Smart Money MD

We all want the best for our kids.  My parents made sacrifices in their lifestyles in order for me to have a better life, and it’s natural to want to pay it forward.  As physicians, we are fortunate to be able to provide reasonable financial support for our children.  What most of us actually are short on is availability and the time to spend with our family and friends.  However, we do have limits on our earning potential.  It’s easy forget that a six-figure salary doesn’t mean unlimited wealth to fund everything that your kids want. The following are some of the instances that ache my heart when I see them recur in my colleagues (and myself).

I’ll admit it. I’m guilty of judging others. I’m also susceptible to being judged.  I make financially imprudent decisions too.  I try to learn from them as much as possible.  What does irk me, however, is when otherwise intelligent people correctly identify bad decisions yet still jump into the pit of flaming tar.  When they finally climb out, they jump right back in.  Here’s a recent conversation I had with one of the local doctors:

Me: How was your weekend?

Colleague: Good. Just getting my son ready for school (son is in the 4th grade)

Me: Yeah, I can’t remember how stressful it was for me or my parents back in grade school.

Colleague: Well, I had to get <son’s name> a new graphing calculator and a dozen pairs of new shoes.

Me: <refraining from asking judgmental questions>

I clearly remembered when I got my graphing calculator in high school, and it was used mainly for playing games.  Sure, modern times are different—fourth graders get cellphones now—but I can’t really think of any good reasons why any child this age would be mandated to have a graphing calculator.  The shoe situation simply had no good explanation.  Apparently it was common for the popular kids in the school to have a new pair of sneakers every month.  All in, these purchases totaled around $800. This doesn’t break the bank, but we have to be cognizant of how many insignificant expenses it takes to eventually break the bank.

We’ve hammered the cost of education to death.  There is always contention when one argues the financial merits of educational costs.  There is opportunity cost to exchanging tuition dollars for something else, whether it be a real estate investment or simply index funds.  To me, the straight comparison of dollars is moot.  There really aren’t that many calculable career outcomes that you can use to justify the cost of education at the extreme ends of the spectrum.  The decision for education has to be qualitative, as we glean immeasurable experiences that grades and career paths cannot quantify. That being said, there are limits to which you can justify throwing money at situations just because you can.

I have a coworker whose daughter was deciding between a relatively well-known school nearby and a school unknown to most people that was a two-hour drive from the nearest airport that also had a tuition four times higher.  There were no statistics on what the graduates of the more expensive school actually did afterward, although one of their friends who was an alum currently works at Lululemon.  My coworker’s daughter ended up picking the more expensive school.

Including the cost of travel and housing, my coworker is probably looking at the difference between $80,000 and $300,000 for four years of college.  Most physicians can still “afford” this difference over four years, but it would probably place a dent into the financial buffer.  It would be interesting to follow up on these situations in five or ten years to see how things turn out.

Most of my medical colleagues take nice vacations (including myself).  Many of them post their adventures on social media.  A handful of them bring their young children (age < 5) to international trips at least once or twice a year.  Most airlines require you to purchase a separate ticket for children age 2 and older, and we’ve all seen our fair share of unhappy little ones during long trips.  When the vacation is over, no one is happy because junior (and the parents) just spent the last 4 hours in the emergency room in Hawaii waiting to get stitched up.  By the way, dad is an ER doc but doesn’t carry 7-0 plain gut and a needle driver when he is on vacation.

How much of the Lake Como experience would a three year old, or even six year old enjoy? I’m not even sure that I understood culture enough as a teenager to truly enjoy Europe, although modern-day kids are now much more worldly than we were decades ago.

From a practical standpoint, it is understandable why families opt to take their young children on big trips even if that means shelling out a lot of money or hassle:

No matter what our family decisions are, we need to think twice before jumping into the flaming tar pit.

No one likes to talk about alimony, yet alone deal with it. The rules governing alimony vary state by state, but if you are the higher paid spouse, expect to incur unwanted expenses.  If you have any children, then expect to fork out a bit more. The good news is that most of the posted statistics about divorce in the medical profession is actually less than what the general population experiences.  The feeling nonetheless stings if you have to go through it.  We don’t need a lecture on alimony, but just realize that it would behoove us to avoid financial agony.