[Editor's Note: Registration for the 2023 Physician Wellness and Financial Literacy Conference (WCICON23) is now officially open. The CME-eligible conference, which will run March 1-4 at the stunning JW Marriott Desert Ridge in Phoenix, has sold out quickly multiple times in the past. So, if you don’t want to be left out of one of the best medical conferences of the year, where you’ll learn how to create financial freedom as you recharge your mental batteries, make sure to register for WCICON23 ASAP! You are worth the investment.]
By Dr. James M. Dahle, WCI Founder
With doctors averaging a salary of more than $250,000 per year, we know that a physician's income is one of the best ways to accumulate wealth and get started on the path toward financial independence. But it likely will still take many years to reach those financial goals, especially if a medical student has to take out hundreds of thousands of dollars in student loans to get the training they need.
It's not an easy path, and since getting to the point of drawing an attending's salary will take years of sacrifice, it's worth giving some financial advice for pre-meds and medical students to make that journey just a little bit easier and more fruitful.
Here are eight tips for pre-meds and medical students.
#1 Choose the Cheapest Medical 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. After all, the less you spend on medical school, the less likely you are to graduate with a massive debt that will affect your happiness, lifestyle, specialty choice, and job choice.
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.
#2 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 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 of these “scholarship winners” have later realized they would have been much better off, personally and financially, if they hadn’t received it. 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.
More information here:
#3 Minimize Your Student Loan Burden
Student loans suck, and they’re getting worse. At the beginning of this century, medical students had access to much lower tuition they could pay with subsidized loans which they could refinance at a low rate shortly after graduation. Now, tuition has skyrocketed, and more than ever, you must minimize your loan burden. Every dollar you spend of loan money is like $3—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.
More information here:
#4 Live Frugally as a Pre-Med and Medical Student
When I was a medical student, I did not have much money, and neither did any of my friends. We used to drive to Red Rock, outside of 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, and then drive home. Now, if I go to Vegas to climb, I can afford to arrive in a gas-guzzling SUV, stay in a swanky hotel on the Strip, eat at expensive buffets, and go see $150 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. Living frugally kind of stinks. But it is far better to be young without money than old without money. 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.
More information here:
#5 Apply to Many Medical Schools
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.
#6 Send Your Spouse to Work
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 they 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. Better yet, live in your parent’s basement. 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 fourth-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.
More information here:
#7 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.
#8 Pick a Medical 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 in the town where you will do residency. I had friends who could easily support their family of five in a Midwestern city and others who couldn’t support only themselves in the Bay Area.
There isn’t a lot you can do to improve your financial situation as a pre-med and while in medical school. But don’t let that stop you from doing these eight things that will improve it. Decades later, as you hopefully enter the land of financial freedom, you'll be thanking yourself for being so smart.
Student loans and the many programs and options are challenging to navigate. If you need help, check out StudentLoanAdvice.com, a WCI company.
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!
[This updated post was originally published in 2012.]