By Dr. Jannette Collins, MEd, FACR, Guest Writer
Promoting mandatory education reveals one’s values and spurs political debate. I’ve been a teacher my whole adult life. I’ve taught every grade from elementary to high school as well as doctors and medical trainees. I know how difficult it is to crack the curriculum egg. It’s a zero-sum game. Any time you want to introduce a new topic of instruction, you have to take time from an existing topic. No one wants to give up their piece of the pie. Think changing the U.S. Constitution. So why do I try?
I’ve written about why I think financial literacy education should be required for all medical students and residents and why I think all practicing physicians should practice continuing financial education. Here are just a few reasons:
- 76% of medical students graduate with a median $200,000 of debt, which plays a major role in personal financial problems, contributing to high rates of divorce, bankruptcy, burnout, and suicide among doctors.
- Throughout the course of their training, residents make important financial decisions without having the knowledge, attitudes, and skills required to successfully manage personal finances.
- Physicians start their career 10 years later than their age-matched peers, who have already begun buying homes and saving money for retirement. This “late start” makes it even more important for graduates to be armed with the information they need to overcome debt and begin building wealth.
- As many as 80% of physicians need, want, and should use a financial planner or investment manager, either because they don’t know enough to manage their finances on their own or they don’t have/want to spend the time to do it themselves. Yet, they haven’t been taught how to get good advice at a fair price.
Like many physicians who write about financial literacy, I’ve learned things the hard way and am committed to educating myself and others. Here are some of the personal “learn by my mistakes” anecdotes I’ve shared with others:
My Personal Financial Mistakes
#1 I Picked Investment Funds from a Magazine
As soon as I paid off my student loans (which I did within five years after training), with my only remaining debt a reasonable mortgage, and already maxing out retirement accounts, I started to have money coming in that wasn’t earmarked. I had always been a saver (thanks Dad) and decided to open an account at Schwab and invest in mutual funds. I didn’t know much about doing either. I had no idea how to pick mutual funds. Choosing a few that were doing well (according to Money magazine) seemed like a smart choice. So, I did what a lot of people did in the late nineties. I bought tech funds! They went up, up, up. Then came the dotcom crash in March 2000 and I wasn’t feeling very good about the value of my Schwab account. This led to hiring a financial advisor, and years down the road when I realized I was getting “not very good advice at a not good price” I left that advisor and started self-managing my finances.
More information here:
5 Steps to Help You Choose the Right Mutual Fund
150 Portfolios Better Than Yours
How to Get Good Financial Advice at a Fair Price
#2 I Bought a Whole Life Insurance Policy When I Didn’t Even Need ANY Life Insurance
I was a school teacher before going to medical school. This was back in the early 1980’s. My annual salary was around $20,000. The school brought in a “financial advisor” (an insurance agent, really) to meet with the teachers. This advisor recommended to me that I buy a whole life insurance policy, which I did. I had every confidence that my boss wouldn’t have arranged for someone to meet with me unless that person was selling something I needed. I was young, married to a graduate student, and had no kids. We had no debt. We didn’t even need life insurance! I paid about $35 a month in premiums for that policy, which “conveniently” came out of my salary before I even saw it. To put this into perspective, $35 in 1980 is equivalent to $110 today. After a couple of years, I realized that I was paying for something I didn’t need and dropped the policy. So yeah, been there, done that.
More information here:
Whole Life Insurance: What You Need to Know
Debunking the Myths of Whole Life Insurance
How to Dump Your Whole Life Policy
Confessions of a Financial Advisor
#3 I Didn’t Have Disability Insurance (Thanks Guardian Angel)
I didn’t know much about disability insurance as a student, resident, or even for a long time as a practicing radiologist. Luckily, my naivety wasn’t tested. I never suffered a disability that prevented me from working. I’m now at a point in my career when I don’t rely on earned income to pay my bills so I don’t need disability insurance. But not every resident will be as lucky as I was.
A full-time radiologist (my specialty) earns, on average, $427,000/year. Multiply that figure, along with adjustments for salary increases (one can only hope) over a career of 30 years and you’re looking at a big pot of gold. For most physicians, their human capital is their most valuable asset and greatest source of wealth. It’s worth insuring.
