Finances in Medical School

For this blog post, I am breaking from my pattern of discussing medicine to talk about something that I feel is equally important - and that is personal finance. Medical school is extremely expensive, so I knew long before going to medical school that gaining financial literacy and developing rock-solid habits with money would be crucial to my reaching my long-term goals. In this post, I will share some of the lessons I have learned regarding wealth. It’s really not about getting rich. It’s about developing character traits that lead to freedom; attributes such as discipline to delay gratification, patience to prepare for the future, and humility to live within your means. 

As with most things, success hinges on “starting with the end in mind”. My goal regarding finances is to reach complete financial freedom by age 50 (or earlier). To me, that means having assets sufficient to bring in enough passive income to sustain my family indefinitely. At that point, work will no longer be about making enough to pay the bills - it will be to pursue whatever causes I deem the most rewarding and important. I see it as a way to be an instrument in the Lord’s hands, able to go where He would have me go and do what He would have me do, unhindered by significant financial constraints. 

That is my long-term goal. Everyone’s goals will differ based on individual circumstances. I want you to take a moment and think about your long-term financial goals. If you already have goals and a written plan to achieve them, great! If you don’t, I encourage you to ponder and pray about it. Your financial well-being is something that God cares about deeply. If it is a topic that elicits stress and frustration, I encourage you to study resources put out by the Church of Jesus Christ of Latter-day Saints on personal finance. They have been pivotal in my financial education. A link to the church's course is listed below. 

Personal Finances for Self-Reliance Workbook 

Back to my story. With a long-term financial goal in mind, I wish I could say that I made a simple three-step plan, stuck with it, and I’m well on my way to financial independence. My journey has been much more convoluted than that. Rather than share my “plan”, I will share a few principles I’ve learned along the way. 

Principle 1) Create a Budget

Subconsciously, I used to view budgeting as a necessary evil. I reasoned I would only use a budget until I had enough money to not need a budget anymore. However, after reading several biographies of exceptionally successful individuals, I realized that I was approaching budgeting with the wrong mindset. Take Warren Buffet for example. He is arguably the best investor in modern history with a current net worth topping 144 billion USD. One might think that with that much money, recording the purchase of something small like a $10 hamburger would be more effort than it’s worth. But I was surprised to learn that Warren Buffet has meticulously tracked every penny throughout his entire life. 

Another example is the Church of Jesus Christ of Latter-day Saints. As a multi-hundred billion dollar organization, one might think that it is beyond counting pennies. My current calling (i.e. volunteer position) is Ward Clerk, and one of my duties is to oversee expenditures for our congregation. We track every penny. If there is a discrepancy of even a few cents, it will be discovered during audits and we will track down the information we need to balance the sheets. 

It seems counterintuitive to spend significant time creating a budget and tracking trivial amounts of money. If anything, wouldn’t that time be better spent working to earn more money? The value of having a budget is not necessarily in the few dollars saved by depriving oneself. Knowing how much money is going in and out every month is the first step to living within one’s means, but more importantly, the character traits developed from integrity with money spill over into other aspects of life. Making and sticking to a budget is an act of willpower that fosters discipline and humility.

Additionally, and this is crucial, one must stop thinking of every dollar as “just a dollar”. A dollar saved is NOT a dollar earned. A dollar saved is a dollar that can be invested. Over the course of a career, just $150 invested today in an S&P 500 mutual fund has the potential to grow to more than $8000. If one were to continue making this monthly contribution for forty years, they would retire a millionaire. Furthermore, investing in other things, such as a business startup or one’s education could yield markedly higher returns.

Principle 2) Make Frugality, Saving, and Investing a Game

While sheer discipline can motivate saving in the short term, good financial habits are more likely to stick with an attitude of playfulness. What does this look like? For me, I have always loved a good challenge, so I thrive on making a budget and sticking to it. I also regularly check the balance of my investment accounts, and I enjoy rewarding myself for staying within my budget by depositing a few more dollars. For me, this is sufficient motivation to pass up eating out for lunch or buying a snack at the vending machine. Over time, watching the value of my portfolio grow has become a reflection to me of my discipline, which is very rewarding. Of note, my investment portfolio is still relatively small. I am still in school after all. But I hold fast to the notion that the steady accumulation of marginal gains will lead to significant outcomes.

Making budgeting a personal challenge and rewarding myself with small deposits in an investment account is a lot of fun for me. But maybe I am an oddball. Whatever your financial goals are, I challenge you to find a way to make it into a game; involve your spouse/partner, family, or friends; and consider setting up a reward system that is directly tied to your goals.

As a medical side note, the sensation of reward is mediated in large part by a neurotransmitter called dopamine. One part of the brain where it is released is the nucleus accumbens, and its release is mostly in anticipation of rewarding stimuli and plays a huge role in motivation and desire. Therefore, it is not reaching a goal but working towards it that is often the most rewarding part of the journey. It is for this reason that I believe working toward your financial goals can be a lot of fun.

Principle 3) Be Creative and Resilient

No financial plan is perfect, and despite one’s best efforts, life is going to happen. The car’s windshield will break, there will be unexpected bills, or your phone will receive water damage from your creative toddler. When I started medical school, the most affordable housing we could find pushed our family $500 over the monthly limit that I could withdraw in student loans for living expenses. Despite our best efforts to live frugally, there was no way for us to live within our budget. Working an extra job during medical is highly discouraged, and Emily and I were committed to not taking on extra debt from sources like credit cards. Looking at my options, I found I could make around $500 per month donating plasma, and the time spent hooked up to the machine could be used for studying. Later, I found an extracurricular research opportunity that paid a small stipend. Additionally, we persistently looked for more affordable housing and now live at a place that is well within our means. Looking at challenges as opportunities for innovation has brought us back into the net positive each month.

What is the source of creativity and resilience in relation to personal finance? I spent several days pondering this question. Having a goal is important; it is conducive to proactively trying to change one’s situation and move closer to one’s objective. In my experience, however, the ultimate source of inspiration is from God. As I mentioned earlier, I have a strong conviction that God cares deeply about our righteous goals and desires. He cares about our financial goals as they relate to providing for our families and serving others. Sharing our goals with Him through prayer and listening for His guiding influence is a crucial first step. But if we are serious about wanting God’s guiding hand in our lives, then we must exercise faith.

There is a promise in the Bible, in Malachi 3:10, that states “Bring ye all the tithes into the storehouse, that there may be meat in mine house, and prove me now herewith, saith the Lord of hosts, if I will not open you the windows of heaven, and pour you out a blessing, that there shall not be room enough to receive it.” I have always done my best to give a 10% tithe to the Lord. This is my way of showing that I trust Him more than I trust myself. There have been several instances where I have clearly seen God’s hand in my life, guiding and directing me in ways beyond my own capacity. I attribute this directly to my small but purposeful efforts to show faith. Ultimately, Heavenly Father cares most about our growth because He sees our potential. Regardless of our circumstances, we cannot go wrong by turning to God for guidance and direction because He is always on our side and will never abandon us. 

Achieving financial goals is about far more than getting rich. By viewing finances through the lens of stewardship, not only do we deepen our character but we lay the foundation for financial freedom that allows us to serve and fulfill higher purposes. There’s a saying that goes like this, “Pray like it’s all up to the Lord, and get up and work like it’s all up to you.” With this mantra, no matter the end result, your efforts will foster character development that is infinitely more valuable than any amount of money.