Financial lessons doctors learned about money management

Healthcare providers have a reputation for being healthy earners. It’s true that many doctors, dentists and specialists earn more than twice the national income average.¹ But while the money may seem good, doctors, dentists and other professionals in the field can have unique financial challenges. Many come out of school with hundreds of thousands of dollars in student loans, and quickly find themselves investing in and running their own practices with large overhead. While they've spent years studying anatomy textbooks, few may have dedicated time to learning how to manage their finances or invest.

The TD Wealth Behavioural Finance Report, an ongoing study from TD Wealth² surveyed health care professionals and found that they may have ground to make up in terms of financial literacy — women in particular. They are 24% less likely to score highly on a financial literacy quiz than men in the same profession. Moreover, most doctors may not receive a weekly paycheque and more than twice as many would describe their income as volatile or irregular, compared to non-medical professionals. Some female health professionals make up for that gap by working with an advisor: Women in healthcare are 46% more likely to have a plan with a financial professional than those in non-medical professions. They are also more likely to say that their advisor is worth every penny paid in fees.

We asked four female healthcare practitioners to share with us a financial lesson they’ve gained from experience.

1. Some financial partners may relate better than others

According to one 37-year-old anesthesiologist, she believes a wealth advisor who understands the health care industry can help guide them through industry-specific issues — like knowing when is the best time to incorporate, how to structure debt and income, and offering tax considerations for professional corporations.

2. Follow your passion

One Montreal-based dental surgeon we spoke with said she was glad she decided to open her own clinic, despite suggestions from family and friends she join an existing practice. She said owning her own business has meant growing her management and marketing skills. Having recently begun working with an advisor, she says she’s looking to learn ways to grow her business, including finding tax-efficient ways to give to charity.

3. Manage debt effectively

According to one Toronto-based geriatrician we spoke with, medical professionals may have a unique perspective on debt: because many start their careers with little money and lots of debt but quickly find they have lots of money and…still lots of debt. She describes spending her early years fretting about and chipping away at her student loans. Through her advisor, she said she’s found a more manageable approach to debt, one that leaves room to invest and helps grow her net value at the same time.

4. Start saving early

When doctors finish their residency, many will experience a big jump in income. According to one Toronto-based physician we spoke with, that can be exciting, but as the years progress, kids, cars, holidays, and homes come into the picture. She wishes she had saved more in the early years when her priorities were simpler. That said, she’s thankful to have a wealth advisor who can help her focus on changing priorities, including connecting her with services she may not have known she’d need, like estate planning and investment advice.