The chance of missing months or years of work because of an injury or illness may seem remote, especially to a young healthy radiologist who doesn’t see much risk from sitting in front of a monitor interpreting images (many of us actually do see patients). But the statistics tell a different story.
Fact: a professional has a greater statistical probability of suffering a severe disability that impedes their ability to work than of dying prematurely.
Fact: more than one in four 20-year-olds will experience a disability for 90 days or more before they reach age 67.
More information here:
What You Need to Know About Disability Insurance
Summary
These and many more personal “stories” should be enough to convince anyone about the need for required financial literacy education. So why isn’t it required? Aside from the challenge of trying to add something new to a curriculum:
- Medical residents are already overwhelmed with learning the clinical aspects of their specialty.
- Physician faculty members are not accustomed to teaching finance to residents. They may not feel comfortable or competent to teach this material (or identify someone who would be).
Those barriers are steep but not insurmountable.
The alternative to not mandating financial literacy education is to allow the laissez-faire approach to financial education to continue. I don’t think it should. Providing financial education will contribute to residents having a heightened sense of control over their future and greater short- and long-term well-being.
Do you agree with requiring financial literacy education in medical and dental school? If not, why not?
[EDITOR'S NOTE: Dr. Jannette Collins, MEd, FACR, has served as a program director, GME dean, and department chair and currently directs content MRI Online. She also blogs about radiology jobs, finance, and education for The Reading Room. This article was submitted and approved according to our Guest Post Policy. We have no financial relationship.]
I completely agree that financial education should be part of a formal curriculum!
This is something that I have spoken about with many program directors. All have agreed it should be but have expressed that there is limited time to fit in all the necessary medical education due to decreasing lengths of training and work hour restrictions. That may be a challenge but not an insurmountable one.
As I develop our plastic surgery residency which should begin in a couple years, it will certainly be part of our formal curriculum
I agree that medical students and dental students need a financial literacy class.
I teach economics and personal finance to 9th graders. It will give them a head start in planning their financial life. I teach it virtually and would live to be employed to teach it to medical students. As we know a lack of financial literacy can derail people’s lives.
figures . . . whole life insurance . . .
A concise finance course in medical school would be so useful, but many attendings and program directors are just as clueless as the average trainee.
Part of my internship included a 2 week course in medical finances, and one of our classes involved a visit to our 50 year old program director’s financial advisor. In hindsight and knowing what I know now, I’m almost certain this guy was an insurance salesman. We learned absolutely nothing about index funds or even the basics of retirement accounts.
A required course on finances during medical school? Uh, no. Was kind of a busy time. Also taxpayer subsidized in most cases, so not really appropriate. But a copy of the WCI book in every student’s mailbox? Sure! I wish someone had been doing this work in 1999 when as a 4th year student I sold my Beetle to buy Cisco stock.
Financial literacy should be taught in high school. I had Home Ec classes, after all; too bad they were useless. Nothing like teaching a teenager with a debit card how to balance a paper checkbook that he doesn’t own! Use the time for financial literacy instead. It would probably be one of the most useful things to come out of secondary education for many people.
I would be happy to have useful financial advice for med students and residents, but there’s no way it won’t turn into clueless administrators hiring disguised salespeople to do the job. Heck, my med school DID have some financial literacy lectures and I have since realized that’s all it was (selling actively managed funds, whole life insurance, etc).
@Brian, I would be happy to have my taxes financially educate people in medical training. I’d like the doctors to have more money to create jobs and pay sales tax on toys than to allow that money to be shunted to exploitative private firms and the already horribly over-wrought financial services industry.
Education is a great thing. I don’t think it is realistic to expect this to become part of medical school or residency curricula.
No one could contend that one NEEDS to know finance to be prepared to enter training (what med school is about) or to practice medicine. It would be useful to doctors s individuals to gain some knowledge, but no more to them than engineers, cops or elementary school teachers.
If a medical institution were to implement mandatory personal finance education the optics would be terrible. Those who view docs as more concerned with money than with patients would take this as proof.
Another problem: who would teach it? Medical schools do not have academic finance departments, staffed by faculty who are experts, teach undergrad and graduate courses and do research. Business schools have many such people. Yes, medical schools do have physicians and managers who are knowledgeable about some aspects of finance. But nearly none of them would be considered qualified to teach Introductory Finance in an MBA program.
