Financial Literacy in Medical Education

Physicians hold a high degree of responsibility within their profession by nature – caring for patients is not easy. A significant amount of training is required to become a well-rounded physician, and with that rigorous process comes a fair amount of stress. On top of the strains of training, doctors are not exempt from normal day-to-day problems. The accumulation of stressors leads to physicians being one of the most depressed professions to date. In addition to other causes such as job burnout, a survey conducted in 2018 found finances to be the second leading cause of physician depression [1,2]. “Wait, but why? Aren’t doctors rich?” Common conception leads much of society to believe that doctors are wealthy – which is not necessarily true.

Physicians are high earners, however, there is a difference between income and wealth.  Income is the net amount of money flow an individual earns on a regular basis. Think of income as the combination of normal salary associated with a job, investment earnings, and other earnings from assets minus the taxes they pay. Wealth assesses how long someone can financially sustain themselves (and families or dependents) without having to continue working. Wealth has two components. The positives consist of assets and savings, while the negatives consist of liabilities like mortgages, loans, etc. The combination of these components paints a picture of an individual’s net wealth [3].

So, to circle back to the question of physician wealth, why are doctors reporting financial stress with high incomes? There are a few reasons:

1.       Financial literacy throughout training is limited. Succeeding in medical school and residency requires an immense amount of studying and work. Any other time not spent on perfecting medical skills is focused on personal well-being – rightfully so. But what this means is that there is very little time spent learning personal finances. And the little time that is spent on it, can often be overwhelming to think about, let alone garner enough information to come up with a structured financial plan. Additionally, medical students and physicians tend to be good students, and often think this translates quickly to other realms. Thus, they often treat studying personal finances with less importance. Overall, financial literacy takes very little precedence early on in medical school, which leads me into the second reason for financial stress [4].
2.       Most U.S. medical students live off student loans and thus accumulate large debt burdens. Medical students are encouraged to take on large loans to minimize immediate financial stress early on in training. This steers students to ignore financial issues until later in their careers. Loans can give a false sense of security to students, leading to poor spending habits. With high interest, loans quickly turn into bad news bears. According to recent data, the average medical school debt by time of graduation is over $200,000. When graduating medical school, newly minted doctors move onto residency training for their respective specialties for anywhere between 3-7 years. The average resident physician salary is about $63,000. This salary, especially when accounting for living expenses and hours worked to pay ratio, is typically not enough to start making any significant payments loans. Thus, interest continues piling throughout training making the mound of debt appear increasingly similar to the Himalayas [5].
3.       Length of medical training + delayed career start = decreased time for wealth accumulation. Medical training is long – 4 years of college, 4 years of medical school, and 3-7 years of residency training in specific specialties. Assuming a student begins medical school relatively soon after college, by the time they are attending physicians they are likely in their early 30s. Compared to their peers, doctors often start 10 years behind in their careers financially – not to mention the debt burden. This makes up for a significant chunk of lost earning potential in retirement savings and investments. So, while attending physicians do have high annual incomes, keep in mind it is hard to beat lost time with respect to savings and investments [1].
4.       Unique financial structure within the profession leading to lifestyle creep. When resident physicians complete training, many go on to become practicing clinicians and experience a significant boost in their income – ranging anywhere from 3-10 times that of their resident salary. With societal pressures and low financial literacy throughout training, newly practicing physicians can fall victim to unrealistic and/or unsustainable standards of living. And after such a long arduous training path filled with delayed gratification, it can be difficult to not immediately grow into the new salary. Doctors can often find themselves in trouble if they increase lifestyle expenditures without having taken care of their educational debt and other expenses first.
5.       High production expectations and fear of malpractice. Doctors, with the increasing corporatization of medicine, find themselves working harder and longer for less reimbursement. They also pay high malpractice premiums and often at some point of their career face a litigation, leading to massive financial stress.

All this is not to say that physicians are not living comfortably – it just takes some planning and willingness to learn. This is worth considering given that finances are one of the biggest reasons for physician depression. So, what is the solution to reducing financial stress for physicians? Hard to give an all-encompassing answer. Issues at the educational and training level need to be solved, such as integrating financial literacy as a greater priority in medical school curriculums and changing the taboo culture of discussing finances in medicine – making financial transparency appropriate. In a grander scale, and a discussion of its own, the issue of the tuition costs in higher education also needs to be addressed. Medical trainees should realize the implications of developing financial literacy early on. While choosing medicine is not about the money, not having to stress about it will ultimately lead to higher satisfaction.

Aaron Tran

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Aaron Tran is a member of The University of Arizona College of Medicine – Phoenix Class of 2023. He graduated from Arizona State University in 2018 with a degree in Kinesiology. In his spare time, he enjoys training Brazilian Jiu-jitsu, bodybuilding, playing guitar and piano, and hanging out with his labrador retriever, Rex, outdoors.

For questions, concerns, or discussion: atran13@email.arizona.edu

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