Dear Incoming Medical Interns a.k.a Class of 2016
This is going to be a bit of a departure for me. I don’t usually write posts specific to doctors, because I think that most common sense matters are common sense for everyone. And maybe they are.
Maybe this could have read “Dear Class of 2016 Professionals” to encompass all the young South Africans due to graduate into relatively secure jobs, with good starting salaries and plenty of opportunities for future income growth.
But I’m more than a little concerned about you specifically, because I’m you a year from now. I know how you’re feeling. I know what you’re facing. And while I can’t really do much to help with those pesky final exams, I really do have a heart for your success and well-being.
I know you’ve probably already had several lectures on self-care and your emotional and psychological well-being. Everyone and their mentor has told you about how, as an example to the community and your patients, you need to preserve and improve your physical well-being. And of course there are all those lovely people who stop by annually to
suck your blood teach you about this upcoming new chapter in your financial story…
Here’s the thing, though. Nobody will ever care about these things more than you will. And nobody has more to gain from your misinformation than those who are supposedly “guiding” you financially. The insurance salespeople masquerading as financial advisors are there to collect as many of you soon-to-be-salaried Pokemon as possible, so that they can secure you to their commissioned products while you’re scared and confused. They will sell you not only products, but also a lifestyle–one designed to be as overwhelming as possible to ensure that you remain in a perpetual state of fear and dependence and never think to question their guidance. They will sell you a dream that keeps you shackled for the rest of what remains of your youth and then ride off into the sunset with a third of everything you so diligently squirreled away, just for the privelege of taking you out to dinner back when you were wide-eyed and ignorant. They will make very simple money matters seem esoteric and so, so complicated.
Nothing about money is esoteric and complicated.
At least at this stage in the game, when you probably aren’t going to be earning all that much during internship (relative to your expected future earnings), your negative net worth is plummeting with each month of added compound interest and you probably have little to nothing in the way of savings, you actually don’t need to be remixing old sound principles.
What are these principles?
We’ll get there, but first I want to acknowledge that if you come from a place of affluence and you have a guaranteed inheritance or support from family to inflate your lifestyle disproportionate to your expected income, you may think this doesn’t apply to you. But it does. To be independently wealthy and be able to maintain that wealth is something everyone should strive for, not just those of us born to impoverished or lower middle class homes, or those of us with staggering levels of educational debt. And if you’re coming from a background where money was scarce and fleeting, listen even closer. You don’t need to buy a Mercedes to purge yourself of the bad memories, you just need to work towards being financially savvy, then financially secure and ultimately financially independent.
SPEND LESS THAN YOU EARN
If personal finance were a cult, and there were a mantra, this would be half of it: Spend less than you earn. Try to earn well (great work so far, your degree of choice has put you on the right path) and then be a wierdo and don’t spend it all.
It will be tough. Your families will have expectations. Your friends who graduated ages ago from normal-length degrees will have plans. You will have a long list of deferred activities and expenses that you probably made without realising that there will be a long list of barriers to the lifestyle you imagined. There will be some defered priorities (like student debt and retirement savings), some expenses and some pitfalls that will threaten to overwhelm your income and leave you earning less than you spend. For example:
- Your debt burden is a mess. Sort that out first. You’re worse than broke if you have mountains of student debt, which is likely since Fees won’t have Fallen by the time you graduate. So pretend you’re still a student for the most part and focus most of those first salaries on making it rain on your student debt. You’ll thank yourself later.
- You’re behind on saving for retirement. Ugh, I know. Old people stuff. Remember, though, that you’ve likely been in University for a very long time. And if you plan to specialise, that’s more time with limited income that will impede your retirement savings. All in all, you’ll be a decade behind your peers. You have very little time on your side for savings to grow, so don’t waste any of it. If you have parents who have their financial houses in order, think about how fortunate you are not to have the burden of their retirements on your shoulders. And if your parents are anything like mine, you’ll understand why “have kids” isn’t the smartest retirement plan and why it’s best to start early and let compound interest do its thing…
- You’ll have a lot of professional expenses. I’m not talking about the silly things like designer clothing and German vehicles. Those have nothing to do with being a professional and everything to do with status. I’m talking about real professional expenses. Like various insurances including own-profession disability insurance. Like CPD expenses if you want to improve your ability to resus, for example (some internship sites don’t have the greatest training or resources, so it will be up to you to improve your skills on your own dime.)
