The Importance of Financial Literacy for Pre-Med Students
July 14, 2017
As with anything meaningful in life, there are costs and benefits to studying medicine. On one hand, being a physician means you get to help others, feel rewarded in your profession, and earn a high salary. On the other hand, you have eight years of rigorous schooling, potential stress, and let’s not forget debt.
Financial stress can be a leading cause of physician burnout. While medical school prepares you for executing procedures, administering medications, and saving lives, it does little to help you stay afloat financially.
Developing even the smallest level of financial literacy at the start of your medical training can save you so much stress, not to mention tons of money. Let’s look at the crux of med student’s financial issues, the current financial literacy of US med students, and how physicians to be can begin to better educate themselves to prevent financial stress along the way.
Why financial literacy is needed
Rising tuition costs. Declining salaries. Interest accruing loans. Board exam fees. These are just a few of the financial challenges med students face while pursuing a career in medicine, not to mention general living expenses. Some minimize or neglect these issues, claiming physicians will quickly pay off their debt with high salaries. However, without the right amount of financial literacy and careful planning, a physician’s salary is hardly enough to make a dent.
As one family physician explains: “No one ever talks to med students, residents, and doctors about money, and it can really hurt us. We should learn about budgeting and investing and taxes. And we should talk about it with each other, so hopefully, we can stop making dumb mistakes. If it were just about money, it wouldn’t matter. But as I explained to that pre-med student, money equals freedom. Freedom to have a long parental leave when you have kids. Freedom to take low-paying work. Freedom to leave medicine if you want. The list goes on.”
Current financial literacy of US med students
While it’s safe to say most are aware of the problem, not many are equipped with the solution. Many medical students accept financial burdens as a necessary evil of pursuing the profession, so they dig their heels in as best they can and continue to rack up the debt.
According to the 2017 Report on Financial Preparedness for Medical Residents, 71% admitted they lacked the necessary financial skills needed to pay off their debt. Among the professed reasons for this lack of knowledge were lack of time, cost, and not knowing who to trust.
A recent study was done on the Personal Financial Literacy Among US Medical Students reiterates the current financial literacy climate: “Financial literacy among U.S. medical students was low. Moreover, current curricula were not associated with improved financial literacy among students, and fourth-year students were no more financially literate than first-year students after controlling for age and other factors. The low financial literacy among students is concerning, as medical students occupy a unique niche with higher levels of educational debt. Medical schools and policymakers should consider and evaluate new methods to improve financial literacy among medical students.”
Educating yourself about money as a physician
It’s important to realize that, regardless of your current financial situation, you have the power to improve it. As you will learn as a doctor, the best cure is prevention. So the sooner you can start educating yourself and planning for your financial future, the better. While medical schools are beginning to incorporate financial literacy training into their curricula, pre-med students must take it upon themselves to start preparing early.
According to an article on Financial Literacy for the Newly Minted Physician: “The key to understanding money is conceptualizing it properly. Contrary to popular belief, time (not money) is your most valuable asset. Money is a tool that can empower you to allocate your time based on your priorities and free you from the need to work.”
There are several resources out there to help medical professionals manage their money, minimize their loans, and pay off their debt. For example, Wealth MD is a site dedicated to financial planning for medical professionals. For a comprehensive list of financial resources by state and your specific needs, check out The Ultimate Student Loan Repayment Guide for Doctors.
Have questions or concerns about paying for medical school? Set up a free consultation with one of Kaplan’s expert pre-med advisors.