Why Great Doctors Tend to be Terrible with Money Management
When it comes to what to do with money throughout each stage of a doctor's career, there appears to be a substantial lack of knowledge in some of the updates in the popular Physician Side Gigs and Physician Mom's groups on Facebook.
This is not surprising, given that doctors are educated to have a doctor's mentality, which is to assist their patients. expand on this, and that is why they need good financial advice.
Most doctors, do not know how their medical practice will be funded after death. Without any significant guidance from business savy physicians, new doctors assume that they can continue to work until retirement and everything will be okay.
Here are some reasons why Great Doctors have problems managing money:
1) They think it is below them - Even though being financially literate saves money, time, stress level , makes their life better, and frees up time to do the things they want. Doctors usually think money is unimportant or that they are above it (honestly this was me years ago).
2) They need to be educated on what NOT to do - Most doctors know exactly what needs to be done in their medical practices, but they rarely know what activities in their lives will drain them financially.
3) They have no idea how much their student loans really cost - Doctors who graduate with significant amount of debt (e.g., 100+ loans totaling more than $500,000-700,000) over estimate how easy it is for them to make loan repayments by working full-time at their current practice until retirement age , because most never factor in interest payments into the equation (interest payments are overwhelming when you have more than 300 monthly loan repayments). I consider this to be the most dangerous reason why great doctors struggle with managing their money.
4) They think that the best way of making money is by working overtime - This may sound counter-intuitive, but some doctors work extra hours because they would rather spend their money than invest it in assets . Great doctors tend to be smart, hardworking people who expect perfection out of themselves and others. Unfortunately, many of them assume that their job should give them security or self-esteem so they can enjoy life. Furthermore, even though they may realize how much more productive they would be if they had more time for personal pursuits (eg., family fun activities), most tend to give up on the idea of being financially independent or wealthy.
5) They believe that it is too early for them to plan ahead - Doctors tend to become risk averse as they age with their career, because every decision they make seems to matter more and more as time goes by. Unfortunately, most doctors do not learn how important it is to plan their finances until something bad happens (e.g., major health problems lead doctor to bankruptcy). By this stage it can be very difficult for doctors to recover from an economic loss event, because they have less energy and fewer options .
Doctors may overestimate how much money they need now in order to enjoy life now, especially those who with private practice models which require excessive time commitment (i.e., part-time model). The good news is that there are still doctors who realize money can create more opportunities to better their lives, but unfortunately these particular doctors tend to be overwhelmed by their debt which makes them fear taking on more risk .
I definitely felt that way but I got some help!
After interiewing a fantastic speaker on my 2021 Physican Practice Automation Summit, I realized there are better, faster, and cheaper ways to get to the highest level of financial literacy to create some peace of mind.
I interviewed Tyler McBroom, CPA, the author of Cash Flow and Grow, who I'd seen speak at a Tony Robbins Business Mastery live seminar in Florida. Tyler is well-known on Instagram with over 1 million followers and provides A TON of information on his social media posts and stories.
Tyler's social media output has helped me in recognizing that taxes are the greatest expenditure of my life, and money management failures are number two (I mistakenly thought they were in the opposite order). It also assisted me and my wife with behavioral change when it comes to money. This also aids me in instructing my young daughters about their personal finances.
I enrolled in his Cash Profit Accelerator training, which is hands-down the finest money education I've ever received. It's not doctors that it targets specifically, but rather business owners and others with significant net worth. Because the cost-benefit ratio is extremely favorable, I believe that all physicians should join up for it. What I learnt changed my perspective on why previous financial advisors were pushing me investments and other services that weren't really in my best interests, but were in theirs.
For my back door reveal of what I learned through Tyler, click HERE.
Make sure to check out the Master the ReveNEW section in Integrative Practice Builder to gain knowledge into the business of scaling and growing an Integrative Health practice that takes medical insurance at www.integrativepracticebuilder.com
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Cheng Ruan, MD
CEO Texas Center for Lifesyle Medicine.
Creator of the Integrative Practice Builder
