I was invited to do a guest post for a pre-med student who has been blogging for a while, (The Hero Complex) but just branched out to his own domain. It’s geared at pre-meds and med students. Take a look!
If nothing else, it’s refreshing to hang around some pre-med students a little bit and recapture some of that idealism I used to have.
[Update 3/15/16: This blog is apparently gone, so I’ll just post the post in its entirety here]
Top 8 Financial Moves to Make as a Pre-Med or Medical Student
By Jim Dahle, MD
Choose the cheapest school you can get into
The decision of which school to attend will have a greater impact on your finances for the next 5-20 years than any other decision other than who/if you marry and what specialty you choose to practice. Choose wisely. I’ll give you a hint–Most medical schools in this country provide a pretty comparable education. Most of what you learn in medical school will come from what you teach yourself and the pearls dispensed to you freely by interns, residents, and other doctors you come into contact with. Little of that learning is dependent on the school you choose. Thus, choose the cheap state school if you can get into it. Don’t forget that costs aren’t limited just to tuition and fees, but also to the local cost-of-living. That school in Boston, New York, or San Francisco is going to cost you a lot more than the one in Omaha or Albuquerque.
Consider the merits of “scholarship” programs carefully
There are several organizations that would like to pay for your medical school in exchange for a commitment. The military Health Professions Scholarship Program (link to https://www.whitecoatinvestor.com/personal-finance/should-i-join-the-military-to-pay-for-medical-school/ ) is the best known, but the US Public Health Service, Indian Health Services, and other private deals also exist. None of these programs is a “scholarship” in the traditional sense of the word, and many a “scholarship winner” has later realized he would have been much better off, personally and financially, if he hadn’t been awarded the “scholarship.” As a general rule, use these programs only if your career goal is to be a military doctor or a rural primary care doctor. Choosing them for the money is almost surely a mistake you will regret.
Minimize your loan burden
Student loans suck and they’re getting worse. Just a decade ago a medical student had access to much lower tuition he could pay with subsidized loans which he could refinance at a low rate shortly after graduation. Now, tuition has skyrocketed, subsidized loans have disappeared, and loan refinancing has become pointless. Now more than ever, you must minimize your loan burden. Every dollar you spend of loan money is like three dollars, since that is what you will need to earn to pay for that dollar of consumption. Take out as little in loans as you can, and spread it as far as you can.
Remember it’s easier to be poor when you’re young
When I was a medical student I was poor, and so were all my friends. We used to drive to Red Rock, outside Las Vegas, to go rock climbing. We would drive an economy car, bring and cook all our own food, and sleep in a ditch out in the desert for free. We’d climb hard for a couple of days, then drive home. I still go to Vegas to go climbing, but now I arrive in a gas-guzzling SUV, stay in a swanky hotel on the Strip, eat in $35 buffets, and go see $100 shows after the climbs. The whole trip costs me less than a day’s work now, but it would have been a vast sum of money as a student. Now is the time in your life to learn how to live cheaply. Learn how to do without, to budget, and to defer gratification. There IS light at the end of the tunnel, but wait until you get there before you start spending it. Being poor sucks. But it is far better to be young and poor than old and poor. I’m reminded of this every time I interact with a local doctor who hates his job and is old enough to be retired. He’s obviously working because he has to, and that’s an awful way to live out your golden years.
Don’t cheap out in the wrong places
Some people, especially pre-meds, but also medical students, cheap out in all the wrong places, such as getting into medical school. Missing a year’s worth of earnings as an attending may cost you several hundred thousand dollars in career earnings. Yet many pre-meds only apply to one or two medical schools because the applications are so expensive. Or they take the MCAT the first time without doing any practice or a prep course “just to see how they’d do.” Do it smart. Do it right. Do it once. Getting into medical school is a numbers game. Don’t be innumerate. If you didn’t get enough interviews that you’re having to turn some down, you didn’t apply to enough schools. If you feel like there’s something else you could have done to prep for the MCAT, you didn’t prepare enough. Sell your car if you need to, but don’t expect to get into medical school if you only applied to one of them, applied late, or didn’t prepare for the only objective measurement available to medical schools.
