Pitfalls often catch us off guard when we’re unprepared to avoid them. My goal with this article is to equip you, the readers, with insight and knowledge to proactively prevent pitfalls that could otherwise lead to regrets down the road. Whether you’re a newly minted APP embarking on your professional journey or someone who has been in the field for a while but is now prioritizing financial independence, I hope that the lessons I have gleaned, sometimes the hard way, can serve as guideposts on your path. I came up with ten common pitfalls to avoid that will help you navigate your career and wallet with wisdom and foresight.

  1. Neglecting student loan debt

One of the challenges that often accompanies a career in the medical field is the burden of student loan debt. Thankfully, as APPs, we typically accumulate less debt than physicians, but it remains a significant financial obligation. Student debt is an automatic expense for us to deal with while embarking on our new career journey. The question becomes: How should you tackle student loan debt? There exist several strategies for managing this debt. Some may allocate the maximum affordable amount, aiming for a quick debt-free status. In contrast, others prefer to meet the minimum payment and stretch the repayment period over a decade or more. Whichever path you choose, consistency is vital, as this debt will not just vanish; it will require ongoing attention. One factor to consider is the interest rate associated with your loans. For instance, my student loans carry a 6% interest rate, making it essential to weigh this against other debt on my radar. It would be more critical to tackle high-interest credit card debt over stress to pay off your 6% student loan debt as quickly as possible. Balancing your debt repayment strategy requires prioritization to ensure you effectively manage your financial obligations and work towards paying off these types of debt.

student loan debt
  1. Failing to create a budget

Embracing the discipline of creating a budget is a crucial step to steer clear of the financial pitfalls we are addressing. If you still need to create a budget, start tracking your income and expenses; this will prove invaluable to crafting your savings plan. Reflecting on my journey, one mistake I made right after graduating from PA school was bypassing this step. In my initial six months post-graduation, I indulged in extensive travel, impulsively bought a brand-new Ford Raptor for my husband, and made several ill-advised financial decisions. Ultimately, the money in my bank account served no purpose but enjoyment. It was easy to succumb to the sense of entitlement, convincing myself that I had earned these luxuries after years of hard work. Hindsight now offers me the wisdom to offer you a different path: channel your financial resources with purpose and let your money start to work for you. 

Set your savings rate to 25%-50%, keep your expenses under 30%, and diligently allocate the remainder for taxes. Be mindful to create a sustainable savings rate over the long term. This rate should include your student loan repayment, contributions to your emergency fund, retirement savings, investments, credit card debt paydown, and high-yield savings accounts. After setting your savings rate, focus on developing your expenses budget. Make clear and concise financial goals predicated on understanding your desired savings and expense levels. Maintaining this balance will prevent premature inflation of your lifestyle. Material possessions do not generate true wealth. In my case, the truck we bought impulsively became the asset we sold to start our real estate wholesale business. Your financial goals should be unequivocal, as they will guide your journey toward financial stability and prosperity. 

  1. Overspending on lifestyle inflation

A typical financial trap healthcare professionals face is the allure of immediate lifestyle upgrades. I relate to these enticements with my example above, the Raptor. It is easy to fall prey to these desires, but my sincere counsel is to exercise caution and resist impulsive decisions. The concept of lifestyle inflation can be appealing. Suddenly, you find a steady income and material possessions become alluring. Many of your peers will opt for larger homes, newer cars, or extravagant getaways, and you might feel compelled to follow suit to compete with them. However, I hope you aim to set yourself apart on financial independence. To achieve this, it’s imperative that you resist the call to inflate your lifestyle prematurely and focus on securing your future. Shift your perspective towards establishing well-defined financial objectives. Tackle your student loans, create a budget, establish a robust emergency fund, and avoid high-interest credit card debt. Build these fundamental blocks and then strategically save for the items you desire. 

  1. Not prioritizing emergency savings

Your inaugural year post-graduation will undoubtedly test your financial discipline. As discussed above, you will encounter the allure of frequent getaways, gleaming cars, and fancy homes. Indulging in these temptations will hold you back on your journey to FI. However, if you can withstand the attraction, you will pay attention to positive money intentions like developing an emergency savings fund. It is paramount to uphold the importance of this fund while striving to curtail immediate gratification. 

Ideally, building a safety net that covers 3-6 months of living expenses, readily accessible in case of emergencies, is the goal. However, commencing with at least one month’s worth of expenses and steadily augmenting it is a good start. It is crucial to recognize that sacrificing immediate desires to adopt a fiscally responsible spending pattern is a cornerstone of financial prudence. Focusing on long-term economic aspirations is paramount throughout your initial year of enjoying a substantial income. I have encountered and, at times, succumbed to those same temptations, and from firsthand experience, I can attest that steadfastly resisting them is unequivocally the right path. Stay resolute, and you will be grateful that you empowered your money to work tirelessly toward securing your financial future.

