Among the many challenges physicians face during their careers is how to manage finances. Ideally, physicians will both maximize the amount of earnings they maintain and know how to successfully invest some of it. This goal can be achieved with a few key initiatives.

For example, you do not want to wait until you are middle-aged to start saving. Writer Jonathan Ford Hughes notes that although many physicians start out with a budget, this practice tends to wane as salaries increase. No matter how large a salary one may earn, it is always wise to know where earnings are going.

Seeking out the assistance of a financial advisor early in one’s career is most effective, according to W. Ben Utley, a professional medical financial advisor. Investing writer Alana Benson suggests securing a financial advisor who is a fiduciary. This ensures that the advisor has an ethical duty to suggest investment options that are in a physician’s best interest.

Another crucial error made by many physicians is not establishing an emergency fund. Consider the large number of canceled procedures, missed appointments, and decreased patient volume that occurred due to the COVID-19 pandemic in 2020 and 2021. Physicians with established emergency funds were better equipped to manage these drastic changes than those without a reliable financial source. A savings of around 3-6 months’ worth of expenses in cash is likely what one would need in a solid emergency fund, according to Hughes.

An additional financial error often made by physicians is the assumption that their retirement is covered by any retirement accounts offered by their employers. While employee offerings like a 401(k) may indeed cover retirement, that is by no means a guarantee. Hughes suggests investing in additional areas, like real estate, to provide more cushioning. Utley suggests that physicians hold on to more of their earnings by practicing some tax-saving basics like opening a healthcare savings account, which provides a triple tax break via contribution deduction, tax-deferred growth, and no taxes paid on a qualified account withdrawal.