Get a sugar momma
I keep seeing stories in the press about medical students prostituting on the side to pay for medical school. I hope most of those are urban legends. Nevertheless, don’t underestimate the benefits of splitting living costs with another person, especially one who has a job. Now’s the time for your spouse to work full-time. If he (or she) can cover your living costs, then your loans will be limited to just the cost of tuition. Even if you’re not married, get a roommate or two to help save money, or better yet, live in your parent’s basement. In fact, it is a little known secret that it is possible to hold down a job for much of medical school. I even had a job as a 4th year student doing histories and physicals at a local surgicenter. If you’re taking out enough loans to support a family of six for four years in addition to the costs of education, you will be limited in your specialty choices and future practice opportunities.
Begin your financial education
I advise residents and attendings to read one good financial book a year. You might as well get started as a student. While I wouldn’t recommend you worry much about investing until you get out of medical school, learning about insurance and budgeting could yield some hefty dividends. Here’s my list of recommended books. (link to https://www.whitecoatinvestor.com/books-4/)
Pick a residency in a low cost-of-living city
There’s a lot that goes into how to make a rank list of residencies. Residency pay is pretty similar, no matter where you go. But don’t forget to consider the cost-of-living of the town you will do residency in. I had friends who could easily support their family of 5 in a Midwestern city and others that couldn’t support themselves in the Bay Area.
There isn’t a lot you can do to improve your financial situation as a pre-med and medical school. But don’t let that stop you from doing these 8 things that will improve it.
What do you think? What financial moves are you making as a pre-med or med student? What do you wish you had done? Comment below!
Wow, was not expecting this. Thank you again!
I disagree about the military only if you think career military.
I’m not sure what you disagree with. Do you believe joining the military to pay for medical school primarily for the money is a good idea?
Found the book list through this post. Two stood out to me as particularly interesting – the Randy Johnson book on a home mortgage and The Successful Physician Negotiator. I noticed both were a little old, and wondered if you had a sense of whether they still seemed as relevant to you today, or whether there were things I’d need to keep in mind as different now if I were to read them?
I’ve seen lots of good mortgage books out there. This one is still just fine in my opinion. But if you want to try a newer one, check out Mortgage Confidential. I haven’t read it but it looks interesting from skimming through it.
The guy who wrote The Successful Physician Negotiator has an updated version called The Physician’s Comprehensive Guide to Negotiating.
Thanks!
no thats not what i meant. I think if you are speaking just dollars alone that you likely could do better. As an overall situation however, i think it has advantages. Ive always found having served opens doors for me. I think most shouldnt do career but just a 4-8 year stent. I just dont think you need to be military career minded in order to pursue it.
You don’t need to plan to stay in for 20 years for it to work out, but you do need to actually desire to be a military doc for four years. Way too many don’t, at least once they realize what that entails (which is usually a few years after signing the contract.)
thats the same stat on most 1st jobs for graduating students/residents. I completely agree you have to think you are willing to be on active duty for 4 years. Nobody knows what its like until it happens (like other jobs). I dont think most people should stay longer than their commitment but i think its a decent starting point.
Not only do they not know what that job is like, they don’t know what the alternatives are like. You sign the contract as a college senior, then 8-10 years later you start the job. You’ve changed and the job has changed in that time.
For a soon to matriculate medical student who is financing their medical education on their own with zero support from family, do you have any tips on how to use the dispersed loans from a refund check? Is it advisable to take out extra loans to have a certain balance on the bank account to feel comfortable? Just trying to get a financial plan together before I begin. Thanks
I don’t think extra loans to have a certain balance is a good idea. I’d minimize loans as much as possible. But if you end up taking out credit card loans because you didn’t take out enough student loans, well, that’s probably not smart.
I’m not sure what you’re asking regarding the dispersed loans from a refund check. Refund of what?
Do you have this post elsewhere? It seems that the blog you wrote for has been down for a while.
Thanks!
Just updated the post.
Thank you SO much!
Thank you so much for all the great posts. They are easy to read, down to earth, and informative. I agree with most of what you said. I totally agree with you that medical education is similar in almost all schools. I might argue that clinical education is probably better at the smaller schools/state schools than the private schools (have you experienced the joy and excitement of attending a 3 hour lecture on the proteasome vs. actually learning relevant clinical material?).