  1. Neglecting retirement planning

Securing your financial future through retirement savings hinges on one fundamental principle: starting early. Compound interest is the magic ingredient in investing, and the sooner you begin, the more substantial your nest egg will eventually become. 

There are several avenues for retirement savings, with employer-sponsored 401(k) plans being the most common. However, not all companies offer them, and eligibility criteria vary. If and when you are eligible to contribute, maximizing your contributions is advisable, especially if your employer offers a matching contribution. 401(k) contributions’ beauty lies in their pre-tax nature, effectively reducing your taxable income. The money in your 401(k) grows tax-deferred, meaning you will only pay taxes once you withdraw the funds during retirement. Do note that withdrawing money from your 401(k) before retirement age incurs penalties and taxes. 

Another category of retirement accounts is the Individual Retirement Account (IRA), which remains tied to the individual rather than a specific employer. There are two different types of IRAs: Roth IRAs and traditional IRAs.  Roth IRAs are post-tax accounts, so you must pay taxes on any money you contribute. However, the investments within your Roth IRA appreciate tax-free, and you won’t face taxes on gains when you reach retirement age. Roth accounts are powerful tools for accumulating tax-free retirement wealth but come with income limits. For 2023, these limits are $138,000 for individuals and $218,000 for married couples filing jointly. Roth IRAs also have contribution limits, which increased to $6,500 per individual in 2023. Contributions, not earnings, can be withdrawn from a Roth IRA without penalties or taxes, but you must wait until you’re 59 ½ to withdraw earnings tax-free.

Traditional IRAs, however, are available to anyone, but the tax treatment of contributions depends on your income and whether you have a workplace retirement plan. If such a plan is unavailable, contributions are tax-deductible up to $6,500 per individual, provided you stay under the income limit. In 2023, the maximum income to contribute pre-tax to a traditional IRA was $73,000 for individuals and $116,000 for married couples filing jointly. Beyond these thresholds, your contributions become post-tax. Funds within a traditional IRA also grow tax-deferred, and you’ll pay taxes when withdrawing during retirement. To avoid early withdrawal penalties in a traditional IRA, you must wait until age 59 ½.

Regardless of your chosen retirement account type, the key is to commence your savings journey as early as possible. Delaying contributions can significantly impact your retirement security, so procrastination should never be a part of your financial strategy when securing your future.

retirement savings
  1. Avoiding insurance coverage

Health, disability, and malpractice insurance are three things you do not want to neglect. Your employer will likely cover your malpractice insurance, saving you from that particular concern, unless you establish your private practice, in which case it becomes your responsibility. However, disability insurance often gets overlooked until it becomes an urgent necessity. During the initial two years post-graduation, my husband and I held full-time jobs, basking in the comfort of a dual-income household. The prospect of one of us being unable to work did not seem pressing. Yet, life does what it does best and takes an unexpected turn. We decided to downgrade our income to a single-income home and switched to my husband staying home with our children. I became the sole breadwinner. 

In such scenarios, disability insurance becomes a lifeline, offering protection if you cannot work due to unforeseen circumstances. As for health insurance, some employers cover the costs, leaving you only responsible for insuring your spouse and children. These safeguards might not be top-of-mind when you’re in good health and comfortable with your current situation. However, they are investments in your future security. Remember, you truly appreciate the value of these insurances once you need them. So, take the time to secure them proactively to avoid the regret of not having done so when unforeseen circumstances arise. Your financial peace of mind and your loved ones can depend on it.  

  1. Ignoring tax planning opportunities

During my first tax filing season as a newly minted PA, the world of tax filing loomed as an unfamiliar and intimidating battle. Until then, I had always looked forward to receiving a tax refund. However, to my surprise (or naiveness), at the close of my first tax year in this new career, I faced a tax bill of $6,500. Pay attention to tax planning opportunities. Effective tax planning aims not to evade taxes entirely but to strategically minimize your tax liability while generating tax-favorable income for your retirement and other investments. Therefore, a two-fold strategy ensues: first, reducing your taxable income by diversifying your income sources, and second, optimizing your deductions to minimize the taxes you owe. Seeking the guidance of a tax specialist is a valuable step in this process, particularly in the initial years post-graduation when your income undergoes significant changes. These professionals possess the expertise to offer tailored advice and tips, ensuring you make the best choices for managing your taxes. 

