It’s that time of year where newly graduated physicians have started their first job as an attending. The sudden change is in many ways as drastic as entering medical school. Suddenly, there are a whole new set of problems to conquer and a feeling that, just maybe, other people are better than you at tackling these problems.
If you have no idea what I’m talking about, then consider yourself lucky. Depending on what study you read, anywhere from a quarter to over half of medical professionals experience impostor syndrome at some point in their career. The larger the lifestyle change, the more prevalent this syndrome is.
So what does this have to with personal finance and investing? Financial impostor syndrome in medicine is the result of years of hard work for little financial return early on. Many new doctors can develop this syndrome where their first paychecks does not feel “real.” As a result, some financial decisions are made that might have long-lasting negative consequences.
Impostor Syndrome In Medicine
Impostor syndrome is a concept where a person internally feels like a fraud or undeserving of their current status. Many medical students, residents, fellows or attendings develop this feeling at one point over the course of their career. I know I was no exception. When I entered medical school, I briefly had this syndrome. I kept wondering how a small town, country boy with parents who didn’t even go to college (high school educated) ended up in medical school. Luckily, with time these feelings fade and pride of accomplishments takes its place.
I’ve come across some of my friends who have recently graduated. They all reported some degree of impostor syndrome while receiving their initial larger paychecks as an attending. Almost all give the same two reasons for why they feel this way.
- Post graduation, the only big difference in practicing medicine is that their paychecks have multiplied by several factors. This increase in pay has not set in as “real” yet.
- There is a feeling that the paychecks, income based repayment plans, or student loan forgiveness will all of a sudden be changed to leave them with significant debt for years to come. Doctors income is always in the spotlight when discussing costs of healthcare. If you like it or not, some feel that doctors don’t deserve the fees charged.
The Beginning Of The Syndrome
One day, a hard reality hits every medical student. The only people other than medical students paying to be in the hospital are the patients. Of course, the difference is that medical students are there to learn. They also start off with little knowledge and are in the hospital to gain the acquired skills necessary for their future career.
Medical school eventually ends with celebration and graduation to residency. For some, this is the first paycheck they have ever had. While in residency, each paycheck is often consumed with monthly expenses such as rent, student loan repayment, food, etc. It is hard to feel the sense of accomplishment by income when money goes in one hand and out the other. As a result, new doctors tend to not know what their financial worth is to the community.
The Mental Beat Down Of Residency
Residency is a time of high mental, financial, and professional stress in a young doctors life. Rules are made with the primary goal of medical education and patient safety. Almost every trainee has no bargaining power when it comes to time off, pay, or benefits provided at these programs. It’s hard to know your financial worth as a physician when none of these benefits are negotiable.
One day my residency program decided to up the reimbursement for 24 hour calls. Meal tickets went from $5.50 per 24 hour call shift to about $9 per call shift. Residents rejoiced overnight that we were finally getting some kind of increase in pay reimbursement (Never mind that the effective increase in reimbursement worked out to about 12 cents per hour worked on a 24 hour shift). This type of experience makes it very difficult to look over contracts for new graduates first jobs. How are you supposed to know what a good deal is when some rejoiced for a $3.50 raise for a call shift?
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Financial Implications Of Impostor Syndrome
Most junior doctors (1-3 years of out practice) seem to fall into two broad categories. The first group is those that inflate their lifestyle. By extension, this group also drastically inflates their monthly expenses on wants and not needs. The first paycheck post residency can feel a bit like winning the lottery if you’re accustomed to the small raises in benefits as discussed above.
The other group is those doctors who feel like the paychecks are not quite real yet. I think many doctors who fall into this category have a degree of impostor syndrome. The result of this syndrome often times is over saving and not paying down debts.
I’m sure we have all heard of these types of doctors before. This type of doctors save up a $100,000 in a low yield savings account while sitting on $200,000 or more in debt at a high interest rate. Instead of taking a 3 month emergency fund and setting it aside while using the remainder to pay down debt, this type of doctor continues to hoard cash.
The end result of financial impostor syndrome in medicine usually ends in one of two ways. The high savings and high debt doctor (example number two) wakes up and ends up paying down debt, or transitions to the other type of doctor. The doctor who spends a lot from the beginning, gets accustomed to the big paychecks, and lets lifestyle inflation set in.
The transition from saver to spender often happens in the same way. A doctor sits on a large pile of cash and student debt. One day, the doctor decides he/she deserves a nice house and spends all his or her cash on a down payment for a “doctor” house. Instead of paying down debt, the doctor decides to use this money as leverage and takes out more debt.
How To Deal With The Transition
Know your worth.
Although junior doctors have less bargaining power than their experienced colleagues, do your research. Look into what the market rate is for your job and do not settle for less. If you’re inexperienced with contracts, hire a lawyer to review your employment agreement and provide yourself extra protection. Know what you are worth in your market financially.
While in residency read website geared towards personal finances, investing, and contract negotiation from your peers. Talk to those who have gone before you for advice and set expectations accordingly.
Try to avoid being a “penny wise and a pound foolish.” It feels good to see $100,000 in the bank account. However, if you are earning <1% interest on this money while paying a student loan at 6% interest or higher then you’re missing the big financial picture. Avoid being the type of doctor who wakes up from this syndrome to inflate their lifestyle and start buying more items or debt (houses/cars).
Find your comfort cash savings and invest the remainder or pay off debt. Build an emergency fund and cushion that will make you comfortable. Most people, including myself, advocate for a 3-6 month emergency fund. Anything beyond this is most likely overkill since in our profession we can make extra money by locum tenens work if a particular job ends.
Last but not least: Avoid lifestyle inflation as long as you possibly can while still taking time to enjoy the next chapter of your career!
Did you have a similar experience when getting your first paycheck as an attending?