3 Personal Finance Lessons You Didn’t Learn in School
It’s no secret that most medical professionals don’t receive any financial training in school. But what’s shocking is how new grads are suddenly expected to manage their brand-new paychecks and mountains of debt with not so much as one single personal finance course. Over 50 percent of physical therapy grads begin their career with over $150,000 in student loan debt. Starting a career with this amount of debt and little to no financial education can be extremely intimidating, even with a good-paying career.1
Personal Finance Is a Lot Like Physical Therapy
There are a surprising number of parallels between physical therapy and finance. I know, because I’ve spent time in both careers and see some clear overlap in successful principles for rehabilitating both your health and your net worth. Here’s what I’ve observed as both a physical therapist and a Certified Financial Planner™ professional.
1. Early Goal Setting Is Key
Goals help us stay on track. But more than that, goals help us identify what’s really important, to our clients and patients, and to ourselves.
Although goals often change over time, it’s good practice to begin with goals in mind. A good goal mobilizes action and inspires behavior that is otherwise difficult to encourage or adopt.
In physical therapy, relating an action or exercise to a patient’s goals can generate powerful motivation. This effect is even stronger when we write goals down. My patients are more likely to perform an exercise at home when they know it’s directly related to a specific goal they want to achieve.
The same is true with saving money, paying down debt, and investing for the future. Identifying your financial goals helps you stay on track as you start to save and invest regularly. With a clear goal in mind, you can invest each dollar with purpose. You can learn more about setting financial goals in my MedBridge course: Personal Finance Essentials: Goal Setting and Account Organization.
2. Behavior Change Is Required
The concepts behind physical fitness and personal finance can be boiled down to just a couple of short sentences.
- Fitness is simple—Move often and be mindful of what you eat.
- Personal finance is simple—Save often and be mindful of expenses.
Granted, it’s more nuanced than that, but the basic principles are simple—and easier said than done. The difficulty lies in changing our behavior.
I can’t be with my patients every day to remind them to do their exercises. I also can’t remind you every other week to invest part of your paycheck into your 401k or student loan payoff account.
Just as it is difficult to find the discipline to do your physical therapy exercises daily, it takes discipline to consistently save and invest each month. Both decisions require behavior change and a commitment to stick with it.
Fortunately, it takes less effort to establish good habits in investing due to automation. For example, you can elect to have 401k contributions automatically withdrawn from each paycheck and transferred to your savings or brokerage account. Even though the mental decision to invest money can be simplified through automation, the lifestyle of careful investing will take patient practice, just as in therapy.
Our objective as physical therapists—and investors—is to make it as easy as possible to stay on track. By using techniques like automatic transfers, you can hit your financial goals on time, with less effort than you put in the gym. Automation is a beautiful thing, and you can learn how I apply this concept to investing within my MedBridge course: Understanding Investments, Insurance, and Estate Planning.
3. Building Strength Requires Consistency
Progress—in both investing and physical therapy—can be painful at times.
It’s not unlike when a patient undergoes a total knee replacement. They must do their exercises consistently each day for their strength and mobility to improve. However, if they neglect their stretches for a few days after surgery, the resultant swelling and scar tissue can set back any progress they had made.
It’s hard to make physical and financial gains if you don’t stay the course.
I encourage you to approach financial education the same way you view your required continuing education. If you build on your financial knowledge regularly, you will grow and maintain financial competency. Reading even just one personal finance book a year will be one of the best investments you can make in your personal and professional life.
Not only will continued financial education enable you to save for the future, but it will also help you achieve your short-term goals. For example, once you understand how your credit score affects your ability to borrow money and start a new business, you may think twice before opening a store credit card—something that would negatively affect your credit utilization ratio. This is a concept I review in detail in my MedBridge course: How to Overcome Student Loans, Manage Debt, and Build Credit.
A Final Thought on Personal Finance & Physical Therapy
A lot of the exercise recommendations we make in physical therapy seem too simple to work. That little yellow band from the clinic looks too innocuous to make a difference. But it can, through persistent and consistent commitment to a routine.
The same is true with saving and investing money—be patient, ignore fads, and don’t panic to sell or buy out of fear.
In both physical therapy and personal finance, the concepts are simple. It’s the behavior—the daily working at it—that’s the hard part. But I’m confident you can achieve your financial goals if you have the right plan!
Creating Your Personal Financial Plan of Care
Sixty percent of Americans who have a financial plan feel financially stable, ready to cover an emergency, automate their savings each month, and pay every bill on time.2 Sounds great, huh? But what actually goes into a financial plan?
Financial planning involves looking at a client’s entire financial picture and developing a way to achieve their short- and long-term financial goals. This can include items like paying down debt, saving for a house, investing for retirement, maximizing tax savings, and protecting your assets with insurance or other methods.3
If you’re unfamiliar with where to begin, you’re not alone. Nearly 65 percent of Americans admit to not working with a financial professional.
Whether you choose to work with a financial professional or not, it’s important to have a financial plan that identifies your goals and how you are going to achieve them.
“Personal finance is personal.” We all have different financial goals, risk tolerance profiles, family size, and other unique factors that will shape our individual financial plan. There isn’t a cookie-cutter financial plan for you to adopt as your own, but there are examples you can use to shape your own financial plan.
The Financial Therapy™ templates you can find in the 3-part Financial Health series on MedBridge are designed to guide you through many of the key components of a financial plan. By working through these templates, you can create a financial plan unique to your financial goals and customize your plan to meet your personal needs.
Whether you use these courses and financial templates to supplement the financial advice you get from a professional or decide to DIY with these educational examples, you’ll be on your way to better financial health. Use the worksheets and financial plan examples for each section to complete the major components that make up a financial plan.
