Everyone knows that doctors make a lot of money, which was the main reason I became one.  In the small town where I grew up, the only people who seemed to have money were two doctors, a lawyer, and a dentist.  They had bigger houses, better cars, and garnered more respect than everyone else in town, which appealed to me in my adolescence.  To be honest, it still does in a way.  Yet, I’ve learned from my own journey to financial independence that having a big house and a fancy car does not mean you are rich.  Wealth is what you don’t see . . . the dry powder, the investments you have made for your family’s security, future, and retirement.  Many doctors do live in big houses and drive luxury cars, but I now know that doesn’t mean what I thought it meant in my youth.  I now personally know many doctors, dentists, and APPs making hundreds of thousands of dollars a year and still living paycheck-to-paycheck, feeling financially insecure.  A survey from Lending Club in 2022 showed that 35% of Americans making >$200,000 a year were still living month-to-month.  In my experience, the primary thing money buys is peace of mind, yet I know a lot of medical professionals without it.     

     The mission of Business is the Best Medicine is to teach medical professionals about personal finance and business so that they can have financial peace of mind and gain control over their lives and careers.  Financial independence (FI) is the state where you have enough money saved and invested that you have the option to stop working.  It is not the same as traditional retirement or the FIRE movement, where early retirement is the goal.  The goal of FI is to be independent from debt, from dependence on a paycheck or an employer.  The goal is the freedom to work when you choose, with whom you choose, and on what you choose.  I believe every physician owes it to their patients to be FI, as it is independence that will allow physicians to shape the future of Medicine.  I want every medical professional to reach the point where everything they wrote on their medical school applications is true: that they are working to make a difference in the lives of their patients, not because they need a paycheck.  

Shooting Fish in a Barrel?

     Some people believe that teaching medical professionals about personal finance is too easy since the target audience is educated and makes a lot of money.  I would liken it to teaching a young Lebron James how to play basketball.  He needed someone to teach him the fundamentals despite clearly having significant natural advantages.  Lebron James is not one of the best of all time simply because he’s large and athletic, but because he has these advantages and still worked hard on conditioning, fundamentals, and basketball IQ.  He listened to coaches long after he could beat them one-on-one.  Just as the basketball world has plenty of physical marvels who never made it to the League, medical professionals still need to work hard on the fundamentals of personal finance and business despite their natural financial advantages.    

Not All Roses

     While medical professionals have distinct advantages in the game of personal finance, they also have several unique disadvantages.  

physician advantage vs. disadvantage

Advantages

     The primary advantage of being a medical professional is a high salary.  In 2023, the average physician salary in the US was $352,000.  Primary care physicians earn substantially lower, while specialists earn substantially higher.  Regardless, both earn considerably more than the 2023 average US household income of $81,000.  A higher salary should allow more money to save and invest, leading to a higher net worth.  Next, medical professionals are generally acknowledged to be of above-average intelligence.  I am a shining example of how that isn’t always the case, having gotten by on hard work and luck more than anything else.  If you’re interested in how luck played a role in my journey, read “Acknowledgement That I Did Not Get Here Alone.”  In any case, the average medical professional should be intelligent enough to comprehend the basics of personal finance.  Finally, medical professionals generally have access to leverage, meaning that institutions are willing to lend money to them based on their profession and expected income.  A physician straight out of residency might have a half-million dollars in debt but can still get a jumbo loan on a house if desired.  Not everyone can say the same.  

Disadvantages

     Starting early is a cornerstone of personal finance, as the earlier you start investing, the more time there is for compounding interest to work its magic.  A medical professional’s first and most significant disadvantage is getting a late start.  A prototypical physician would complete 4 years of undergraduate studies and 4 years of medical school.  Still, not everyone is typical, with some taking extra time in school or having previous careers before studying medicine.  According to the Association of American Medical Colleges, the average age of a medical school graduate is 28.  Since medical residencies take 3-7 years, the average physician would not start making “doctor” money until 31-35 years old.  The following graphic illustrates how damaging a late start can be.  

