Being a finance illiterate pre-med

[GottaGetThatMD]

Advertisement - Members don't see this ad

Over the past four years, I have worked my butt off to make it into my dream medical school. But I guess I've been focused so much on getting into med school that I didn't really learn any real world lessons in personal finance. It doesn't help that my parents are probably even less knowledgeable than me when it comes to dealing with money type issues. But seriously, I have no idea what APR means on a credit card contract. I don't know how mortgages work, I don't know anything about taxes or tax refunds, and I don't even know anything about the loans that I'll be taking out next year for med school.

Is anyone else in a similar boat? Is this common among pre-meds?

Is there any resource (book, articles, YouTube channels) that give basic introduction about personal finance as it relates to a career in medicine?

 

[CaliforniaDreamer]

I felt the same way, my parents paid for everything and I thought that I should just focus full force on getting good grades and getting into med school. But I realized that I actually did want to be financially literate, and I decided to learn how in the same way I learn everything else, by just doing it. I basically isolated all of my funds, no more money from parents except tuition and insurance (which I had no chance of paying without working full time), and got multiple jobs, my own credit card, and started keeping track. Just go for it, especially if you have a parental safety net.

 

[Tintinnabula]

The AAMC has a website, FIRST, that you may find to be really helpful. I've done all the modules across a weekend. The schools I applied to all require that it be done before matriculating, so even though I'm on hold lists, I made a login and just did them all (I believe that there's an option to later add your school so the info goes to your Fin. Aid folks but I also will be fine with doing them again). It's largely short videos. I think it still might be helpful to you.

 

[DokterMom]

Good for you for recognizing this and taking some positive action!

I'd suggest you head over to a bricks and mortar bookstore and browse for a 'Personal Finance 101' type book that speaks to you. (Some will put you straight to sleep; some are geared to an 8th grade reading level, others are geared toward the deeply in debt or the Wall Street wannabes.) I'd look first at Dave Ramsey or Suze Ormon - but really, just browse until you find one that looks like a good fit.

The great news is that you're starting from scratch, and are not already deep in a financial hole, and that you're entering a profession with excellent income potential. A little knowledge and good decision-making now will really pay off for you --

 

[mcloaf]

This blog is a good place to start as far as longer term financial planning for those entering medicine. His book is also good.

 

[TxC]

It is fairly common among pre-meds, don't worry.

You can always work with a financial advisor one day, especially if you plan on investing.

 

[potatochip1]

It is fairly common among pre-meds, don't worry.

You can always work with a financial advisor one day, especially if you plan on investing.

dont do that lol (http://whitecoatinvestor.com/what-do-advisers-think-about-doctors-2/)

jk, but on a more serious note just doing a little reading will get you up to speed quite quickly. If you are smart enough to get into medical school you are definitely smart enough to make basic financial decision, however like anything else reading up on the subject in advance can help greatly. White Coat Investor is a good free resource. (http://whitecoatinvestor.com/new-to-the-blog-start-here/). I've let alot of new grads borrow this book and even some of my "less academically engaged" friends have found it insightful and easy to read. Look at the suggested readings on that page and you'll find a bunch more.

A little financial literacy can go along way. Best of luck!

 

[medguy24]

Get and read "THE WHITE COAT INVESTOR" it's a book on finance investing loans everything written by a doctor for doctors. I read it it's amazing!
He also has a website:
http://whitecoatinvestor.com/
The book is on Amazon:
Amazon product ASIN 0991433106
Get the kindle version (you can get the kindle app on iPhone or android)it's only 9.99$

Good luck!

EDIT: typo

 

[GottaGetThatMD]

Thank you everyone! You all make some great suggestions!

 

[moonwake]

So... not be offensive if you know how to do this, but I created an excel template so you can calculate how much your loans will be after you're done with your residency/fellowship. Just change the numbers in the first 3 black boxes. It's open to anyone.

 

[DokterMom]

It is fairly common among pre-meds, don't worry.
You can always work with a financial advisor one day, especially if you plan on investing.

😱 Yikes!

@potatochip1 was right on target until his "jk" -- The articles entitled "What do Advisers Think About Doctors?" didn't answer the question. The short, simple and brutal truth is that financial advisers think doctors are "ripe for the picking". Potential clients with lots of money, little financial knowledge, little time or inclination to interfere or object to whatever an investment adviser suggests (aka 'is selling today'). Most financial advisers are far more interested in selling financial products (which make them money in sales commissions) than in making you money with whatever it is they're selling. (You've got enough money, right?)

