5 Bad Money Habits of White Coat Professionals
Everyone's got bad habits. Unfortunately, how we deal with money can have serious implications in life. Below are five bad money habits that help explain why some high-income-earning white coat professionals never achieve financial independence. They are in no way exclusive to our career choice but we are definitely not immune, myself included.
1. Borrow against future income. We all do this to a certain extent. For example, borrowing six figures in student loans to finance a medical education. But like anything else, too much of it becomes a bad thing. If you start living a lifestyle based on the future expectation of a six-figure salary, chances are good that you’ll never live that lifestyle when you actually make six figures. Remember compound interest? It may work to your benefit when we’re talking about investing, but unfortunately it works the same way when money is going in the other direction.
2. Ignore bills. We’ve all had that moment: We come home to a mountain of mail that we would like to do nothing more than deliver straight to the trash can. Life can get overwhelming when you are working 80 hours a week, especially if you are trying to take care of a family outside of work. Sometimes we just want to put all that mail away in a box and say “I’ll take care of it later.” But unfortunately life never slows down and that box keeps getting bigger and bigger. The best way to address this is to take advantage of all the technology we have at our disposal – use the bill reminder, auto-bill pay services offered by your credit card companies and service providers. Of course you should check the bill as well, but at least now that big box won’t come back to bite you.
3. Prioritize the unimportant. Tell me if you have one of these – a friend who seems to be constantly complaining that he/she has no money for rent but at the same time leases a luxury car and dines out on a regular basis. This friend suffers from an inability to correctly prioritize the important things in life. What should be the first priorities for your money? Food in your mouth, clothes on your back, and roof over your head. You don’t do anything else with your money until these three things are taken care of.
4. Inadequate asset protection. What is our most important asset as healthcare providers? I would argue that is our ability to work in a highly compensated, job-secure industry. Perhaps it is because we work in one of the more secure career paths that we apply that expectation of stability and security to other facets in life. I know many colleagues who are under-insured. Sure we all have car insurance and most of us are provided malpractice insurance through work. But what about life insurance, disability insurance, umbrella insurance?
5. Trusting the wrong people (with our money). The reason Future Proof, MD exists is because of this – I once went to a dinner sponsored by one of the local “physician-specialist” financial advisor groups. During the very nice event, the attendees were “educated” on many money-related topics. Unfortunately, a lot of misinformation was given out that day, specifically regarding the Public Service Loan Forgiveness (PSLF) program. It is because of that experience I decided to start writing on behalf of my colleagues. Just like one of my attendings always says, “You can’t diagnose what you don’t know.” In order to succeed financially, we have to arm ourselves with the great weapon of knowledge. Luckily for us, many of the answers to our questions lie a few Google searches away. I'm not saying you have to do everything yourself. There are a lot of financial professionals out there vying for your business, some are better than others. What I am saying is that you should approach financial advice with the same mindset you take when you order a CT for that 24-year-old female patient with abdominal pain who swears there is no chance she can be pregnant – Trust, but verify.
Do you have any of these bad habits? Do you know anyone who does? Any others that should have made the top five list? Let me know in the comments!