Assumes an 8% compounded annual returnStart Age 22Invest $1,000/mo.Start at Age 32Invest $2,000/mo. Start at Age 42Invest $4,000/mo.
Age 22$0$0$0
Age 32$173,839$0$0
Age 42$549,144$347,678$0
Age 52$1,359,399$1,098,287$695,355
Age 62$3,108,678$2,718,797$2,196,574
Age 67$4,638,067$4,135,603$3,509,085
Total Money Invested$540,000$840,000$1,200,000

     While dealing with a late start, medical professionals also contend with a high student loan burden.  In 2022, the average physician graduated with $241,600 in total student loan debt.  As this number is an average, many graduates have significantly higher levels of debt.  I know several physicians with over $500,000 in debt upon graduating from their residency programs.  While there are loan forgiveness programs, this amount of debt affects the slope of the path to financial independence.  If you would like an in-depth illustration of how starting late with a lot of debt affects the financial trajectory of the medical professional, read my case study on this topic, “What is the Financial Break-Even Point Between a MD and a PA?”

     The US has a graduated tax system, which means that the more money you make, the higher the percentage of your income you pay in taxes.  Additionally, the US system disproportionally rewards return on invested capital, which is how a billionaire like Warren Buffet can accurately claim that his secretary pays taxes at a higher rate than he does.  This leaves most doctors holding the bag as high-income earners with a high tax burden.  In 2023, a salary of $350,000 per year puts you in the 35% marginal federal tax bracket for individuals.  Most states carry an additional tax burden.  While you may hear that the “rich don’t pay their fair share,” “there are loopholes for the rich,” or “they can just write everything off,” it simply isn’t true for high-income medical professionals.  For a deeper dive into understanding taxes, read “Taxes, Life’s Other Inevitability.”      

tax chain

     I completed 12 years of college, medical school, and residency, yet never had a formal course in economics or finance.  The narrow focus of study in medicine prevents its practitioners from gaining basic financial principles.  As outlined in “Why Teach Medical Professionals About Business,” physicians are taught to ignore financial and business principles.  The prevailing attitude in medical training is don’t talk about money, don’t think about money, and don’t worry about money, from how much you will be paid to how much a test costs for a patient.  No wonder so many medical professionals graduate and struggle with personal finance.  Physicians, Dentists, and others also deal with societal expectations about money based on their profession.  When someone hears you are a dentist, they automatically assume certain things about your financial means and lifestyle.  Dentists are expected to have an expensive house and send their kids to private schools.  Societal expectations for doctors put us in the Goldilocks category, neither too rich nor too poor, but just right.  I know a medical specialist who built a full garage on the back of his office so he can drive his Ferrari to work every day without upsetting his patients.  It would be equally disconcerting to many patients if their doctor pulled up in a rusty, broken-down jalopy.  There are real expectations that we present ourselves as doing well but not too well.   

     Just because you are good at medicine doesn’t mean you know anything about finance.  There is a bit of hubris to many doctors, having risen to the top of their respective educational systems.  However, it is a well-known trope that doctors make bad investors (and pilots) and are often the preferred targets of scammers.  I have overheard many conversations where cardiologists discuss stock tips as confidently as placing a cardiac stent.  There is a reason that women, on average, are better investors than men.  Confidence in your investing ability doesn’t always translate into actual results.  

     Additionally, simply because you have access to debt based on your future income doesn’t mean you should always take advantage of it.  Physicians with a half million dollars of student loans don’t need to purchase a million-dollar house with no money down, yet because they have access, many of them do and have to pay it all back on 65% of a $350,000 salary.  You must learn how and when to wield the sword of leverage, or you will get cut, sometimes fatally.  

Benefits of Learning Personal Finance 

     The pathway to FI starts with learning personal finance, but the goal isn’t knowledge; it is freedom, security, and optionality.  These are the same benefits for anyone who achieves FI but are especially important for medical professionals.  Specifically, financial independence allows medical practitioners to advocate for our patients, ourselves, and our profession.  Finally, becoming financially independent and having the ability to retire early might paradoxically extend your career. 

The Basics

     FI confers certain benefits to anyone who achieves it.  Being financially independent gives you the freedom to spend your time doing what you want.  I am writing this because I have time freedom.  My family spends the summers in Hawaii, away from the blistering Texas heat, because we have financial freedom.     