But that link did have some very valuable information, which I've quoted below:

There you have it, in their own words. If you weren’t sure what kind of relationship a typical financial “adviser” was looking for with you, now you know. Our esteemed colleague, Dr. William Bernstein, said this in his classic 4 Pillars of Investing:

“Make no mistake about it, you are engaged in a brutal zero-sum contest with [the financial industry]– every penny of commissions, fees, and transactional costs it extracts is irretrievably lost to you….

Brokers do undergo rigorous training, sometimes lasting months–in sales techniques. All brokerage houses spend an enormous amount of money on teaching their trainees and registered reps what they need to know– how to approach clients, pitch ideas, and close sales. One journalist, after spending several days at the training facilities of Merrill Lynch and Prudential-Bache, observed that most of the trainees had no financial background at all. (Or, as one used car salesman/broker trainee put it, “Investments were just another vehicle.”)….

What do brokers think about almost every minute of the day? Selling. Selling. And Selling. Because if they don’t sell, they’re on the next train home to Peoria. The focus on sales breeds a curious kind of ethical anesthesia. Like all human beings placed in morally dubious positions, brokers are capable of rationalizing the damage to their client’s portfolios in a multitude of ways. They provide valuable advice and discipline. They are able to beat the market. They provide moral comfort and personal advice during difficult times in the market. Anything but face the awful truth: that their clients would be far better off without them. This is not to say that honest brokers who can understand and manage the conflicts of interest inherent in the job do not exist. But in my experience, they are few and far between….

Brokers will protest that in order to keep their clients for the long haul, they must do right by them. This is much less than half true. It’s a sad fact that in one year a broker can make more money exploiting a client than in ten years of treating him honestly….

Your broker is often your neighbor, fellow Rotarian, or even family. And eventually, by design, they all become your friend. Severing that professional relationship, although necessary to your financial survival, can be an extremely painful process.”​

 

[lifetothefullest]

Try Khan Academy economics. You don't need to know about basic supply/demand/factors of production, etc. but focus on the accounting and how cash flows work. That's the crux of mortgages, credit cards, etc. They loan you a lump sum of money up front for a house, clothes, etc. and you pay them back for it over some fixed amount of time with interest added. Flip that around and that's how a bond works. You loan somebody - the government, a company, etc. - a lump sum of money and they pay you back interest over a fixed amount of time.

The cool thing about it is that you pay back mostly interest first. So when you take out a mortgage, you're paying essentially all interest the first few years of payments. If you want to take out the interest and keep it from accruing, you should make additional payments on top of the minimum towards what is called the principal. Less principal, less sum for interest to accrue on.

 

[DokterMom]

Most people get caught up the "back end" (investing) and ignore the "front end " of basic budgeting, banking, credit cards, mortgages, loans, and insurance.

So very, very true.
Even a hefty income can disappear very quickly for someone with poor financial habits.

 

[Leslie_Knope]

Most people get caught up the "back end" (investing) and ignore the "front end " of basic budgeting, banking, credit cards, mortgages, loans, and insurance. That last one is particularly important to wanna be docs as, it is my understanding, that most medical school loans are not forgiven if your were to suddenly die but rather pass on to your estate. So if you walking across the street after a tiring overnight shift and get struck by a car and get killed, the loan stays alive.

Learn the basic financial literacy that every adult should know, then move into understanding savings for house, retirement, etc followed by basic income tax and taxes in general. Only then should you be dealing with anyone who talks about investing.

I have talked to an estate planning attorney and most student loans die with you.

 

[Catalystik]

Is there any resource (book, articles, YouTube channels) that give basic introduction about personal finance as it relates to a career in medicine?

You can also peruse/Search SDN's Finance & Investment Forum: http://forums.studentdoctor.net/forums/finance-and-investment.176/

 

[DokterMom]

The debt could almost certainly be claimed against the estate of the deceased if such was in the agreement. And I can see how someone's student loan obligation might become binding to a spouse upon marriage, but not how it could possibly become binding to a parent or unmarried partner unless they had co-signed, or to a minor child. No matter what the lender says...