The term “wellness” has become increasingly popular in the general public at large, and within the medical community specifically. This is not surprising, as most physicians want to enjoy a level of well-being while working within a demanding profession. One layer of such well-being is financial – what one could call “financial fitness” or “financial wellness.” In this article, we will discuss the importance of financial wellness and how doctors can hope to achieve it.
Financial Wellness Defined
Before we discuss how physicians can achieve financial wellness, we should define. According to Vanguard, “Financial wellness means knowing you can live and retire on your terms. It’s about managing your day-to-day finances, protecting yourself from unexpected expenses, and saving for your short- and long-term goals.”[1]
Why Financial Wellness is Needed: The Prevalence of Physician Burnout
Confronted with demanding workloads and elevated stress levels, physicians often find that the demands of their profession leave little time to focus on their own personal well-being. These collective challenges can lead to burnout, a condition that can be characterized by emotional exhaustion, depersonalization, and a reduced sense of personal accomplishment.
Physician burnout is alarmingly prevalent in the medical community. Results from a 2022 study published in Mayo Clinic Proceedings show that 63% of physicians surveyed reported at least one symptom of burnout, an increase from 44% in 2017.[2] The high-stress environment surrounding the practice of medicine, which can include extended working hours, the emotional toll of patient care, and administrative burdens, significantly contributes to this phenomenon. The consequences of burnout can extend well beyond the doctor’s personal health concerns, to the point where the condition impacts the quality of patient care and increases the risk of medical errors.
Achieving Financial Wellness to Avoid Burnout
Below are five important actions a doctor can take to improve financial wellness and thereby reduce the likelihood of burnout.
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Develop a Comprehensive Wealth Management Plan
A multidisciplinary wealth management plan or financial model can become the cornerstone of your financial wellness, encompassing the critical tasks of assessing your current financial situation, setting realistic goals, and implementing well-structured strategies to achieve them. Such a plan or model often begins by creating a comprehensive budget that considers your income, expenses, and savings goals.
This proactive approach will empower you to gain control over your finances and make well-informed decisions regarding your spending and investments. Knowing that a comprehensive plan is in place helps to alleviate stress for the physician and foster overall financial wellness.
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Enlist the Help of Experienced Financial Advisors
Financial advisors can be a valuable resource for physicians, helping them navigate the complexities of wealth management and make sound financial decisions. Collaborating with seasoned financial advisors, especially those who specialize in serving physicians, can be a game-changer.
These professionals bring expertise in various areas, including investment management, tax optimization, asset protection, insurances, and estate planning, all of which are essential for high-net-worth individuals. A team of knowledgeable advisors can be instrumental in achieving financial wellness, as they can provide physicians with peace of mind knowing that their financial futures are in good hands.
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Start Planning for Retirement Early in Your Career
Planning for retirement is an integral component of financial wellness. Initiating the retirement planning process early in one’s career is paramount to harness the power of compound interest. For physicians, this is imperative as their lengthy educations and demanding careers often lead to delayed savings. Even during the years of student loan repayment, young physicians should consider contributions to tax-advantaged retirement accounts such as 401(k)s, IRAs, and HSAs.
Your financial advisor can assist you in determining the optimal retirement age, estimating your retirement income needs, and crafting a personalized retirement plan. Their guidance can also prove instrumental in effectively managing your investments during retirement, ensuring a sustainable income stream.
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Optimize Asset Management
Diversifying your investments across various asset classes is a fundamental principle for mitigating risk while maximizing returns. A well-diversified portfolio helps minimize the effects of market volatility, thereby avoiding the stress caused by dramatic gains and losses in a few individual investments. For physicians, a diversification strategy that spreads investments across different asset classes, industries, and geographic regions can help protect wealth from market downturns and ensure long-term portfolio stability and financial wellness.
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Understand the Importance of Insurance
Insurance plays a pivotal role in financial planning, especially for physicians. The potential financial repercussions of a malpractice claim, disability, or premature death can be devastating, posing a significant threat to your wealth and assets. Ample coverage in professional liability, disability, and life insurance policies is essential to protect yourself and your family and safeguard the value of your future income, along with the wealth you have earned thus far.
Your advisor team should include an insurance specialist with a comprehensive understanding of the unique risks faced by physicians. Their expertise can prove invaluable in navigating the complexities of malpractice, disability and life insurance, ensuring that you have encompassing, yet cost-efficient, coverage tailored to your specialty, your family and your practice.
Learn more: Everything Physicians Need to Know About Life Insurance
Beyond Finance: Strive for Work-Life Balance
While this article is focused on financial wellness, we feel it imperative to at least mention work-life balance. This typically involves setting boundaries between professional responsibilities and personal life, as well as prioritizing self-care and allocating dedicated time for activities that bring you joy outside of work.
Engaging in activities outside the medical profession is vital for mental and emotional well-being. Whether it’s sports, arts, travel, or spending time with family and friends, these activities provide a necessary diversion from work-related stress, fostering a healthier lifestyle.
Conclusion
Achieving and maintaining financial wellness is a multifaceted challenge for physicians. The task requires a proactive approach that incorporates comprehensive wealth management, early retirement planning, diversification in asset management, and securing proper insurance coverages. Investing in financial wellness today can enable you to pave the way to a more fulfilling and sustainable career as a physician, while also positively impacting your patients and loved ones. In the pursuit of financial wellness, it is imperative to seek guidance from financial advisors who possess a profound understanding of the unique needs of physicians, ensuring that your decisions are well-informed and aligned with your long-term and short-term goals.
[1] https://ownyourfuture.vanguard.com/content/en/learn/financial-planning/what-is-financial-wellness-why-important.html
[2] https://www.nytimes.com/2022/09/29/health/doctor-burnout-pandemic.html