Doctor Common Financial Mistakes

Contrary to popular belief, doctors are not
filthy rich. In fact, finances are a huge stressor for
many medical students, residents, and even attending physicians. Between the opportunity cost, raising cost
of tuition, and increasing interest rates on student loans, it’s easy to see why becoming
a doctor isn’t as financially favorable as it once was. For that reason, being smart about your finances
from the beginning is essential. These are the common financial pitfalls to
avoid as a pre-med and medical student. Dr. Jubbal, The reason its key to get a grip on your finances
from even your college days is the concept of the compounding effect. In short, interest compounds over time and
either work for you or against you. If you invest at a rate of 7% per year, that
money doubles after 10 years. However, the reverse is true too. If you take out loans at 7%, that money too
compounds with time. With the average graduating medical student
carrying $200,000 in debt, it’s common sense why you want to pay that money off sooner
than later. You must personally take ownership of your
own financial well-being. No one else will do this for you. My family was not wealthy and I had to pay
for both college and medical school all on my own. But by practicing intelligent financial decisions
and saving aggressively, I was able to keep my loans quite low and even pay them off shortly
after graduating. The first and most obvious mistake ties in
with the common misconception that as a doctor, you’ll never have to worry about money again. For that reason, too many students figure
they’ll worry about finances later. Now let’s say a medical student graduates with
$300,000 in debt. That debt starts accruing interest the moment
they take it out in medical school. While they’re making minimum payments in
residency, it’s still accruing interest. By the time they’re an attending physician
and making more aggressive payments on their student loans, that amount is closer to $400,000
– sometimes even more. The average primary care doctor is making
$220,000 per year and the average specialist is making $330,000 per year. Not as much as most people would have you believe. At this point, you may think “so what!?”
it’ll only take 2, maybe 3 years to pay off with such a huge salary. But if we look closer, that’s obviously not the
case. The biggest expense, of course, is going to be taxes, but you’ll also be paying for malpractice, and
living expenses too. And don’t forget, you probably have a family
at this point, which has its own set of expenses. Now you see why, particularly for primary
care doctors, it’s not uncommon to be paying off student loans for a decade or more. And the bad news is that these statistics
are trending in an unfavorable direction. As tuition rises, student loan options are
actually getting worse. Federal subsidized loans are gone, and loan
refinancing has less utility than it did before. Therefore, unless you have incredibly favorable
loan terms, its best to minimize your loan burden. For these reasons, I’m a strong advocate
of educating yourself on financial basics even as a college student. Unfortunately, our modern education systems
do not prioritize financial education, and as a result many students make mistakes that, in the long term,
cost them a small fortune. Our personal finance videos and blog posts
are a great place to start. If you’d like to read further, I highly
recommend The White Coat Investor book, the Personal Finance subreddit, and a few other resources
I’ll have linked in the description below. Students, and often times their parents, prioritize
the prestige of a program too far above other factors. I’ve gone over the relative importance of
college prestige in a previous video. Prestige in medical schools is arguably less
important compared to college universities. I’ve personally seen colleagues or helped
clients from less competitive medical schools match into highly competitive residencies
at highly desirable institutions. That isn’t to say that medical school prestige
doesn’t matter, but it’s of secondary importance. The opportunities available (and the student
making the most of those opportunities) is most important, and these opportunities are
only weakly correlated with a medical school’s prestige. After a certain level, say Top 20 or 25, the
relative importance of prestige drops even further. I’d argue other factors are more important,
including your fit in the school’s culture. Do you mesh well with other students and the
faculty? Do you overall like the school and its location? What about the cost? Have they offered you any financial incentives
and what is your out of pocket cost going to be? These factors will play a much greater role
in your happiness, wellbeing, and long term success than the prestige of your institution. I remember during orientation week at my medical
school, a lecturer presented on finance basics 101 for medical students. In it, she explained anything you pay for
now is costing you 50% more due to the compounding effect of interest on your loans. Small expenses, like buying a $4 coffee every
day at Starbucks, is actually costing you $6 in the long term, and doing it daily adds
up quick. In her words, “skip the sexy coffee” and
brew it yourself at home for a fraction of the cost. While I agree with her logic, there’s a
balance one must strike. Don’t be so frugal that you make yourself
miserable. On one extreme, you don’t need to buy every
new gadget that comes out. Your smart phone can last a few years, trust me. And do you really need new clothes again? You’ll be rocking scrubs in the hospital
most days, and no, the fancy scrubs you see all over social media are not necessary. The free ones you get from the hospital are
fine, and you’ll be much more comfortable getting blood, excrement, and other goodies
