Don’t Make These Super Common 5 Expensive Mistakes During Medical School

Fools say that they learn by experience. I prefer to profit by others’ experience. – Otto von Bismarck

I’m sure there are things you regret:

Bringing kids to the grocery store. Not double-checking to see if you tucked in your shirt into your skirt properly. Not getting a cart once you entered Target.

Financial decisions are big regrets. We all make them, including yours truly. (See tip #1 below for the biggest financial mistake the household made.)

It’s no wonder we make them. Medical schools don’t do a great job teaching financial literacy. Residencies don’t, either. You’re expected to know which student loan payment plan to be on, how to invest, and whether to pay down debt or invest over the other.

It’s a lot to navigate.

I’ve been there before and I’ve had to figure it out for my family. That’s why I’m obsessed with helping you as soon as possible. The earlier in your medical journey you learn about finances, the better.

I share some of the biggest money mistakes that medical students make.

(Btw I left out student loan management mistakes because it’s such a monstrously large topic beyond this scope. For more on that, I am writing a separate article in the future.)

Let’s dive in!

Don’t Make These 5 Expensive Mistakes During Medical School

Mistake #1: Not contributing to a Spousal IRA

Here are two common instances where a medical family is on a single income:

  • You are the breadwinner and putting your DrSpouse through school (your DrSpouse = no income)
  • You are a SAHM (you = no income)

In either of these cases, you can contribute $6000 (limit in 2020) to the working spouse’s IRA, and another $6000 to the non-working spouse’s Spousal IRA. All that’s needed is that ONE of you earn enough income to contribute to them.

Read: How To Save For Retirement When On A Single Income

While my husband was in medical school, I was the breadwinner and contributed to an IRA for me, but didn’t contribute to an IRA for him. This four-year mistake cost us a potential six figures by age 70. This was the biggest financial mistake so far in our lives 😩

Mistake #2: Taking out too much student loans

Your medical school will offer you the max number in loans. They don’t care how much you take out.

You’re not obligated to take out the max. And you shouldn’t. You may not be thinking about it now, but you will have to pay back those loans at high rates between 6-8%. At that point, you will feel the pain.

A better way to take out student loans is to figure out how much you really need to live and take out just that much.

Mistake #3: Not getting enough insurance

There’s a lot of insurance you don’t need like insuring against your fantasy football team. But there’s some you DO need.

I list the ones that you should definitely have while in medical school:

  • Health
  • Auto
  • Renters or homeowners
  • Term life insurance on both of you (even if you’re a SAHM)
  • Umbrella insurance
  • Own-occ disability insurance from one of the “Big Six” (technically, you buy this during intern year but you should start to shop for it during 4th year of medical school)

Mistake #4: Going to a super expensive medical school

There’s not many pros to going to an expensive medical school over a less expensive one. That’s because the cost of medical school tuition isn’t correlated to its ranking.

For example, going to Tufts University College of Medicine for $60,000 a year isn’t going to open that many more doors than going to the University of Texas at Austin College of Medicine for $20,000 year. They’re both great schools. One costs 3 times more than the other, but Tufts isn’t 3 times better than UT Austin.

Another point against an expensive school is that your pedigree matters most at the most recent place you trained. The longer ago your training was, the less relevant it becomes.

Here’s the order of significance:

fellowship > residency > medical school > undergrad > your class ranking in high school

A good strategy some clever families make to get the most value out of their money is to get the HIGHEST medical school grades and Step scores at a CHEAP school, and try to match at the most HIGHLY RANKED residency program they can.

Mistake #5: Spending all your disbursements before the next one happens

Imagine if you were paid only twice a year…that’s how medical students are being “paid.”

Medical students get what we call disbursements from student loans. It’s the amount you are given to pay your tuition, rent, eat and to live off of. It happens twice a year. If you spend all of your money before the next disbursement, you’re SOL 🤭

It takes financial finesse to be able to plan your entire life in six-month increments. But as the wife of a medical student and CFO of the family, you need to master the budget.

Many medical families think a budget is a record of what they earn and spend. (Sorry, that’s bookkeeping.) A REAL budget is more than that because it influences how you spend and needs to be reviewed regularly.

Start by tracking everything on Mint and Personal Capital and then going through them once a month during a money date”with your DrSpouse. Then adjust your spending accordingly.

Let’s Review

Mistake #1: Not contributing to a Spousal IRA

Mistake #2: Taking out too much student loans

Mistake #3: Not getting enough insurance

Mistake #4: Going to a super expensive medical school

Mistake #5: Spending all your disbursements before the next one happens

In Summary

Financial mistakes happen to everyone. The important thing is to prevent them from happening to you. The best time to learn is before residency.

And if they do happen, learn from them and inform others as I have informed you. It takes a village, and we got each others’ backs.

I’m a hugger. I’m hugging and supporting you, friend.

To your strong medical family,


Your Turn

What was one of your big lessons?