An early career physician has a lot going on and doesn’t need to get everything just right, but there are a few financial priorities that should be recognized.

Editor’s Note: Physician On Fire is the guest post this week on PIMD. They are a real estate investing platform that gives investors access to multifamily, office, retail or commercial real estate deals in dozens of markets across the country.

Disclosure: Physician On Fire is a sponsor partner of our site.

You did it! You did it! Don’t worry; that’s normal. I’ll be happy to help you get started.

You’ve got time to figure out the finer details of personal finance over the next few years, but there are a handful of concepts you’re going to want to get correct right off the bat.

Making a major mistake in any of the following areas can cost you big-time down the road. Most people believe that doctors are good at what they do. A career that garners respect, an excellent salary, and the knowledge and skills to diagnose and heal the sick and wounded.

Medicine can be a fulfilling and lucrative career, but many physicians fail to make sound financial decisions and it comes back to bite them when they are mid-career and they realize that the job they once loved never loved them back.

“Looks like we made it.” – Barry Manilow

Just because you’ve made it through training and have landed a good doctor job doesn’t necessarily mean that you’ve made it. It’s easy to be deceived by appearances. There is a lot to be done before you can truly make it happen.

Pay attention to the other people you are running with. Don’t


I haven’t noticed.” -Coach Conrad to Randy “Pink” Floyd, Dazed & ConfusedAs you settle into your first job and likely a new city or neighborhood, you’re bound to make new friends. That new crowd you start running with can go a long way towards determining how you spend your time and money.Understand the implications of your peer group on your finances. It is possible to have a paradoxical relationship with your peer group. Those who seem to be financially well off may be struggling, while those who are less fortunate might be able to save more of their income. If their incomes are similar, they may look the same, but you will want to be like them.

#1 Plan for your Debt

Young doctors don’t have a lot of money. Most have a significantly negative net worth, thanks to student loan balances that usually increase throughout training.There are plenty of other potential debts to consider, as well. You should also take inventory of your debts, including credit card debt, mortgage debt, and car loans. There are different approaches to debt pay down that equate debt to snow-related objects for some reason, and I prefer the “debt avalanche.”Pay down the highest interest-debt first. Credit card debt is almost unavoidable for a physician making $200,000 per year. It is best to pay it off immediately or transfer it to a

0% introductory rate card

. You should plan to get rid of the balance in 12 to 15 months.

The attrition rate can reach as high as 50%. I’ve heard the attrition rate can be as high as 50%.

If you do choose to buy a home, lock in a low mortgage rate and only consider a

physician mortgage loan

if a 20% down payment is unattainable in your location and timeframe.Student Loan management is hugely important, and getting this wrong can be incredibly costly.

Ensure that you are on the optimal repayment plan, take advantage of any government gifts like public service loan forgiveness (PSLF) if working for a non-profit or loan payment suspension (as exists in 2020 for certain federal loans).

If you’re not certain that you’re on the right track with student loans, I can recommend two resources.

First is a book by Dr. Ben White, Medical Student Loans: A Comprehensive Guide. Although it is not an exciting subject, the book is informative and comprehensive. One caveat is that programs can change often and that legislative acts can make some information obsolete.A student loan consultation from someone who lives, eats and breathes this stuff can also be very valuable. Two resources are available to me.Student loan advice

is offered by a WCI Company. Andrew Paulson is a Certified Student Loan Professional (CSLP), and he serves as the lead consultant.
Travis Hornsby is a former Vanguard bond trader and a doctor’s spouse. He and his team at

Student loan planner

have been doing this for many years. You want someone to analyze your financial picture and come up with the best strategy for student loans.

#2 Avoid massive lifestyle inflation

It’s strange, I know.

#2 Avoid massive lifestyle inflationPaying your debts down will be much more difficult. It’s weird, I know.

You deserve to indulge. You deserve it. You don’t have to do it every day. It’s the instantaneous upgrade of absolutely everything that can push back financial independence indefinitely.There are four categories of spending (not including debt service) that account for most of our spending: housing, transportation, food, and travel.Decide which is most important to you, and go well above-average in that category, but be reasonable with the rest. You can have many nice things with a six-figure income. However, it is not possible to have all of them.

Financial freedom

I recommend that you attempt the “

live off half challenge

” to achieve financial independence. Use half your net pay to invest and pay down debt. Do that, and paid work will be optional in about 15 years from the day your net worth is zero.#3 Save for Big Ticket ItemsThis really ties together the first two priorities of managing debt and keeping your lifestyle in check.

Most physicians can afford to max out all available retirement accounts, make student loan payments, and still set aside tens of thousands of dollars annually.

Like I said, you can have nice things. You don’t have to take on too much debt in order to get them.

Do you want to go on a safari in Africa? Save up for a nice camera, get the appropriate vaccinations and medications, and start a safari savings fund.

The same goes for a boat, motorhome, kitchen remodel, or anything else that could be financed, but can also be purchased with a five-figure pile of cash.A down payment on a home also belongs here, but if we’re preaching what we practice, I have to admit that twice I used a physician loan (Later on in my career, though, I transitioned to

paying cash for homes and avoiding mortgages

and their closing fees altogether.

Paying cash for a truck, trip, tritoon, or townhome not only keeps you from taking on additional debt, but it might also restrict your budget a bit. You tend to spend less when there’s no one else spending your money.

#4 Protect future income

It is possible to save money by paying cash for a truck, trip, tritoon, or townhome.

How do you make sure you have a great coworker?

Be kind to your coworkers. Treat your ancillary and nurse staff with respect. Be gracious with the physicians that consult you and to those to whom you refer patients.

Being well-liked and having good working relationships with your fellow medical staff members can go a long way towards helping you not only keep your job but also increase your pay.Also, be a good doctor in the eyes of your patients. You will provide excellent medical care. However, I am confident that your patients will consider you a good doctor. Understand that your patient population is going to use a different set of criteria for quality than you would uses when judging other physicians.On the insurance front, you need true own-occupation disability insurance from one of the

“big six” companies that offer it. Do not think a group policy is sufficient or worth the risk. Buy from an independent agent that will shop around on your behalf


Also, if anyone besides you depends on your income, it’s smart to purchase term life insurance. You’re much more likely to become temporarily disabled than die young, but if the unthinkable happens, at least your loved ones will be taken care of financially.

A young, healthy person should be able to get a policy that will pay out $2 Million for under $100 a month. There are a number of variables that go into that calculation, but you can

get a quote specific to you in just a few minutes


#5 Understand Available Investment Accounts

The first four financial priorities haven’t really touched on investing. Personal finance is a broad topic, but investing is a big part of it, particularly for the high-income professional.

The important part, especially early on, isn’t to do everything exactly right, but to avoid big blunders. You may be able to invest in an HSA depending on your health insurance options. Depending on your insurance coverage, you may be able to also invest in an HSA.

You can’t have all of these at the same time, but you may have one or two of them.

Regardless of your employment status, the

backdoor Roth IRA and taxable account

are additional accounts in which you should be able to save and invest for retirement.For a more complete rundown of these and other accounts, please see my two-part series:You’ll also have to decide what to invest in within each of these accounts. If you were automatically invested in a default fund such as a target-date fund, that is a good place to start. One to three funds can be a good starting point. Although it may seem like a difficult task at first, you will be grateful for it later.

Skip to content