on the hospital scrubs anyway. On the other extreme, don’t be afraid to
enjoy yourself and eat Korean BBQ every now and then. Pinching every penny to the point your happiness
is significantly compromised is not a healthy long term solution either, even if your wallet
is better padded initially. Remember that it’s easier to be poor when
you’re young. Practice simplicity and appreciation of what
you have, rather than always longing for something new. Pick up a budgeting app and track your expenses. I recommend Mint for its ease of use. Defer gratification, and understand that you
can have the fancy Michelin star meals and designer clothes when you’re an attending
physician, but they aren’t necessary right now. Living in this manner has its own benefits
– it will make it that much sweeter when you finally earn it and can afford these things. I know several colleagues who didn’t have
to pay a dime in loans because their parents footed the bill. That’s great for them, but practicing my
own self-restraint and delayed gratification was rewarding in its own way. First, I have the satisfaction of knowing
that I earned and paid for my MD on my own merit, and that feeling of paying off the
last of your student loans is hard to replace. And now I know I’ve made it, because I can
get guac in my Chipotle bowl without sweating the extra three dollars. Before committing to anything that has long
lasting implications, it’s obviously very important you understand what you’re getting
yourself into. This applies in two ways regarding medical
school finances. First, understand the different types of scholarships. No-strings-attached scholarships, like the
Med School Insiders Annual Scholarship, are fantastic opportunities. These scholarships provide free money for
tuition and related expenses, most commonly to students in financial need. Some focus on areas of study, like medicine,
and others focus on your religious affiliation, region where you live or grew up, or even
your writing chops. But other “Scholarships” aren’t scholarships
in the traditional sense. For example, the Health Professions Scholarship
Program, or HPSP, are scholarships offered by the U.S. military. Other similar offerings can be found with
the US Public Health Service or Indian Health Services. They pay for your medical school in exchange
for a commitment. These are best suited for individuals whose
career goal is to be a military doctor or rural primary care doctor. If your goals align with the commitment, more
power to you. Otherwise, I recommend you exercise caution. Second, understand the contingencies of various
loan forgiveness programs. For example, the Public Service Loan Forgiveness
Program, offered by the U.S. Government, has a complex mix of requirements. In it’s first year, of the 28,000 borrowers
who submitted loan forgiveness applications, only 96 had their debt forgiven. That’s less than one percent. Purchasing a new PlayStation while forgoing
quality foods in favor of cheaper fast food is not a good long term decision. Yet it’s surprisingly common to see pre-med
and medical students cheap out in all the wrong places. Your health and wellbeing is the highest priority. As someone who has personally experienced
significant medical issues, let me tell you that if you aren’t healthy, nothing else
matters. I’m not saying to go treat yourself to concierge medicine and weekly massages,
but prioritizing healthy exercise and dietary habits will have tremendous compounding effects
long term. The second most important aspect is your education. Missing an extra year or two because you failed
to get into medical school the first time can cost you hundreds of thousands of dollars
in career earnings. Yet so many students skimp out on test prep
or admissions advising because they figure they’ll “see how it goes.” It’s not just a matter of wasting money
on having to retake the MCAT or the monetary cost of applying to medical school once again. The opportunity cost is orders of magnitude
larger. Do it right and do it once. Be the strongest applicant you can be. By working on myself, achieving top scores,
and bullet proofing my own application, I was able to not only get accepted to top institutions,
but was even awarded merit-based full tuition scholarships that drastically reduced my loan
burden. These scholarships are only offered to those
who are the strongest of applicants. By bolstering your own application, you can
optimize your chances to receive these lucrative scholarships as well. Don’t expect to get into a strong medical
school or match into your dream residency program if you haven’t adequately prepared
and invested yourself in your own education. That means doing as best you can on the MCAT
and optimizing your medical school or residency application the first time. If you need help with the MCAT or strengthening
your own medical school or residency application, our top physician advisors at
are here to help. They love what they do, and they’re the
best in the industry. They’ve passed our highly rigorous 5 step
screening process and have excelled in their own medical careers. As you guys know, I’m a huge proponent of
systems generating results. That’s why my team and I have spent months
perfecting our proprietary and systematic processes that ensure the highest quality
service for each and every student. Unlike other companies, you’ll never worry
about being “unlucky” and not getting a phenomenal advisor. Our team consistently delivers an excellent
experience and service, and I personally stand by that. Our results speak for themselves. Learn more at Thank you guys so much for watching. What other financial mistakes or misconceptions
do you commonly find? I’m going to be making a part 2 video on
finances for pre-med and medical students, and I want your input! Leave a comment below, or shoot me a message
on Instagram. Much love to you all, and I will see you guys
in that next one.

