minimum be taught about the following financial subjects:
- Debt Management/Credit Scores
- Saving and retirement plans
- Life, Health, and Disability Insurance
- Estate Planning
As a physician, you need to put in the time and effort to at least learn the basics. If you don’t, I guarantee you that at some point during your career (probably at the beginning) you will be manipulated by a so called financial advisor (apparently everyone can be called that) to purchase some exotic investment product with ridiculous HIGH fees and little to no benefit to you. The only way to protect yourself is to learn as much as you can about all the above subjects.
"Financial literacy is not a requirement to be a competent physician, but can significantly impact job satisfaction and productivity"
Residents and Fellows have a small window of opportunity to get this right. The window starts to close a few years after transitioning to an attending.
I work exclusively with physicians, helping them avoid costly financial mistakes by establishing clear financial goals that lay the foundation for the accumulation of wealth. After analyzing every aspect of your financial life (investments, taxes, employee benefits, student loans, insurance, estate planning, debt, mortgages) I recommend all the necessary action steps needed to organize your finances and accomplish your goals.