There is a stereotype that doctors are bad with finances and, while this may be true for some, there are some bad financial habits for doctors to avoid.
Lifestyle Creep: For doctors, the training doesn’t end and their careers don’t begin until they are 30. After years of studying, exams, and living on a student budget, many are ready to splurge. Many have seen their friends graduate at 22 and start working and, along with advertising that prevails, many want to start increasing the lifestyle. When doctors finally start making money, instead of spending that money to become debt free or increase an emergency fund, many will start spending it to make up for the years when they were a student.
Not Paying Attention to Money: Not paying attention to money is common for doctors and this habit can be the result of two reasons. The first reason is not wanting to see expenses exceed income and fear. Many may know they are overspending but don’t want to see how bad it is. The second is a good income. Many doctors feel like they make enough money and that they don’t need to keep track of expenses because things will just work out. When you aren’t looking at what you are spending, then it’s easy to overspend.
Relying on Debt for Emergencies: Of course there are things that pop up from time to time that are actual emergencies, but not everything is. A blown transmission isn’t an emergency and it’s considered a regular part of car maintenance. Many doctors aren’t planning for future expenses when they know they are coming. A lot of doctors have financial advisors who tell them they don’t need to have cash around for an emergency, and instead decide to keep the money invested. This is bad advice and a bad habit because debt is not something you want to get into for a cost you should have seen coming. Not being able to save money means you are living beyond your means.
Neglecting Student Loan Debt: Doctors can have a lot of student loan debt and turning a blind eye to different repayment options can only make things worse. There are different student loan refinancing options to lower monthly payments and reduce interest that gets paid. Doctors should look at their options before settling.
Not Choosing the Right Insurance: Doctors need insurance, just like they need scrub sets, but it’s a fine line between the right coverage and the costs. Many doctors don’t take the time to research their options and end up paying more than they need.