91 thoughts on “Doctor Common Financial Mistakes

  1. A high paying job won't guarantee financial success. Knowledge on how to manage your money and make it work for you will though!

  2. Wow Dr. J.
    This is amazing. I am still doing my undergrad and this really has saved me from a long financial burden.
    You are the best.

  3. Love how not feeling guilty about getting the extra guacamole is your standard for financial success. 🥑

  4. Great timing for this video. Just got accepted to Medical School last week for August 2019. Looking forward to Part 2. Would be interested to hear about LOCs?

  5. Hi. I see you didn't mention the use of credit cards. What is your advice on the proper use of them or how to avoid using them all together?

  6. What if one joins the workforce for a year or two after college to save up money for living expenses before going to medical school.?

  7. Great and very informative video as usual, can't wait for part 2. I'm gonna check out Med School Insiders as soon as possible, I hope that you guys can help me🙏

  8. Is it better to use all your savings to cover your first 2 years of undergrad expenses or split it up evenly between all 4 years?

  9. Love your videos man. Going to college this year and even tho most of your video are about med school. It’s always really helpful to know how you guys do it so I can apply it early on in my college life.

  10. wow what a coincidence, I got s notification for this video right as im considering taking out more unsubsidized loans….hmmmm

  11. You should not start medschool to become rich. You should do it because of an internal drive to help other people 😅👍

  12. Finally you post how expensive all those liabilities are. Thank you for bringing minimalism and that conveniences are not providing freedom, they are typing you down more.

  13. Forgiveness loans don’t work. You are being over worked and most likely your debt will be paid off faster if you take the highest paying offer.

  14. this was an eye-opener and showed me that I have been stressing out on the wrong things, thank you for this video!

  15. When the Korean BBQ came up, my heart soar!!! Thank you so much, this will make my med school experience a bit more awesome

  16. If you take on the loan from the military and after you complete your service as a doctor what is the transition like from that to being a normal doctor

  17. What other financial mistakes did I miss? Let me know! I'll be making additional finance videos =)

  18. I’m a international student and our tuition is just so high I hope I would be able to find a a good scholarship for my med school

  19. This video makes me appreciate the Australian university fee system. For undergraduate and graduate courses, the majority of places are 'Commonwealth Supported', meaning ~90% of our fees are subsidised and the 10% we have to pay does not accrue interest. This means rather than paying ~300k+ for med school, it'd cost us around 30k

  20. Rural health scholarships are pretty dam good imo. Especially if you are going into a specialty like EM where you’ll have an even higher salary. Stay there until you’re 35 and then move.

  21. Hi I have a question. What did you mean when you said that missing a year or two of not getting into med school will cause you to miss out on earnings?

  22. Most of schools educate student about the knowledge, but they don’t educate student about financial management.

  23. I really like listening to your videos. I don't care anymore about the graphics because your voice alone makes it really good to listen 🙂

  24. Hi. I'm 14 and I want to be an orthopedic surgeon. I watch ur videos and they r really good and giving guidelines. Thank You

  25. 7:14 you mentioned you guys offer a scholarship, but I checked your website and the deadline was two months ago 🙁

  26. I'm debating if I should quit coffee or gum at this point 😂 Educating yourself about finances is the best advice I've heard!

  27. A high paying job won't guarantee financial success. Knowledge on how to manage your money and make it work for you will though!

  28. No matter if you are a medical doctor, engineer, laywer, or even a minimum wage worker, the key is to live "BELOW YOUR MEANS"!

  29. Financial responsibility = Spend as little as possible. It's common sense. This is why it's much better to pick a college that gives you scholarships over a more prestigious university.

