[Editor’s Note: Today’s guest post was submitted by Jannette Collins, MD, MEd, FACR. She has served as a program director, GME dean, and department chair and currently directs content MRI Online. She also blogs about radiology jobs, finance, and education for The Reading Room. We share an interest in financial literacy education in medical school and residency, but have no financial relationship.]
Promoting mandatory education reveals one’s values and spurs political debate. I’ve been a teacher my whole adult life. I’ve taught every grade from elementary to high school as well as doctors and medical trainees. I know how difficult it is to crack the curriculum egg. It’s a zero-sum game. Any time you want to introduce a new topic of instruction, you have to take time from an existing topic. No one wants to give up their piece of the pie. Think changing the U.S. Constitution. So why do I try?
I’ve written about why I think financial literacy education should be required for all medical students and residents and why I think all practicing physicians should practice continuing financial education. Here are just a few reasons:
- 76% of medical students graduate with a median $200,000 of debt, which plays a major role in personal financial problems, contributing to high rates of divorce, bankruptcy, burnout, and suicide among doctors.
- Throughout the course of their training, residents make important financial decisions without having the knowledge, attitudes, and skills required to successfully manage personal finances.
- Physicians start their career 10 years later than their age-matched peers, who have already begun buying homes and saving money for retirement. This “late start” makes it even more important for graduates to be armed with the information they need to overcome debt and begin building wealth.
- As many as 80% of physicians need, want, and should use a financial planner or investment manager, either because they don’t know enough to manage their finances on their own or they don’t have/want to spend the time to do it themselves. Yet, they haven’t been taught how to get good advice at a fair price.
Like many physicians who write about financial literacy, I’ve learned things the hard way and am committed to educating myself and others. Here are some of the personal “learn by my mistakes” anecdotes I’ve shared with others:
My Personal Financial Mistakes
#1 I Picked Investment Funds from a Magazine
As soon as I paid off my student loans (which I did within five years after training), with my only remaining debt a reasonable mortgage, and already maxing out retirement accounts, I started to have money coming in that wasn’t earmarked. I had always been a saver (thanks Dad) and decided to open an account at Schwab and invest in mutual funds. I didn’t know much about doing either. I had no idea how to pick mutual funds. Choosing a few that were doing well (according to Money magazine) seemed like a smart choice. So, I did what a lot of people did in the late nineties. I bought tech funds! They went up, up, up. Then came the dotcom crash in March 2000 and I wasn’t feeling very good about the value of my Schwab account. This led to hiring a financial advisor, and years down the road when I realized I was getting “not very good advice at a not good price” I left that advisor and started self-managing my finances.
#2 I Bought a Whole Life Insurance Policy When I Didn’t Even Need ANY Life Insurance
I was a school teacher before going to medical school. This was back in the early 1980’s. My annual salary was around $20,000. The school brought in a “financial advisor” (an insurance agent, really) to meet with the teachers. This advisor recommended to me that I buy a whole life insurance policy, which I did. I had every confidence that my boss wouldn’t have arranged for someone to meet with me unless that person was selling something I needed. I was young, married to a graduate student, and had no kids. We had no debt. We didn’t even need life insurance! I paid about $35 a month in premiums for that policy, which “conveniently” came out of my salary before I even saw it. To put this into perspective, $35 in 1980 is equivalent to $110 today. After a couple of years, I realized that I was paying for something I didn’t need and dropped the policy. So yeah, been there, done that.
#3 I Didn’t Have Disability Insurance (Thanks Guardian Angel)
I didn’t know much about disability insurance as a student, resident, or even for a long time as a practicing radiologist. Luckily, my naivety wasn’t tested. I never suffered a disability that prevented me from working. I’m now at a point in my career when I don’t rely on earned income to pay my bills so I don’t need disability insurance. But not every resident will be as lucky as I was.
A full-time radiologist (my specialty) earns, on average, $427,000/year. Multiply that figure, along with adjustments for salary increases (one can only hope) over a career of 30 years and you’re looking at a big pot of gold. For most physicians, their human capital is their most valuable asset and greatest source of wealth. It’s worth insuring.
The chance of missing months or years of work because of an injury or illness may seem remote, especially to a young healthy radiologist who doesn’t see much risk from sitting in front of a monitor interpreting images (many of us actually do see patients). But the statistics tell a different story.
Fact: a professional has a greater statistical probability of suffering a severe disability that impedes their ability to work than of dying prematurely.
Fact: more than one in four 20-year-olds will experience a disability for 90 days or more before they reach age 67.
These and many more personal “stories” should be enough to convince anyone about the need for required financial literacy education. So why isn’t it required? Aside from the challenge of trying to add something new to a curriculum:
- Medical residents are already overwhelmed with learning the clinical aspects of their specialty.
- Physician faculty members are not accustomed to teaching finance to residents. They may not feel comfortable or competent to teach this material (or identify someone who would be).
Those barriers are steep but not insurmountable.
The alternative to not mandating financial literacy education is to allow the laissez-faire approach to financial education to continue. I don’t think it should. Providing financial education will contribute to residents having a heightened sense of control over their future and greater short- and long-term well-being.
Do you agree with requiring financial literacy education in medical and dental school? If not, why not? Comment below!