  1. Not investing wisely

Investing for long-term wealth accumulation should never be underestimated, even in the early stages of your career. Compound interest’s power, as we discussed with retirement savings, can ultimately set you ahead in the financial game. Here are a few various investment options that suit your goals and risk tolerance:

Broad-based index fund investing

Broad-based index fund investing offers several benefits. These funds provide instant diversification over an entire market index, which spreads your risk over multiple assets and sectors. This diversification reduces the impact of individual stock fluctuations, making index funds a relatively low-risk investment option. Index funds are easy to use and typically have low fees, making them an excellent opportunity for hands-off wealth building and investing. 

Roth IRA

A significant advantage of investing in a Roth IRA is withdrawing money tax-free at retirement, as your contributions are made with after-tax dollars. Contributions are made with after-tax dollars, allowing your gains to grow tax-free over time. Roth IRAs also offer flexibility, making them a tax-savvy investment for retirement. 

Real estate investing

Investing in real estate encompasses a vast spectrum of opportunities. You can generate passive income through rental properties, benefit from property appreciation, and enjoy various tax advantages, including depreciation, mortgage interest deductions, and property tax deductions. These are only a small part of multiple ways to invest in real estate and make money; we will discuss this in more detail in another article. 

High-yield savings accounts

These savings accounts offer a secure and accessible way to earn interest on your cash. These will offer a better return than traditional savings accounts, which will help your money grow over time. Typically, they are FDIC-insured and offer liquidity and the ability to access your funds quickly. 


Unlike the other investment options mentioned above, entrepreneurship will be unique to each person. The benefits of this go beyond financial rewards. If you have an entrepreneurial spirit, leap and make it happen. This journey has the potential to be immensely satisfying and rewarding if you are passionate about what you are doing. Entrepreneurship will foster creativity, hard work, adaptability, and grit. These are good qualities to have in any career. You can find personal and financial rewards through entrepreneurship.

We will delve deeper into these investment options in future articles, providing comprehensive insights and strategies. This breakdown should serve as a starting point, offering you a glimpse of the diverse array of investment opportunities as you embark on your wealth-building journey. 

  1. Avoid high-interest debt accumulation

Accumulating credit card debt is a financial pitfall that plagues many individuals, me included, at one point. This predicament is a nationwide issue, but it often hits healthcare professionals especially hard during their education journey. For many of us, the path to becoming a healthcare professional involves a period of intense studying and clinical work, often without the luxury of a steady job. During this time, we may rely on student loans and credit cards to make ends meet, setting the stage for potential financial challenges.

The problem, however, continues after graduation. Even after earning an income, the allure of credit cards can persist, making it too easy to use them extensively. Recognizing this pattern and taking proactive steps to address it is crucial. Avoid accumulating further high-interest debt and instead focus on paying off any debt you may have accrued while in school.

Holding onto high-interest credit card debt is squandering a significant portion of your hard-earned income, as these debts often come with steep interest rates, ranging from 18% to 25% or even higher. You’re essentially paying a premium for past expenses by allowing this debt to persist. Clearing this financial hurdle is one of the most prudent financial decisions you can make.

Take charge of your financial well-being by prioritizing debt reduction. Implement a disciplined approach to chipping away at your credit card balances. With each payment, you’re reducing your debt and freeing up more income for future financial goals and endeavors. The journey to financial freedom begins with shedding high-interest credit card debt, and it’s a pivotal step towards securing your financial future.

credit card debt

  1. Neglecting continuing education for personal finances

The saying “never be the smartest person in the room” carries profound wisdom in our personal lives and our journey towards financial independence and investment. Embracing this philosophy underscores the importance of perpetual learning and the continuous acquisition of foundational knowledge as you traverse the intricate landscape of personal finance.

Surrounding yourself with individuals who share your commitment to financial independence or have already achieved it is a potent catalyst for your growth. Seek out those passionate about life, driven, and unwavering in their pursuit of excellence. It’s valuable to immerse yourself in an environment where you are challenged and inspired, where you can glance around the room and know that some individuals can outwork you and push you further to ensure you do not let them. Let this be your approach in your financial journey. Take advantage of opportunities to expand your financial knowledge, embracing every chance to sharpen your investment skills. The path to financial independence is not solitary; it’s a collaborative journey where you continually learn, adapt, and evolve.

In conclusion, these ten pitfalls serve as guideposts, steering you toward the path to financial independence, provided you steer clear of them. While these tips are particularly pertinent for those early in their careers, it’s essential to remember that regardless of where you stand on your investment journey, there is still time to embark on the path toward financial prudence and security. Stay tuned for more insights, tips, and strategies to navigate your unique journey towards financial independence.