“What’s the good life? My definition is a life free from financial worries, a career where you make a real contribution to society, a few luxuries along the way, the ability to help others financially throughout your life, and a comfortable retirement at a time of your choosing.”
– Dr. James Dahle, author of The White Coat Investor
Despite all of the training we receive as medical students and residents – anatomy, physiology, pharmacology, pathology, BLS, ACLS, ATLS, medical ethics, research – residents and physicians are typically in the dark about the the world of personal finance and investing. Physicians are already, by virtue of relatively high return on our educational investment and excellent job security, in a great position to grow wealth provided they are given the advice, understanding, and tools to effectively manage their personal finances and investments. Dr. James Dahle (@WCInvestor), a board-certified EM physician, wrote The White Coat Investor to provide the basic understanding about wealth management that physicians can use to turn our passion into what he calls “the good life.” While the book focuses on all physicians, regardless of specialty, his background in EM makes it especially applicable to EM residents and physicians (and even interested medical students).
Synopsis: How to Find the Good Life
No one teaches you how to think about money in medical school or residency. Yet, from the moment you start practicing, you must think about it. – Atul Gawande
Dr. Dahle graduated from medical school in 2003. In just 10 years, with a stay-at-home wife and 3 children, he became a millionaire. He noted that many of his medical colleagues were uneducated about the ideal ways to manage their salaries, and thus his blog The White Coat Investor was born. Throughout the book, Dahle’s narrative is interspersed with advice on loan repayment, asset protection, and estate planning; making a sometimes dry subject not only tolerable, but fun. Several anecdotes and specifically calculated examples give his advice a real foothold in the reader’s life.
In the first chapter, entitled, “The Big Squeeze,” Dahle explains that, in the face of rising tuition, lower reimbursement, and increasing regulations, financial literacy is more important than ever. Physicians spend a decade training during prime income-earning years. They often accumulate hundreds of thousands of dollars in debt, and they commonly have an indulgence reaction to an attending salary after years of delayed gratification. They are targeted by less-than-efficient financial professionals due to their profession. They are expected by society to live to a higher standard, and due to their basic benevolent nature tend to donate more to charities. Lastly, many physicians feel they don’t have the time to delve deeply into their finances. Dahle elucidates that when accounting for inflation, physicians are making 28% less than they were 20 years ago and paying 4x as much for their education relative to inflation. Simply having a doctorate does not guarantee financial success.
In the following chapters, he creates a map for converting high income to high wealth with specific examples. Here are a few of the most salient points and recommendations:
Despite relatively large salaries, physicians tend towards being UAWs (under accumulators of wealth). You can become a PAW (prodigious accumulator of wealth) by following the above guidelines and reading the later chapters on real estate investing, obtaining reliable financial advice, asset protection, estate planning, income taxes, and choosing a business structure. Dahle recommends that you read one book about finance each year and consider it CFE (continuing financial education). This will improve financial literacy and make obtaining your investing goals more enjoyable.
Physicians typically enter the profession out of an innate desire to help others. Dahle suggests that one major obstacle to physician financial acumen is that money was never the initial motivating factor. It is for this reason that physicians are often embarrassed to speak about money and may even feel the need to apologize for having it. Fine details of wealth management are consequently left to others who may take advantage of such naivety. This, in combination with busy resident and attending work loads with little free time to read up on this complex topic, can cause the world of personal finance to feel overwhelming.
Dahle reframes the conversation concerning wealth in a powerful way. He points out that financial stability can open the door to your dream job. You can work on research, travel, volunteer in a free clinic, or just have the freedom to speak up when you feel that departmental changes are not in the best interest of patients. You can also take greater risks when it comes to venturing outside of emergency medicine to pursue passions of entrepreneurship or administration. And, when it is time to retire from the specialty, you can do so autonomously at the time of your choosing.
He states “money might not bring happiness, but having been both rich and poor, I definitely prefer rich.” He is able to live a life where there are no arguments over money and vacations are limited primarily by time, not finances. His children are able to participate in activities of their choosing, and he can engage in hobbies without guilt. His financial acumen allows him to support his loved ones as well as his favorite charitable causes.
Dahle provides a clear and common sense navigation of the world of finance that is digestible for the busy resident. He delivers compelling and feasible explanations for becoming a millionaire by forty. After reading this book, you will likely be inspired to learn more; links are provided at the end of each chapter to suggested deeper reading. Dahle offers more in-depth information on his very successful blog. This book ultimately reveals that improving your financial literacy can be enjoyable, and that optimizing personal finance and investment practices is less about the accumulation of dollars and more about ensuring the opportunity to accrue the experiences you desire for personal fulfillment – “The good life.”
- What kind of retirement savings options are available to you at your institution? Are you actively using them?
- How does fellowship change financial prospects and what actions can one take to improve financial well-being during additional training?
- Practicing physicians, how did you live immediately following residency? Where did your loan repayment and retirement savings fall on your list of priorities following residency?
- What are the first steps one should take towards improving their financial situation?
- What is the most effective way to spend a sign on bonus/pay checks?
Google Hangout Discussion featuring the ALiEM Chief Resident Incubator
Google Hangout Discussion Participants
Author: Dr. James M. Dahle (@WCInvestor)
- Dr. Adaira Chou (@AllaroundDoc)
- Dr. Brandan Devine (@tarheelmd)
- Dr. Melody Glenn
- Dr. Emily Gordon (@dregorr)
- Dr. Alex Harding (@aleharmd)
- Dr. Maggie Sheehy (@mksheehy)
* Disclaimer: We have no affiliations financial or otherwise with the authors, references or hyperlinks listed, the books, or Amazon.
Edited by Dr. Nikita Joshi and Dr. Matt Klein