Apart from a minority number of academic physicians (a la @PassiveIncomeMD), nearly all of the physicians openly discussing finance matters online are either retired or in private practice. The data might be skewed since most practicing physicians don’t work in academia anyway. What might be interesting is to compare the percentage of financially literate academic physicians to that of those outside of academia. I would venture to surmise that academic physicians might be more financially literate than everyone else simply because they are likely a more analytic bunch—I guess it also ultimately depends on how we define financial literacy.
Now hold it right there buddy! My medical school classmates who work in academics know squat about money!
Why academic doctors might be less informed about finances
Doctors as a group are intelligent—you might argue that there is a difference between intelligence and common sense, but in order to get through the training process to become anointed with an “M.D” (or D.O) not only requires a long time but an ability to troubleshoot at least the medical aspects of our jobs.
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Just as how any educator would assess her students, proficiency (or lack thereof) in a subject could be attributed to one reason:
Motivation — We’ve all known people who are gifted but don’t apply themselves. I would argue that most people who didn’t flunk out of medical school should have the chops to open a Roth IRA or decide whether they can afford a new yacht every five years. But no matter how much intelligence you have, going into a college final cold turkey can only get you so far.
Lack of motivation could be summed up by a multitude of reasons:
- Too busy — This is not unique to academic medicine, but if your life doesn’t afford you the time to learn about finances you’re not going to understand it. The barrier to understanding money is somewhat low compared to understanding metabolic acidosis from oral hypoglycemics, but if you’ve spent no time learning you’re starting with an empty deck.
- Pre-existing financial independence — It might be presumptuous to assume that one reason why you don’t spent time managing your finances is because you started out with a loaded deck. I know a few of those people in medicine, and we all wish that more people were as altruistic as these gals. Their trust funds are still being managed by somebody, however. It would be nice if all of us had this luxury.
- Unawareness — A number of my colleagues simply think that their six-figure salaries can buy more than they can, so they don’t really pay attention to the details. Once the kids move off the waiting list for the highly competitive daycare that all of your coworkers send their kids to, the $50,000 a year nanny would start looking inexpensive.
- Everything else — This is a catch-all bucket. Maybe the lack of financial motivation is due to a combination of the aspects mentioned above. Frankly, the norm is not to talk about finance as a doctor. If your colleagues don’t seem to be worried about it, why should you?
Academic medicine somewhat highlights being “too busy” to be deeply knowledgeable about finance. Aside from being a clinician, academic doctors may be responsible for a multitude of tasks:
- Training residents, students, and fellows. This includes ACGME mandated roles for residency directors.
- Drafting new grant requests, both within an institution or with the NIH.
- Conducting either laboratory or clinical research, along with going through dozens of revisions on multiple papers.
- Traveling to conferences across the globe to present their research.
- Sitting in administrative meetings.
- Participating in fund raisers for their departments.
- Scut monkey for their departmental chair
There’s only so much you can throw onto your plate before it spills.
The financial ceiling of academic medicine
While most careers will have an income ceiling, it’s pretty well known that academic medicine will usually have a lower overall income ceiling over a normal career length compared to other clinical jobs. What this means is that those doctors whose incomes are in the lower range of physician incomes will need to be more conscientious about their finances as they might not have the financial firepower to get themselves out of negligent spending.
What does this mean if you are in a career in academic medicine or are considering it? All is not lost! You don’t have to resort to owning a dozen rental properties just to make ends meet. You do have be aware of the pros and cons that your career choice offers and make appropriate choices:
- Be aware of your earning firepower, and make sure your lifestyle doesn’t exceed what your W2 shows.
- Some academic arrangements are actually private practices with academic titles. This might confer the benefits of being in both academics and private practice.
- If you are working in the public sector, consider PSLF. You could start the process while in residency and continue for a few years after you finish. It may not be as long as you think.
- Don’t try to compare yourself with others not in your shoes. You will only be disappointed.
- Make sure that you actually know what you want. Don’t make job choices based on what others think of you. Do it for yourself and your family.
What other financial suggestions do you have for the academic physician?