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10 Financial Mistakes Physicians Should Avoid

Writer's picture: Betsy at RVPFBetsy at RVPF

Updated: Jan 29

No one ever told you that managing money as a physician would be one of the hardest parts of the job. But as with many things in life, it’s not always as straightforward as it seems. To help you navigate the financial maze, here are ten common mistakes many physicians make when it comes to managing their wealth.


No one ever told you that managing money as a physician would be one of the hardest parts of the job.
No one ever told you that managing money as a physician would be one of the hardest parts of the job.

1) Not Maximizing Retirement Contributions

Physician families often miss out on the full potential of retirement accounts like 401(k)s, 403(b)s, and IRAs. Contribution limits change every year, and in 2020, that meant $19,500 to a 401(k) and $6,000 to an IRA per spouse. Many physicians assume their income is too high for an IRA, but the Backdoor Roth IRA is a game-changer. If you're not contributing to both, you're leaving valuable tax-protected growth on the table!


2) Relying Too Much on Bloggers and Financial Celebrities

It’s tempting to take financial advice from bloggers and influencers who claim to have the secret to wealth. While it's good to do your own research, beware of the "get-rich-quick" promises. These financial celebrities often have something to gain—whether through book sales or advertising. Without the legal responsibility to provide proper advice, their guidance might not be tailored to your unique situation.


3) Taking a Passive Approach to Finances

A 2019 Gallup poll found that only about half of married couples equally share decisions about saving and investing, and when one person takes charge, it's often a man. Women physicians can benefit greatly by actively participating in financial decisions, not just rubber-stamping plans suggested by a spouse or advisor. Being informed and involved can help you better understand and manage your financial goals.


4) Holding Excessive Cash

It’s easy to let cash pile up in checking or savings accounts, especially when the thought of investing feels intimidating. But once you have enough cash to cover 3-6 months of expenses for emergencies, it's time to focus on growing your wealth through investing. The longer that cash just sits there, the less it's working for you.


5) Overlooking Disability Insurance

For many physicians, the ability to earn an income is their largest asset, and yet many fail to secure disability insurance. Without it, your income—and your future—could be at risk. Don't overlook this crucial step in protecting your livelihood, especially in the early and mid stages of your career.


6) Falling for Whole Life Insurance

Whole life insurance can be a useful tool in certain situations, but it’s often oversold, especially by agents with multiple interests (selling insurance, offering financial plans, and investing). If their plan seems too good to be true or "free," it probably isn't worth much. Stick with fee-only advisors who follow fiduciary standards and who will put your best interests first.


7) Neglecting Tax Planning

Taxes can be overwhelming, and online tax services make it easy to file without truly understanding the code behind it. But without a solid annual tax plan, you could be leaving significant tax breaks on the table. Tax planning is essential for physicians to minimize liabilities and maximize savings.


8) Carrying Debt for Too Long

Medical school loans and large mortgages are common for many physicians, but this comfort with debt can lead to long-term financial stress. Tackling debt head-on, avoiding lifestyle creep, and living within your means can help you pay off these obligations faster and free up resources for wealth-building.


9) Mismanaging Windfalls

Bonuses, tax refunds, inheritances, and other windfalls are opportunities to boost your financial health—but they can also be a temptation to splurge. Spend this money mindfully by aligning it with your financial goals, rather than blowing it on short-term wants. If you haven’t already, create a financial mission statement to help guide these decisions.


10) Not Having a Generosity Plan

Many physicians enter medicine to make a difference, but generosity isn't always intentional. Deliberate giving—whether to charity or causes that resonate with you—can bring unexpected purpose and fulfillment to your life. A thoughtful generosity plan can shift your focus from "never enough" to an abundant mindset.


By avoiding these common pitfalls, you can set yourself up for a more secure and fulfilling financial future. It’s never too late to make smarter financial choices and take control of your wealth.





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