     Financial independence provides security for you and your family.  Money can certainly buy physical security: gated communities, guarded schools, and safer cars.  However, money can also buy emotional security by allowing you to avoid the mental stress of living month-to-month.  Nothing is more stressful than trying to figure out how to make ends meet.  Many of these emotional stresses go away upon obtaining a job with a high salary, but a high-paying job alone doesn’t give lasting peace of mind.  There are still nagging questions about job security, changes in the healthcare industry, and retirement.  FI gives you lasting peace of mind as the ends will always meet, even when you decide to stop working. 

     Imagine having no option but to eat the same meal every day for the rest of your life.  To most people, this sounds unappealing, however, many medical professionals will work the same job, live in the same town, and work for the same employer for their entire career.  They do this because they have no options.  They must work full-time to afford their lifestyle or to keep their benefits.  They simply don’t feel they have any other options.  Being FI gives you access to the entire menu.  You can work more, less, or not at all.  You can work where you want, when you want, and with whom you want for as long as you want.

Medical Practitioner Benefits

     As an ER doctor, I sometimes feel like the last line of defense against the surrounding hordes fighting against the best interests of my patients.  Insurance companies don’t want them to get treatment, hospitals don’t want them admitted if they can’t pay, drug companies want them to buy the most expensive medicines, and even other overworked doctors just don’t want to be hassled in the middle of the night.  Medical professionals are supposed to be advocates for their patients against these malevolent forces, yet are often too overworked, dependent, and scared to properly do so.  I’m not above the fray, either.  I get tired of seeing the same frequent flyers.  I am stressed about my LOS.  I am trying to hit stroke, sepsis, and STEMI time parameters while attending to every other patient impatiently waiting to be seen.  Financial independence is not a panacea that will solve all the problems that healthcare providers face, but it is a great place to start.  FI allows you to speak out against patient or staff safety concerns.  It gives you the security to leave a toxic job and be fine until a better one comes along.  It gives you the option to work part-time and spend more time with your family or work at a non-profit facility instead of a for-profit one.  Financial independence provides a financial backstop for your courage, allowing you to speak up against the US healthcare system’s myriad problems.  It will enable you to look beyond the basic needs of you and your family to see the bigger picture of what is happening around us.  In my opinion, nothing is more important for the future of Medicine.  

     The FIRE movement promises early retirement to spend more time with your family, to pursue other hobbies, and to escape a job you hate.  However, early retirement is not the goal for most physicians and other healthcare professionals.  Early retirement in healthcare is often not voluntary but is caused by burnout, health concerns, or poor job satisfaction.  Every healthcare professional understands the danger that burnout presents to your physical and mental health, your family, and your career.  The top reasons for burnout include being overworked with administrative duties, toxic workplace environments, and the mismatch between career expectations and reality.  While FI cannot solve every issue, it can allow you to find a job that fits your expectations and temperament better.  If you need time off for your mental health, take it.  If you need to work less for a while for the sake of your family, do it.  If you would simply prefer a lower-paying job that makes you happier, take it.  Finding the right fit for you and your family can lead to a longer career and fewer medical professionals leaving healthcare.  

Conclusion 

     I started Business is the Best Medicine because I believe all medical professionals can and should achieve financial independence early in their careers.  While most healthcare professionals won’t end up in the same financial straits that plague lower-income earners should they ignore their personal finances, there are still significant repercussions to not pursuing FI.  Working a job you don’t like, missing your children growing up, and dying early due to lack of personal care are just a few.  This disconnect between a doctor’s education level and personal financial choices is not just due to “being bad with money.”  It involves structural issues within the medical system and the American consumer culture.  Medical providers have some significant disadvantages to achieving FI, most notably their late start and high debt burden, but their high income typically outweighs these challenges.  Medical professionals don’t have an income problem; they have a spending problem.  Financial peace of mind is there for the taking if you embrace it.  I want to use this site to spread the message to all healthcare providers that financial responsibility is integral to their lives and careers.  I am confident that educating providers on personal finance and leading them down the path to FI will improve their lives, the lives of patients, and the US healthcare system.