Financial bootcamp for fellows: Build your wealth from the ground up

Fellows have a nearly unparalleled depth of medical knowledge. While they are busy learning all the complexities of the medical profession, financial literacy can often fall by the wayside. This presents a problem, considering that in 2019 medical school graduates had a median debt of $200,000, and 73% of all graduates graduated with education debt.^[]

Advice from finance professionals

To help fellows establish a baseline of financial literacy, MDLinx interviewed Brian Hartmann, CFP, of Granite Bridge Wealth Management, and Mark Milbrod, vice president at ASGLife. 

Unfortunately, medical school and fellowship do not leave much time for learning about personal finance.

Hartmann and Milbrod suggested several points to consider while in fellowship. 

Build an emergency fund: Physicians understand emergencies well. These are life’s unexpected moments (and expenses), such as an unforeseen medical bill, car repair, or job loss. When any of these situations arise, they’re often best addressed in cash.

“A good rule of thumb is to strive for a minimum of 6 months of income set aside,” Milbrod said. 

Start saving for retirement: Chances are, the organization where you’re doing your fellowship offers some sort of retirement plan, probably a 401(k) or 403(b). “When possible … try to be disciplined enough to systematically put some money into some form of savings every month,” Milbrod said. 

This is especially critical if your employer offers a contribution match. Otherwise, you’re leaving free money on the table. 

Establish credit: “Establish credit by opening a credit card,” Milbrod advised, noting that small credit lines build credit history. “Make small purchases and pay them off when due.” 

Repaying student loans

Fellows also need to consider how they’re going to tackle undergraduate and medical school loans.

There are several programs that may reduce or eliminate your student loan debt. The Public Service Loan Forgiveness (PSLF) program can reduce the balance of your qualifying loans after 10 years of payment (120 payments).^[] The National Health Service Corps offers several programs that could pay between $25,000 to $120,000 toward loan debt.^[][]

And, if you served in the military prior to or during your training, and depending on which branch, you could be eligible to receive repayment assistance.^[][][]

Lastly, 33 states in the US and Washington, DC, have some type of repayment program specifically for medical professionals.^[] 

Each program has its own eligibility requirements. Hartmann and Milbrod pointed out that individual needs vary. Exploring these options in detail with the help of a financial planner or attorney could be extremely beneficial. 

Estate planning and insurance

Milbrod and Hartmann expressed slightly different views on the timing of estate planning.

Milbrod advised creating estate plans early. These basic legal documents are key should something happen to you while in fellowship—offering guidance for family (or caretakers) of your medical wishes that otherwise would not exist. 

Hartmann said, “For many people, it makes sense to create the first rendition of their estate planning documents when they begin their careers.”

One point on which Hartmann and Milbrod agree is that these documents can evolve as your circumstances change. 

Hartmann said it’s critical to be mindful of risk. As a physician, your body is critical to your work. Take care of yourself, mentally and physically, and own the proper types and amounts of insurance, such as life and disability insurance. Both experts noted that life insurance is easier to obtain and more affordable when you are young and healthy. 

Keep things in perspective 

Once you have a sound plan in place, you can take a step back and focus on the more significant financial journey ahead. Think long-term in your financial planning, Hartmann advised. 

While you may have earned about $60,000 in your first year as a resident, better paydays likely await.^[] Living simply—below your means, in fact—as a fellow, such as renting over buying a home, sticking with your reliable car over buying a new one, and minimizing unnecessary purchases, will go a long way to building a solid foundation, according to Hartmann.

Milbrod agreed, advising fellows not to compare themselves to their peers.

“There is no need to play catch-up with them, as this may lead to poor decisions. They have had more time to ‘establish’ their lives,” he said.