Having a mandatory course in personal finance would be a PR nightmare. And most schools would have no one to teach it anyway.
On the other hand, a medical school could declare that high costs and wasteful practices in medicine derive in part from physicians near complete ignorance of finance. The school could address that by teaching a straightforward undergraduate finance course. Nothing about whole life, real estate investing or any other personal finance. Just a by the numbers course on finance. Those med schools that are parts of universities with undergrad business schools could simply hire those faculty members to teach a course that they already give. If they have a grad school of business but don’t offer an undergrad program, then still go to the B school and ask them to put one together. Thoroughly professional instruction from thoroughly qualified faculty members. Other med schools could hire qualified adjuncts to do the same thing.
No PR nightmare. No courses taught by doctors who view themselves as experts but would never be hired to teach this topic at an accredited university.
Even better, make it part of the required undergrad preparation for med school. Students all over the country could take it while undergrads, just as they take chemistry.
No time in dental school for finance as we have far too much to complete in 4yrs
Just provide them with the best resources like books by Bogle, Malkiel, Swedroe, and Bernstein and WCI and Bogleheads
I could teach anyone in ONE HOUR all they need to know about investing in stocks and bonds and so could most of us that have yrs of experience
Great article, and I complely agree but maybe I’m biased!
Lots of interesting comments on how financial education can’t/shouldn’t be a part of the medical school curriculum or schools don’t have time. I beg to differ as I’m in my 7th year of teaching the Business of Medicine, with 250 people enrolled in this year’s course. 🙂
It interesting to see all the criticism of financial education. Having been in academics for years, there is a hunger for this information from the med students and residents! We taught our financial edcuation class after hours – I was always amazed at how many students and residents showed up after a full clinical day in the OR.
Understanding money and finance buys you freedom – to spend your time doing what you enjoy, when you want, with who you want. There are few classes in med school that give you that ROI. I can think of plenty of other “subjects” that could have been easily removed from our med school curriculum in order to make room for financial education.
One of my colleagues recently invested approx. 500 k in an EV stock (NIO and TSLA) stating it would go up in the future, he also recommends Options, Puts etc, which I dont understand. Having a Daughter, two grandkids from a previous marriage, I wanted feedback on if this is a good idea and put your money in a concentrated stock? I want to make sure to have a conservative portfolio in my late 50’s to ensure income, but it sounds tempting that the EV stocks will take off ?
Please advise
No, it’s not a good idea.
With all due respect, a one hour “course” in personal finance would cover nearly nothing of what would be in an intro finance course, even at the undergrad level.
If you want people to learn something about finance, then teach them finance. You know, like you teach them chemistry. You don’t bring in a clinical doc who thinks they know a lot about chemistry. Bring in a Chemistry professor who is fully qualified to teach the course.
If done as a med school course, you would have to start by developing a background in micro and macro economics. Not everyone takes those in college- although at my alma mater almost everyone does. Usually, these are one semester each at the undergrad level but you could consolidate them into one semester for both for people who had narrow interests and were not going on the higher courses.
Teach people the quick and dirty way and you get quick and dirty thinking. Teach them the rigorous way, with a proper textbook and problem sets and you get rigorous thinking. Understanding finance at the undergrad level would put the way ahead of most doctors now. The problems of costs and wastes would make much more sense.
On the personal finance side they would have to tools to analyze insurance, taxes, Roth conversions, etc for themselves.
They would be ready to read real books on finance, not dumbed-down-for-the-masses books. After all, we are talking about med school. Everyone was a high performing college graduate. Give them real tools.
Like Chemistry.
The Wall St Myth is that investing is too complicated for ordinary investors
Being doctors are hardly ordinary, a Second Grader can beat Wall St
Ask author Allan Roth or read his boom
EMBRACE SIMPLICITY with your investing
I agree with that. But there is a lot more to personal finance than investing.
Nothing simpler than investing in the ACCUMULATION PHASE
A target date fund, a life strategy fund, or the Boglehead three fund; all with beat active investors long term
Don’t let Wall St make you think there’s some complexity/difficulty to this
the Distribution phase not that difficult but a bit more strategy