Financial Mistakes to Avoid in Your Medical Career

The transition from medical student and intern to full-fledged physician is often a literal case of famine to feast. You’ve spent years living on a shoestring budget and eating hand to mouth, and now your first paychecks are coming in, and they’re more than you could have imagined making.

This financial whirlwind may seem like a blessing, but if you’re not careful, it can set you on the path to nightmarish economic challenges. With great income comes great responsibility, and it’s up to you to learn how to handle your money wisely.

The good news is that you don’t have to learn from your mistakes — you can research the errors others in your shoes have made, and learn from theirs! Here, we’ll dissect the most frequent financial fumbles other doctors wish they’d never done to help you make the best decisions for your economic future.

1 Instant Debt

Ahh, the life of a physician!

You’re expected to demonstrate your success through material possessions. Your luxury car, massive home, and impressive neighborhood are just a few of the ways to prove you’ve hit the big time in your career, and, as a doctor, it’s easy to find creditors willing to lend you six figures to buy anything you set your sight on.

And since you’ve been denying yourself all these pleasures for so long, it’s easy to jump into instant gratification — and instant debt. But if you’re not careful, you can end up in the same boat as your med school self, with your paycheck going straight to your monthly bills.

It’s okay to buy yourself a new house and car if that’s the season of life you’re in, but for now, keep them moderate and affordable without adding massive payments to your next five, ten, or twenty years.

2 Money Avoidance

Right now, it may seem like there will always be more income than expenses, and you could even have an accountant and office manager handling your bills. But if you’re not paying attention to where your money is going and where it’s coming from, this money avoidance can lead to serious overspending.

Work with the professionals around you, including your financial advisor and office manager, to come up with a personal and professional budget. Check-in monthly (or more often) to ensure you’re sticking to those numbers, and pivot as necessary as your goals, expenses, and income change.

Without having your finger on the pulse of your finances, you may not see the compound effect of your spending before it spirals into a debt you can’t get out of easily.

3 Spending All You Earn

Living paycheck to paycheck may look different when your income is larger, but it still creates the same issues as you had when you made less money.

Instead of spending every dollar as (or before) it comes in, take those funds and pay off any interest-bearing debt, particularly credit cards and other high-interest lenders.

Then, set aside easily accessible cash in an emergency fund. This can be in a high-yield savings account, a Certificate of Deposit (CD), or as cash in your safe, but it should contain enough money to carry you through 3-6 months of expenses in a crisis. Having this buffer also reduces your chances of going into debt again when an unexpected expense, like a health issue or car repair, shows up on your path.

Once that fund is secure, you’ll have surplus income that you can use to invest in retirement and your future. How you do this depends on factors like your risk tolerance, workplace opportunities, and interests.

For instance, if you’re an employee, you can invest in a 401(k) or similar program, and your employers match your contributions. However, there are often penalties and drawbacks you should be aware of should you need to withdraw funds early.

Independent contractors and physicians who run their own clinics have unique needs, as well. You’ll need to consider how to budget for your quarterly tax returns, how to save for retirement without employee contributions, and other long-term planning concerns. For more detailed information about getting started in investing for doctors, read this article by OJM Group.

However, no matter which situation you find yourself in, lack of planning for the future is a crucial mistake many others like you have made. Invest the time in learning about your best options to build a stable financial net worth.


Physicians have an often coveted financial standing in the world. It’s a wonderful problem to have, but to ensure you control your money and not vice versa, you need to make wise economic decisions. Avoid these three mistakes, and you’ll be on target to a successful career and effective money management.

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