However, I think one difference that people should consider if they are choosing Harvard/Columbia/Stanford vs. Omaha/Albuquerque is the availability of high impact research opportunities for students interested in pursuing an academic career. In my opinion, the opportunity to do research/get published in a high impact paper is much easier at these institutions compared to smaller schools where clinical skills are emphasized more. Almost all attending physicians will have some form of project going on that you can work on/write up (as promotions emphasize publishing) + these institutions are much more likely to have larger clinical trials going on + more likely to have basic science faculties who just do research and no clinics. Therefore students are much more likely to get published in NEJM/JAMA/Nature/Science and help them get into residencies that places a lot of value on research/academics.
Many state schools do have these facilities/faculties and therefore it makes much more sense to go to UCSF vs. Stanford as a CA resident but even if you will end up with $125K in debt by going to Harvard (they offer FA on tuition + living expenses) vs $??? for Omaha, it may be worth it in the end if you want to do academics.
But for the majority of medical students who end up going to private practice, I agree that it really does not matter which medical school/residency they go to therefore going to the cheapest possible one is the right answer (and they will get paid more anyways if they end up practicing in the smaller cities). But you know where to go if you are interested in proteasomes ;).
I agree that the name of your school matters a lot more in an academic career than a private practice one.
Great post. I have a question regarding my first job out of residency. I keep going back and forth between working in the private sector versus working at the VA. As everyone knows the VA will pay you half of what you could make in the private sector. However, the VA offers a pension plan that vests you after 5 years and nobody offers pensions anymore. Also, the lower VA salary also lowers your tax bracket and therefore your tax burden. My question is at what point or salary does working in the private sector outweigh the benefits of getting a pension at the VA? For context I would be working as an EM Physician.
Well, you can run the numbers and compare apples to apples. Add in the value of the pension, adjust everything for taxes, and see how they compare. Don’t forget to include benefits.
Great list and definitely would echo the importance of your last tip: “Pick a residency in a low cost-of-living city.” As a 4th year medical student about to graduate next month and soon starting a primary care residency, I can’t tell you how glad I am right now to have chosen to stay in the midwest for residency training. I was conflicted throughout the interview season about pursuing program “prestige” vs. quality of life. Not that these are always mutually exclusive, but there was certainly going to be a lifestyle difference between my resident salary in the northeast vs. the midwest. Don’t get me wrong, I really enjoyed my interview days at some of those big-name programs, and the ego in me thought “wouldn’t it be so cool to say I trained here?!” But when I looked in to COL, differences in resident pay (not significant, but still something), and the difference in taxes (again, not huge but something) between the northeast states and where I am in the midwest, the stress of it all didn’t seem worth it to me, personally. I also am married and have family here so that factored in of course. Granted I don’t plan to do academic medicine or research so that was less important to me. Perhaps if my career goals were to stay in academics or be a big name in the research world, I may have decided differently. And of course, those pursuing different specialties or planning on fellowship may make different decisions based on their intended field. But it really feels good right now to not be stressing about living expenses unlike some of my classmates who are searching for apartments in Boston or Seattle at the moment.
Huge fan of the blog and glad to have found it! Planning to continue to follow along throughout residency and as an attending one day.
Thanks for the tip that when one feels that one should have prepared in advance in order to pass the MCAT and get accepted in medical schools, one should go through such preparations in order to increase the chances of passing the MCAT and entering into medical school. After medical school, do these same rules apply? If I were a licensed medical professional, I still find it important to undergo training in order to increase one’s skill set and be able to heal patients better. Thanks for the great article on how to manage finances as a pre-med and medical student.
Question: Can I take the max. Federal Financial Aid I can get (which would leave me about $4,600 extra after tuition) this semester in Med School (I am a first-year med student) and use that $ to pay off an existing undergrad Sallie Mae private loan that I have at 8.75% interest (which otherwise will continue to accrue until I graduate)? Is that a good idea or not? And more importantly, is that considered a “misuse of funds?” I don’t really see how since it’s all my debt but I certainly don’t want to get in trouble down the road. Any thoughts would be MUCH appreciated.
Sure, I don’t think that’s dumb. I’d do it.