18 Feb 2014
By Janet Meller, MD, FACS
On March 29, 2013, the New York Times published an article entitled Money Advice for Doctors and Lawyers and the Rest of Us by Paul Sullivan. It echoed a very familiar theme, that physicians are not good at finances. In particular, we do not know how to save and we do not know how to invest. We come out of our residencies and are faced with decisions that we have little experience or knowledge to make. This includes negotiating a salary and benefits package, managing a business (for those going into private practice), and managing a private income that increases dramatically after years of struggle.
Women, in particular, are at a disadvantage because we are historically poor negotiators. I learned this first hand, joining an academic practice only to discover that my associate (male) was earning more than I even though we did the same work and I was also the clerkship director. It took several years to rectify this problem and would have been easier to fix at the start.
Furthermore, we are much more likely to have a duel income and a spouse that also has an agenda. Most consistently, the most important thing that we can do is to get help and not try to manage everything ourselves—that includes a trustworthy, experienced financial planner and a lawyer (as much as we don’t like the “l” word) for contract negotiations and estate planning (not the same person). Lastly, if it feels unfair, speak up!
Planning for the future is also paramount. We need to save for our retirement which seems far away, saving for our kids to go to college so that they aren’t burdened by debt, and planning for catastrophic illnesses or other events. The smartest thing I did was to start saving for my kids as soon as they were born by opening accounts and putting money aside every month, more than you think you need to. Now, I have put three variously through college, grad school and medical school. They are all debt free. I didn’t start maxing out my retirement accounts early enough, though, and now that I am getting close to that age, I am having to work hard at saving. The recommendation is that you have 10 x your yearly salary ( at the age of retirement) saved to preserve your lifestyle. It is easier to do if you start early!
Janet Meller, MD, FACS is an associate professor of pediatric surgery at Texas Tech University Health Sciences Center School of Medicine at Amarillo.