Pay Yourself First: A Financial Guide for Doctors Entering Practice

As doctors move from residency or fellowship to their first years of practice, they face a variety of choices. One of the key choices is between a high-consumption, high-status lifestyle, and a more modest, savings-oriented lifestyle designed to build walk-away financial independence at a relatively young age. This book discusses the changing economics of medicine, the psychology of wealth and status, and the compounding effects of early savings. The book concludes with seven success strategies for physicians making the transition to full-time practice, designed to place a new doctor on a confident path toward financial security.

Burd and Hemphill’s debut financial guide aims to help start new physicians on the path to solid financial futures. Doctors may make a great deal of money over their lifetimes, but that doesn’t mean that they always know how to manage it wisely. New doctors start at relatively low salaries—according to the authors, fellows may make as little as $12.50 an hour—but they can start making impressively high ones in the blink of an eye. Such a sudden, radical change in cash flow can easily throw a new doctor for a loop, particularly given society’s expectations of how doctors are supposed to live. Burd and Hemphill write that many young doctors plan to practice indefinitely and see no need to put money aside for retirement. But, they point out, the first few years of medical practice are crucial in determining a doctor’s financial future: A doctor who starts saving money immediately will end up with a far bigger return than one who waits even a decade to invest. One who starts by putting his or her cash toward an expensive lifestyle will find it extremely painful to cut back later and start saving, but one who continually tucks a percentage of earnings away from the beginning won’t have to change a thing. The authors define wealth as being able to maintain a lifestyle indefinitely without needing to work, and their book lays out a plan for accomplishing this end. Their program centers on the concept of “pay[ing] yourself first”—setting aside money from each paycheck and saving it before spending it on anything else. The authors clearly know their subject, and unlike many money management books, this one provides specific investment and money-management suggestions; the only sour note is the sales pitch at the end, when the authors advise new doctors to sign up as their clients. A clearly written, common-sense guide to smart money management for medical professionals.