Financial Literacy Should Be a Required Part of the Residency Training Curriculum
Financial literacy is the possession of the set of skills and knowledge that allows an individual to make informed and effective decisions with all of their financial resources. It is not emphasized in radiology training programs.
Here are 13 reasons why it should be:
- 76% of medical students graduate with a median $200,000 of debt, which plays a major role in personal financial problems, contributing to high rates of divorce, bankruptcy, burnout, and suicide among doctors.
- Throughout the course of their training, residents make important financial decisions without having the knowledge, attitudes, and skills required to successfully manage personal finances.
- In a survey of medical students, only 12% reported that they “somewhat” or “strongly agreed” to feeling competent managing their finances.
- A survey of residents and fellows (8.8% of whom were in radiology training) showed that trainees had low financial literacy, low investment-risk tolerance, high debt, and deficits in their financial preparedness. Most respondents, including those with children, lacked a will and only half had reviewed their credit report or credit score in the past year.
- Residents want financial literacy education.
- Radiologists start their career 10 years later than their age-matched peers, who have already begun buying homes and saving money for retirement. This “late start” makes it even more important for graduates to be armed with the information they need to overcome debt and begin building wealth.
- The American culture does not support talking about money – it is a “taboo” subject, so even financially literate friends, family or colleagues may not be approachable as sources of information.
- Financial literacy arms new graduates with the ability to understand the significance of language within job contracts (e.g., retirement plans, life/disability insurance policies, health insurance benefits) and be in a better position to negotiate optimal terms.
- Nearly every radiologist will receive a pitch at some point in their career to buy permanent life insurance (as opposed to term life insurance). Often, the medical school or radiology department will bring someone in to “advise” residents on buying life insurance, and that person’s goal is often to sell as much expensive insurance as she can. Residents, and often well-intended departments, may not recognize that the “advisor” is a sales person that does not have the best interests of her clients in mind. Among physicians that purchase whole life insurance, 3/4 of them regret their decision. Among the general population, over 80% of whole life insurance policies, a product designed to be held until death, are surrendered prior to death.
- As many as 80% of physicians need, want, and should use a financial planner or investment manager, either because they don’t know enough to manage their finances on their own or they don’t have/want to spend the time to do it themselves. Yet, they haven’t been taught how to get good advice at a fair price.
- A new graduate’s salary is 3-5 times or more than that of a resident’s salary, which jettisons them into a high tax bracket, without the benefit of basic income tax knowledge or even what constitutes a fair price to pay a tax preparer.
- American culture expects doctors to spend lavishly and if practicing radiologists (who serve as role models) buy expensive cars, houses, vacations, etc., residents may learn that this is acceptable financial behavior for every radiologist regardless of their level of indebtedness, personal expenses, and future financial needs. This goes back to the “taboo” nature of talking about money, which leads to radiologists “comparing their insides with other radiologists outsides.”
- Since money=time, ignorance in finance leads to mindless consumption of our most precious commodity, which is time.
Barriers to requiring financial literacy education
Residents are already overwhelmed with learning the clinical aspects of radiology in addition to the non-interpretive aspects of the Accreditation Council for Graduate Medical Education’s (ACGME) required curriculum. Adding financial literacy education would further increase the educational burden for both trainees and faculty.
Radiology faculty members are not accustomed to teaching finance to residents. They may not feel comfortable or competent to teach this material.
The ACGME should specifically include financial literacy as a required part of the residency curriculum
In my opinion…
Fulfilling any new educational requirement takes time and effort on the part of trainees and training programs. The alternative to not mandating financial literacy education is to allow the laissez-faire approach (i.e., unwillingness to get involved in or influence other people’s activities) to financial education to continue. Providing financial education will contribute to residents having a heightened sense of control over their future and greater short- and long-term well-being.
Coursework about the basics of personal financial planning should be incorporated into the medical school and residency curriculum. Topics should include but not be limited to the time value of money (effects of compound interest), investing, borrowing, budgeting, insurance, taxes, behavioral finance, retirement plans, estate planning, contract negotiation, and home buying. In addition to personal finance, business principles for running a successful private or academic practice could be included.
Further research into the needs of trainees, current educational programs, and long-term effectiveness of financial literacy education is needed.
Radiology societies should make financial literacy a formal part of meeting programs.
The ACGME should specifically include financial literacy as a required part of the residency curriculum.
What do you think? I welcome your feedback and additions to the list. There are more than 13 reasons why financial literacy should be a part of the residency training curriculum.