- The snakes will be hot on your heels. “You’ll be a busy doctor, you won’t want to have to deal with/think about/manage xyz.” If you haven’t heard this a dozen times already, you will (or you did yourself a favor and listened selectively at Financial Year Day). This is how they get you (and your money). The key is to make you feel like a special snowflake (“you’re a doctor“) and convince you that basic tasks that everyone else does are beneath you (“busy…won’t want to have to deal with…”) There will be all sorts of individuals vying for your attention, your time and a cut of your finances. “Advisers” will sell you products that make no sense for you, but make plenty of sense for their pockets while you’re sleeping. Tax professionals will make taxes seem mysterious and painful, even though you’re unlikely to have more than a retirement annuity/pension fund and a medical aid to factor in during internship. Convenience services will convince you that you can’t possibly hope to be a good doctor and take care of your own home maintenance/dietary needs/excretory functions. And although you may want some of these different services, it’s unlikely that all of them will add any real value to your (quality of) life.
So how do I suggest you navigate the fact that you need to spend less than you earn, pay off debt with the surplus and then invest in your future, what with all of these challenges and/or priorities?
STRADDLE THE LINE
Although it’s easy to say you should continue to live like a student until your debt is paid off or that you should avoid outsourcing basic tasks, it may not always be practical. It’s also not entirely necessary.
Being a junior doctor does provide some small perks, in the sense that you really don’t have to scrimp and save that much compared to someone else in their first year of work, unless you’re doing so for specific goals or in line with specific values.
When I paid off my student debt a couple of months ago, I was suddenly faced with a large amount of my salary that was “mine” again. I knew I was going to redirect that portion to “catch up” contributions for my retirement savings, but even then I knew I’d have a little bit more wiggle room for “lifestyle”. I was technically free from the constraints necessitating my relatively extreme frugality. I could afford to let loose…
So did I run out and buy a Porsche on credit?* Nope.
I’m still getting around mostly by foot and by public transportation (bus, taxi) and my first car will be a second hand Toyota something or other once I raise enough capital.
“But you’re a doctor!” I hear you scream through the screen. “You don’t need to torture yourself so!”
And herein lies the secret: for me it’s not torture. What I drive doesn’t matter that much to me. Neither does what I wear. What I eat? Definitely. How much control I have over my own time? Absolutely. Supporting my family (within reason)? Totally.
So I straddle. I pick the things that are important to me, and then ruthlessly disregard the things that aren’t. So I get around town like I don’t make a particularly great living, but I save and invest like I’m rolling in the coins. There’s a freedom that comes with having a relatively secure job with decent pay: you can be frugal, but you can also be luxurious with it. I shop at Checkers and Shoprite for most of my groceries and cook all my meals at home. But I don’t squirm when my friends are having dinners at slightly more expensive places, because I have the freedom to straddle. In moderation, I can enjoy the occasional splurge while 90% of the time sticking to the plan. I don’t need to be 100% in either camp. There’s flexibility.
And so this is what I’d advise you to do if being uber frugal doesn’t appeal to you (thanks for asking* by the way, I’m flattered). The same way you’ll balance patient care with self-care. The same way you’ll vacillate between 36-hours of grueling non-stop work and the requisite hours of sleep to maintain a healthy, agile clinical mind…
Straddle the line between the extravagant but unrealistic doctor lifestyle and the life of the ordinary, hard-working South African you know yourself to be. Do your own taxes but outsource your housekeeping once a week. Or do your own housekeeping but outsource your taxes once a year. Or outsource neither but build your dream closet. Or be a completely frugal freakazoid but save enough to give yourself the option to take a year off or drop overtime work once it becomes optional. Or substitute your own poison. Just be mindful that you’re spending that above-average buffer in a way that actually brings you more joy/time/peace/satisfaction–but also be sure that your basic financial cards are in place prior.
Revisit this after your final exams–or after your first paycheck if it seems a little impersonal right now.
Or after your first “free” dinner with the finance guy.
Just make sure, whatever you do, he doesn’t convince you to take that damn investment-insurance hybrid product. Or talk you out of getting out of debt.
All my love and light for your financial future,
*PS: No shade to anyone who bought their Porsche on credit as a first year intern. My judgment is superficial because I know the pressures and I know the level of financial iliteracy among medical students is ridiculous. You’re still reading this, which means there’s still hope for you 😉
**This open letter was written with a friend (who will be class of 2017) in mind, in light of a conversation we had about how she can’t imagine being as frugal as I am when she finally earns a salary. Nazo ke!