By Katherine Vessenes, JD, CFP®
Have you ever wondered how you could make your financial life simpler, easier, and maybe even get it on autopilot?
If so, you’ll want to listen to this week’s episode of More Money Minutes for Doctors. Katherine Vessenes, CEO and Founder of MD Financial Advisors continues our series of Quick Financial Tips from Your Colleagues with special guest, Dr. Brian Clyne. Follow along with the transcript below.
The following transcript has been edited for clarity and grammar.
Katherine: Have you ever wondered how you could make your financial life simpler, easier, and maybe even put it on autopilot? Well, today we’re doing a segment called "Quick Financial Tips from Your Colleagues." I have a very special guest with me here today, one of our beloved clients, Dr. Brian Clyne. Welcome, Dr. Clyne.
Dr. Clyne: Thank you so much, Katherine. It’s a pleasure to be here.
Katherine: Welcome back to all our listeners to More Money Minutes for Doctors. I’m your host, Katherine Vessenes, CEO and founder of MD Financial Advisors. Before we get started, if you have any questions, please reach out to us at info@mdfinancialadvisors.com.
K: Now Brian, before we get into your quick tips, our friends at the SEC have certain things they want me to ask you. They want to know: Did I pay you anything of material value or even a small amount of money, to get you to record this podcast today?
Dr. Clyne: No, you didn’t.
Katherine: I didn’t pay you anything; you didn't pay me anything. I just appreciate you doing this as a public service to your fellow colleagues.
Dr. Clyne: Well, thanks for the opportunity.
Katherine: To start, give us a little bit of your background. I know you’ve been in emergency medicine for—is it really 25 years? You don’t look like you’ve been doing this for 25 years!
Dr. Clyne: Yes, I’ve been practicing emergency medicine for 25 years since residency. My practice is in an academic environment, so I’ve been very involved in medical education, career development, and some research.
Katherine: That’s wonderful. We’re going to be talking a lot about tips for younger doctors today, and you deal with them every day in your work. I also want to mention that we’ve been working together for eight years now, since 2017.
Dr. Clyne: I know, it’s amazing. And you know, you haven't aged a bit either!
Katherine: All right, so tell us: what are two money tips you would give to younger doctors?
Dr. Clyne: Okay. I would say for the newly graduated—someone fresh out of residency or fellowship and starting their professional career—if you don’t have a background or expertise in finance or a loved one who is in that space and deeply committed to helping you, then I think getting professional help is really important. I realize it’s going to cost, but getting good advice early on in your career is going to be really, really valuable. I think there's a notion that physicians value autonomy more than anything else, and there's this notion of being fiercely independent. Some physicians think that their knowledge in one realm transfers to another, but it's also pretty well known that in general, physicians aren't great with finances. So, my first tip would be to seek out professional financial advising help.
Dr. C: My second would be to start early and maximize your inputs. An advisor can help you work through that while maximizing early contributions to your retirement. This is something I learned from you: to the extent possible, put things in the "tax-free bucket".
Dr. C: I guess another thing that I've seen happen a few times is there's a lot of delayed gratification in healthcare. You do this kind of prolonged subjugation training you get paid later and then you come out you're like ‘Yeah I'm going to buy that Jeep because I deserve it’. If you can, hold off on any of those big reward purchases. I've seen people turn upside down pretty quickly for the big house and the big car because they feel like ‘ohh I've arrived’ and suddenly they're working to pay their bills as opposed to saving.
K: They’re house poor.
Dr. C: Yeah, you know the terms better than I.
K: I just have to comment on some of those things. I agree. I think one of the issues with doctors is you were always the smartest kid in the classroom, right? And so, you grew up thinking ‘well, I can handle this financial stuff’. I think that mindset actually hurts doctors a lot. They don't know what they don't know. I remember this one case in particular, they had done such a poor job of managing their finances. I estimated they were going to spend $2,000,000 in additional taxes in retirement that they wouldn't have had to do if they had planned better. That to me was horrifying. Thinking about $2,000,000 in extra taxes and what they could have done if they had that money. They could’ve retired!
K: I totally agree with you that the time to get that big house and whatever new car is in, is not right away. Put that off; rent for a couple years. Basically, I say for the first couple years after training, live like a resident.
Dr. C: Yeah
K: Get those credit card bills paid off. Get your emergency fund set up. Start saving and if you can live your entire career at less than what you make, you're going to be in great shape.
Dr. C: I came out of residency with this pretty substantial amount of debt for the time and age. I mean it was 25 or 26 years ago, and I had close to $200,000 in debt. Today a lot of people are coming out with $300,000 or $400,000 and you look at that and you think ‘how am I ever going to chip away at that? How is that even possible?’. It's daunting and sometimes people are like ‘well, I owe so much already, I might as well just keep digging a deeper hole’, but that's one piece of advice to avoid. It speaks to this idea of establishing a long-term plan. It’s the small things over time; they make a huge difference.
K: Yes, definitely! Do you have two things that you're doing that are making your financial life easier, simpler, or less stressful?
Dr. C: Yes, we are automating and maximizing all of our pre-tax things, so we don't even miss them. The organization I work for has a pretty generous retirement benefit and we've taken advantage of that and maximized it. If you have the opportunity to maximize your benefits plan, you should.
