Book Review – Physicians (and dentists, nurses, nurse practitioners, and other health care providers) need to understand money but most have limited financial expertise. No wonder and it’s not your fault. Four years of college, four more of medical school and three or more of residency left little time for personal financial education. But you still need that education and now is the best time to start.
The financial playing field is definitely not level and so you need to do what you can to level it. You are probably encouraged regularly to invest in various money making schemes that sound too good to be true. Making good financial decisions over time means the benefits can compound over long time periods – to your definite advantage.
Unfortunately, medical school and residency programs have essentially no time devoted for personal financial education and little if any time for learning the financial implications of starting a medical practice. You are on your own. Your natural mentors – professors, senior residents or senior colleagues in your practice – are probably no better equipped than you. Some medical students are obtaining combined MD/MBA degrees but this is overkill for just your own personal financial educational needs.
I was encouraged by consultants at Sage Growth Partners to meet Dr. Yuval Bar-Or. Dr. Bar-Or comes from a medical family (father and brother are physicians) but he entered the finance field, obtaining a PhD in finance from the University of Pennsylvania’s Wharton School. He is now a faculty member at the Johns Hopkins Carey Business School. His own family’s circumstances led him to realize that medical families need access to clear, objective, expert financial knowledge. He has written a set of two books, called Pillars of Wealth I and II, to address this need.
The books are straight forward, easy to read, thorough, yet not mired in financial jargon. In short, you can learn and do so easily. He begins with what he calls three axioms (reminds me of high school math!) 1) Your most valuable asset is earning capacity (not lucrative sounding investments); 2) Your most precious resource is time (saving now will pay off handsomely in retirement); 3) Your greatest enemy is procrastination. From there he reviews the basics of stocks, bonds, real estate, business ownership, insurance, annuities, 529 college savings plans, etc. He puts an emphasis on getting out of, and not entering into, debt (except a mortgage for a reasonably priced home.) This is followed by a discussion of risk and risk anticipation as a front line of financial defense. This leads to insurance – what you need and what you can avoid in terms of life, disability, liability and of course malpractice insurance.
It is an important principle that sound financial decisions early in your career have a big impact down the road – and so too do suboptimal decisions. You are probably bombarded by sales people that assume you have money to spend; some will have good ideas and products and many will not. Should you have a personal financial advisor? Or can you learn enough to make sound decisions yourself – for your own financial well-being, for your family and for your career?
A personal financial advisor would be worthwhile but you need to find the most appropriate person whom you can trust to offer sound meaningful advice and who charges appropriately. Pillars of Wealth gives suggestions on making this choice.
Bar-Or is articulate and passionate to meet. He thinks of himself as a financial risk management “physician”, i.e. to keep your finances healthy and functional while you help your patients stay healthy.
Your practice priorities are always uppermost but for some limited time and on a regular basis you deserve to consider your own financial health. Pillars of Wealth might be a good place to start. A chapter every few days will put you in a much better position over time to benefit financially from your education and training. These books are very well written and thoughtful. I will go so far as to say they should be must reading for all medical students and residents.
Note – Dr. Bar-Or and I met for lunch; we each paid our share. I bought his books before we met. I have no financial relation with him or his book sales.