  30. Off topic. I'm going for a radiography program and was wondering if a tattoo on my wrist would affect my career. How strict is the medical field?

  31. I'm actually wondering is there any websites that list of medical schools in accordance of tuition per year?

  32. You missed the part where the US higher education system practices predatory lending and has continued generally cutting funding towards higher ed for decades. Advocate for change!

  33. South African Medical Schools cost about $40k in total and most students get scholarships that don't need to be paid back but worked back. Most students pay off their fees before they finish. I don't get why American medical schools are so expensive. Oh and the quality of education in South African medical schools is great

  34. An important point i think that you missed is that when you finish residency or med school and you're ready to start working, you should strongly consider working for a hospital in rural undeserved populations as the income in those areas is better since doctors are higher demand. Doing that for a few years or more really helped out with my debt.

  35. Thanks for this video Dr. J! This is perfect timing! I don't want to pull out any more loans for money but finding free money for graduate school is TOUGH! So where can we find scholarship money for med school? Can you please list some websites or companies that give scholarships for med students. I'm doing a 1 year special masters program right now and even finding scholarships for graduate programs is SO HARD!

  36. Good stuff. Best way to save money on food is to go to Walmart and get 20# of pinto beans and 20# white rice. That's 40# of food for less than $20. Not only that but that is the healthiest way to eat. Add a few veggies and an apple each day and you can eat for less than a dollar a day for 6 months.

  37. In iraq, you’ll get to be a doctor for free in exchange for commitment to work for government 7 years with a salary of 750$ per month

  38. hey dr Kevin…I'm a medico myself.. please do a video on mental health for medicos…I suffer from anxiety ,.. whether I'll do good in my residency .. stuffs like that…Im just procrastinating stuff because of my anxiety issues… please do an insightful video for medicos..I really wonder how people with higher academic scores keep it going and multitasking…

  39. Spoiler alert for all these videos: "Common sense this, common sense that, I am captain obvious, shameless plug please buy our stuff."

  40. I'm joining pre med in august moving to Hungary @Debrecen university but I do have sickle cell anemia and lucky enough my parent are financially well off but I never forget where they once were and how they worked to get where they are so I take full advantage of everything they give me and appreciate it emencely, thanks for the video, I really relate

  41. I was not educated in financial management. In high school, i knew i wanted to become a doctor. I knew loans would be my primany way to pay med school. First, I attended community college. It is a great opportunity to save money and build a strong Gpa. It was a great transition from high school to four year college. After, l went to an in state university and lived with parents. I graduated with no loan in bachelors degree. In high school, i was a 4.1 gpa, act 20, honors/ap student. But, community college was the best decision.

  42. Hiiii sir I am from India. Now I m studying now in the BSc nursing last year. Tell me the procedure how to take admission into a medical school of USA after BSc nursing

  43. I'm not planning to join anything medical but I love the animations and knowledge you share that I'm spending a lot of time on your channel

  44. Question: I’m currently a sophomore and looking into med school, but my first year was a bit rough (currently at a 3.1 gpa). If I can get my grades up a bit, get a good mcat score, and have experience with the healthcare system/patients, would I still be able to get into a good program with a scholarship?

  45. God i love how university work here, fee is not huge to begin with , plus if you do well on entery exams you get government scholarships, 50% , 75%, or 100%. I just got into pre med with 100 % scholarship and since i am staying at home for uni ( there are no dorms here , my uni is close enough to walk ) i can graduate pre med with no debt + i still can get 100 scholarship for med school to , if i get good grades.

  46. Not to shit on Americans, but I am so glad that I am a European med-student. The shit we have to go rough is nothing in comparison what you have to go trough.

  47. How were u able to pay off medical school without completing residency? Curio UK s besides youtube whatever source if income did you have?

  48. The federal govermnent is the problem if they atipped handing out loans like it was candy the colleges would be forced to compete with prices. Colleges dont even advertise price because they know the federal govt will pay whatever they cost. I say every student gets a max of 100.000 in student loans. If you choose to go out of state and then an expensive medical school thats your problem

  49. All I have to say as long as you can do it I’m doing it I’m not in it for the money. Imagine being able to save someone’s life!!a life is the most important thing in this earth and I could keep that alive I could help someone have 50 years more

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