Dr. C: One of the other things that I'm doing is spending money where my values are. This is my personal philosophy. The two things we spend money on are education and experiences. Buying the fanciest clothes or that watch is probably going to have a short-term dopamine hit for you, but investing in either your children or partner or family’s education is going to yield longer term benefits.
Dr. C: The broad theme there is thinking long term. The experiences that you have with your family or your partner are going to have more of an impact than the shiny new thing that costs a lot of money.
K: You said two very important things. One is getting your savings plan on autopilot.
Dr. C: Yeah
K: In most client cases, if I can get them to save X amount a month, it just automatically goes out every month. They don't miss it. They learn to live on what's left over and they never have to worry about savings because it's just on autopilot. You're already doing that with your comments about maximizing your work plans.
Dr. C: Yeah
K: I read a study a while back that said that people actually value experiences more than they do the material objects. Which I think gets exactly to your other point. One of the things I try to do with clients is ‘What are your big goals?’. Most doctors make a lot of money, but it is not an unlimited amount of money. We don't have any doctors that could spend absolutely everything. They cannot live like Jeff Bezos. I had a case recently where this lovely doctor was thinking about buying a particular thing that she thought might be helpful for her grown daughters and I'm like ‘Okay, you could do that, but you told me your highest priorities were making sure you had money to retire and that you got out of debt. How does this line up with those top two goals?’ and she was completely shocked. This doesn't line up at all! So, to your point, I think it's very important to think through what your top two or three goals are. In your case it's educating your daughters and having those great experiences. It was easier for you to go ‘No, we don't need the shiny object, because it doesn't fit in with our top two goals’.
Dr. C: Yeah, exactly. I mentioned my own personal experience with educational debt. It was a priority for my wife and I not to have that happen with our kids. We're still working through that. We have one in college now and one out of college, but to the extent we can, we’d like to have them start life with a little bit of a cleaner slate than we did. That was an important value. We underestimated the punishing level of tuition, so I'm not sure we could, even with all the discipline in the world, have saved for what ended up being the costs.
K: Yeah, I just did a plan this morning for a client she wanted to do 90,000 a year
Dr. C: Wow!
K: I know! For some clients, it's very important, and we want to help them reach that goal. So, my last question, is there anything you wish you had done differently?
Dr. C: My wife and I, when we first moved to this city that we live in, we learned that it was great for so many reasons, but the public school system wasn't performing well. We very early on kind of got into this flow or experience with independent schools and then it was hard to get out of that experience. Anyway, the short answer is if I were to do anything differently, as much as I value the importance of education, there were some points during the last 20 years where it probably didn't make a ton of sense to be putting that kind of money into 4th grade or high school at these independent schools. I probably would have had to rethink where we lived, and there's a lot of things to consider. I guess I would spend a little more time thinking about the education system in my town, and whether the public system is going to serve my kids as well.
K: I totally agree with you. Sometimes it costs more to live in those neighborhoods where they've got a really good public system, but I think it can still be cheaper than actually paying for private school, particularly when you have two or three kids.
Dr. C: Exactly! That’s something that we thought a lot about and we never really got enough momentum to make a significant change, but that could have made a difference. If I was a real pragmatist, it would have been a clear ‘Okay, we're going to live in this town. We're going to buy this kind of house. We're going into this school system.’. But it ran away from us. I don't know if it's a regret, but it's something that I'm very aware of that we've probably overspent on.
Dr. C: I wanted to make a point before about physicians. You're right that very few physicians have the kind of money to act like nothing matters. That they can pay the $500,000 tuition for private college. On the other side, very few physicians are on the stratum where they're going to get full financial aid. The majority of us occupy that sweet spot for colleges and universities where you're a full freight family. Fair or not fair. I think that's something that a lot of physicians maybe don't recognize or it's just something that they have to reconcile, but just thinking more about education, there's a good chance that a lot of your clients are going to be fully paying the maximum. It's the runaway cost of education these days. It's hard to imagine what it's going to look like in 20 years.
K: Yeah, it's pretty appalling. I've done college plans for that brand new baby and honestly, when you start adding that inflation factor (that's higher than regular inflation), it's not unusual to think they may need $1,000,000, if their goal is they don't have any debt.
Dr. C: Right, right.
K: I think there's just different ways we have to think about this. Is that really a good goal? Are there some things they can do to get some merit-based aid? There are different ways to approach this problem.
K: I love that you only have one thing that you wish that you had done differently. I could do a whole podcast and all the things I’d do differently, which is part of the reason I'm in this field. I don't want clients making some of the mistakes I did.
Dr. C: Well, you know you talked about you don't know what you don't know. I'm in that space right now, so there's probably so many things I should have said that I'm not even aware of.
K: No, no! I'm so grateful, Brian, that you spent the time with us today and I hope our listeners can really enjoy getting all this great information from you. Thank you.
Dr. C: I appreciate it. Thank you so much, Katherine.
K: In closing here today, remember if you have any other questions, you can e-mail us at info@mdfinancialadvisors.com. Remember only you can take care of you, so plan protect and prosper.
Katherine Vessenes, JD, CFP®, is the founder and CEO of MD Financial Advisors who serve 600 doctors from Hawaii to New York. An experienced Financial Advisor, Attorney, Certified Financial Planner®, author and speaker, she is devoted to bringing ethical advice to physicians and dentists. She can be reached at Katherine@mdfinancialadvisors.com.
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