Intro to ATH Financial Health
Welcome to the financial health section of the All Things Healthcare Blog. I am excited to take you guys along my journey towards financial health and independence. Also, I just wanted to make a few points clear before I start dishing out a bunch of financial tidbits. I am NOT a financial advisor or certified financial planner. Therefore, you should always do your own research or speak to a professional before making a significant financial decision. However, I am excited to share the financial knowledge I have acquired and continue to learn about.
My goal is that my posts bring you awareness to certain financial topics you may have never thought of, and that you may greatly benefit from further looking into. I also hope to bring a little fun to finance as I know for most of you this topic can be quite boring. However, I promise that learning just a little can pay huge dividends on the rest of your life. And if you don’t know what the word “dividend” means, you should definitely keep reading my posts. We’ll get to those later.
So What Do I Know About Personal Finance?
My interest in personal finance really started to grow when I took an elective personal finance class my senior year at Cornell University. To be honest, the course was sort of dry. However, I felt it was important to learn the basic financial principles I would one day need. One interesting assignment we had was to make a financial plan predicting the next 20 years of our lives. It wasn’t long before I learned how many variables truly go in to understanding one’s finances.
I also noticed how much more complex my projected ended up compared to many of my peers. This was likely because I had “physician” listed as my future career. Consequently, I had to account for taking out student loans, how to handle the drastic shift between residency and attending salary (not saying this was a problem, just saying I had to account for it), when to get disability insurance, malpractice insurance, etc. I enjoyed learning about all the financial aspects of healthcare, but I was only scratching the surface.
My next endeavor into the financial healthcare space was getting certified as a Life & Health Insurance Broker in NY. Yes, I know this is a very strange certification for an incoming medical student to have. So why did I get it? First, my father is the President of a boutique health insurance brokerage firm A&C Management Group, LTD. I currently work on marketing and business development for the company. Second, I know that physicians unfortunately have to deal with the bureaucratic nature of the many profit drive insurance firms. Thus, I wanted to further understand this industry, and felt seeing the other side could be valuable insight. I personally do not plan on directly selling insurance, but if you are in need of life, health, disability insurance, or corporate benefits, feel free to check out A&C.
Financial Health 101
Ok now to the fun part. Here are some basic tips to help you achieve financial health.
Financial Health Is All About Balance
As a medical student, it makes sense to try to be frugal most of the time. Especially, if you are like the majority of us, you probably have a negative net worth due to student loans. However, even as a medical student, or even a resident still paying off debt, you deserve to enjoy your life. That means if every so often you want to go out to a nice dinner with your significant other, or buy tickets to a concert for your favorite artist, or get yourself a gift, you should do it. This is not to say you should go crazy and take out $10,000 for a vacation you want to go on. Especially since in reality that is likely $10,000 plus the compounding interest, which can create a vicious cycle pushing you further into debt. The key is balance. Spend just enough that you do not feel deprived, but not so much that it will come back to haunt you.
Track Your Finances
It’s always good to have an idea of exactly where your money is going. Luckily, today there are a lot of easy ways to keep track of this without having to put in much effort. I personally like to use mint.com to track my spending each month. With mint you can link all of your accounts including checking, savings, credit cards, investments, loans etc. The site will then provide you with an overview of your financial situation. Additionally, mint will automatically categorize every transaction you make and the dollar amount into a predetermined “budget” you can set for yourself. For example, I have a $500/month budget for groceries and restaurants and mint will send me a warning when I am getting close to going over. Usually, when I get that notification it means less eating out for the rest of the month!
With that said, I still won’t drive myself nuts if I decide I want to go out for one more dinner even if it may put me over budget. It is more important to have an idea of where your money is going and that you are not completely over budget each month. However, there are times where I may be over budget on restaurants but I’ll compensate in other areas such spending less on entertainment of coffee for the month.
Don’t Drive Yourself Nuts Over A Budget
I actually don’t think sticking to an extremely strict budget is a healthy way to manage your finances. As David Bach puts it in his book The Automatic Millionaire, budgeting is like counting calories in your diet. Most of the time you can become so obsessed with keeping track of every calorie you eat that you eventually get burnt out and give up. Budgeting is not much different. Deprivation will drive you crazy and honestly it’s just not that fun. However, you will be perfectly well off by learning some basic financial principles. A few include having a high savings rate, living below your means, and not racking up credit card debt.
Educate Yourself About Finances
Trust me if you can pass organic chemistry, you can learn some of the basic principles to personal finance. While I can spend an entire four hour drive listening to a financial podcast for fun, I know this isn’t the case for everyone. However, if there is one point I hope you take away from this post, it is that educating yourself on finance will greatly benefit you down the road. Healthcare professionals are many times targeted by sleazy finance people, insurance agents, and others trying to get you to invest in their next “million dollar idea”. By knowing only a few proper principles to managing your money, you will drastically reduce your chances of getting scammed. Furthermore, you will set yourself up for financial success and independence.
If you are still reading this post, thanks for sticking with me thus far! I would assume you are probably interested in planning for your financial future. Even if you do not see yourself reading much more about this finance mumbo jumbo, please do me one favor. Please read The White Coat Investor: A Doctor’s Guide To Personal Finance And Investing, by Dr. Jim Dahle. This book is a must read for future and current healthcare professionals, and may very well save your financial future.