Between repaying student loans and balancing present lifestyle vs. future needs, medical residents face a lot of financial burdens, and many of them feel ill-equipped to handle them.
A new study by MD Financial Management attempts to uncover the roots of residents' financial concerns. As we discovered, respondents feel a lack of knowledge and confidence in their own skills when it comes to making financial decisions. Many noted an absence of trust and clarity about who to turn to for assistance, with many saying they seldom use financial advisors.
Many of these concerns don't melt away with age and time. In a related study, we polled practicing physicians with tenures ranging from 0–16+ years. The demographic that felt most at ease with the financial decisions were, unsurprisingly, the physicians with the longest tenures.
What can medical residents learn from these new reports? Let's dive in.
Who responded to our survey
We polled 72 resident physicians across Canada, 29% of whom identified as female and 71% as male. The majority reported being single (63%) and very few have children. The ages in this cohort ranged primarily from 25–34.
Here's what they said:
1. Barriers to financial literacy leave budding doctors in the dark
One of the biggest things our study reveals is that residents do not have a great handle on financial literacy at this point in their lives, nor do they have the time to gain new financial wisdom. Medical residents averaged 53% in our 13-question financial literacy quiz, with a solid tenth earning a grade above 71%.
Our study also discovered that 43% of resident respondents wish they knew more about investing, with savings coming in second at 17%. What stands in the way of these young physicians gaining better financial knowledge? Interestingly, 43% of residents said they don't have enough time to learn about it on their own, while 47% said they worried they don't know enough to be able to trust financial advisors. Other barriers include a general lack of trust in the financial industry, a failure to learn money management before deciding to pursue a career in medicine and not knowing where to turn for advice.
MD insight: Medical residents seem to be stuck in a catch-22 loop, where they wish they knew more about investments, but don't have time to learn about finances, nor do they trust financial advisors to invest on their behalf.
We know that going through your residency program is all-consuming, leaving very little available for anything else. "Medicine, not financial planning is their passion—If you put a financial journal and a medical journal in front of them, they're going to opt to read the medical journal," says Mary Ruddock, Wealth Planning and Strategy Lead at MD.
For those who are short on time but want to learn more about investments and financial planning, MD provides convenient access to advisors that specialize in early career physicians by phone, in person or by Skype.
2. Expenses associated with med school become less important with time
Medical residents are worried about money. Nearly 7 in 10 reported feeling extremely or somewhat stressed about making decisions about financial priorities. Where paying for medical school and student loan repayment are naturally top of mind for medical students, we see these concerns lessen with age. 72% of residents reported worrying about loan repayment. And, in our other report on established physicians, school-related expenses sat near the bottom of the pile of concerns.
Part of the reason for these findings could be that students typically have no income. As physicians get older and gain more experience in their medical training and careers, the concern over academic expenses is slowly replaced by other interests: mortgages, paying for children's educations, saving for retirement and so on. This speaks to the impermanence of student-related debt over the course of a physician's career.
"Often when they are transitioning from residency to practice, they seek advice from our advisors who specialize in early career doctors to discuss paying off debt, starting to invest and practice incorporation," says Ruddock. That's the perfect time to come up with a solid financial plan.
MD insight: Medical school debt can seem unwieldy to manage, and it can be difficult to make other financial plans when you're busy paying it down. However, MD Advisors* work with residents on a daily basis, helping with a variety of services including budgeting and expense management during residency.
Meeting with an MD Advisor will provide peace of mind that the debt you accumulate during your training—while large—will be able to be paid off with the personalize strategy you create together.
3. Many residents value a good balance between lifestyle and future planning
One thing that remains fairly constant across all our polling respondents is the quest for present-future balance. That equation speaks to managing current expenses and lifestyle costs while also preparing for the future. Of the respondents, 92% said striking this balance was important to them.
MD insight: The commonality of this priority suggests that all physicians at nearly every stage of their lives value a good lifestyle and are willing to allocate a certain budget to living well. However, they have many competing priorities that change as they get older. Creating a budget and sticking to it can help keep lifestyle-related expenses in check while also fulfilling other financial needs.
Gaining a better grasp on your financial future
Between transitioning from med school to residency to practice, you may feel like you haven't got the time or energy to do many things — and that includes planning for your financial future. But you don't have to figure things out on your own. Contact a MD Advisor to help you plan your expenses and savings strategically. Preparation is the key to success.
For the full report on medical resident and practising physician financial literacy, check out the MD Physician Financial Literacy Study.
Source: Environics Research (2019) MD Physician Financial Literacy Study
* MD Advisor refers to an MD Management Limited Financial Consultant or Investment Advisor (in Quebec), or an MD Private Investment Counsel Portfolio Manager.