Doctors are one of our most esteemed professions. They’re held up as geniuses, seemingly unable to do wrong. Except when it comes to money.

A common stereotype, doctors are often lax with their finances. They rack up debt, spend too much of their income and fail to save for retirement.

Joe Saul-Sehy, of the personal finance podcast Stacking Benjamins, says doctors are so used to being looked up to, that they find it difficult to seek out advice on anything.

A former financial advisor and a husband to a doctor, Saul-Sehy also says because doctors have high salaries, they think it’s okay to spend accordingly.

“Because of that, many spend their money on trappings that make them appear rich: nice vacations, expensive cars, maybe a boat and a large house,” he said.

Dr. Jim Dahle, a blogger at the White Coat Investor, said that the common reasons that most people struggle with money apply to doctors. These include, “a lack of financial literacy, poor financial discipline and a lack of long-term perspective.”

“In addition, there is a bit of a culture within academic medicine where you don't talk about financial topics,” he said. (For related reading, see: These Professionals Need Financial Advisors.)

A God Complex

There’s also the God complex. Doctors are used to being in charge and having people rely on them. They often find it difficult to trust someone else. To them, asking for advice is a sign of weakness. Physicians are supposed to be confident and it’s hard for them to be vulnerable to someone else.

Saul-Sehy says he knows of a financial advisor who refused to work with doctors. When asked why, he said, “Because I can only worship one god.”

Most doctors spend years getting their undergraduate and medical degrees. Their friends are 22 when they graduate, start working and earn a real living. In contrast, most physicians leave medical school in their early 30s. After years of studying, exams and living on a student budget, they’re ready to splurge. (For more, see: A Look at Advisors Serving Niche Clients.)

Dahle says for many, the income jump is one of the reasons for poor financial habits.

Careers Start Late, Mounds of Debt

But being a doctor also comes with its own set of financial baggage. Even though they’re earning well into six figures, most are also paying off hundreds of thousands of dollars of student loans, as well as figuring out tax differences and saving for retirement.

Alexi Zemsky, cardiologist and blogger at MilesDividendMD, said that many doctors fail to account for being in a higher tax bracket.

“Unique challenges for professions with high levels of earned income really have to do with keeping effective tax rates as low as possible,” he said. (For more, see: Why Advisors Should Sidle Up to Estate Attorneys.)

Some of the ways he saves on taxes include maxing out his retirement accounts, health savings account and recording any losses from investing.

If you choose to be a physician, it doesn’t mean you’ve resigned yourself to a life full of debt and bankruptcy. Finding a good financial advisor is one way you can beat the statistics. Look for a knowledgeable advisor, do your research and ask around. Part of the reason that Dahle got so interested in investing was after a bad experience with an advisor. (For more, see: Strategies for Winning Advisory Business in 2015.)

“Physicians have already won the money game,” Dahle said. “Their high incomes get them 90% of the way. If they just manage to do a few things right, they will be financially successful.”

The Bottom Line

Just because doctors have a reputation for being bad with money doesn't mean they're doomed to a life of bankruptcy and debt. If they seek professional help, live within their means and remember to save for retirement, they're as likely to succeed as anyone. Like anyone, they should start saving while they're young and continue to maintain good habits throughout their career. (For more, see: How Advisors Can Tap the Doctor Niche.)


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