Whether in the first year of practice or a tenured physician, otolaryngologists face unique challenges when it comes to their finances. Due to lack of personal finance training, high debt levels and a large income jump early in your career, you may make money mistakes without realizing before it’s too late. 

Taking control of your finances now and avoiding costly mistakes can help you reach your desired lifestyle faster. Here are some common financial mistakes ENTs may encounter and how to avoid them.

Mistake 1: Living Beyond Your Means 

After being overworked and underpaid during surgical residency, it is understandable to want to treat yourself to the finer things once you begin receiving your full attending salary. This is especially difficult considering the average ENT salary is $455,000 — the third highest paid specialty based on a survey by MedScape. 

Though you may feel richer, you are likely still in substantial personal and educational debt. Based on a survey by Association of American Medical Colleges, otolaryngologists graduate with an average of $200,000 in student loans.

How to avoid this mistake: 

The best way to avoid overspending is to make a clear budget. Include items like income, debt payments, saving goals and discretionary spending. Laying out the bigger picture of what you’re making, what you owe and your long-term goals can give clarity to what your spending should look like. 

For larger expenses like a house or luxury car, we recommend consulting expertise, whether online resources or a financial adviser, to determine how much you can reasonably afford.

In simplest terms, avoid lifestyle creep by spending less than you earn. We encourage you to be patient in your first few years of practice by living more frugally. This will allow you to build a stronger pathway to financial freedom.

Mistake 2: Prioritizing Investments Over High Interest Debt

Investments seem like a great option to set yourself up for a strong financial future. ENTs face a unique draw to invest in surgery centers, but it is almost always better to pay down high interest debt before taking advantage of these opportunities.

If you’re unsure whether your debt is considered high interest, use the rule of 6%. If your debt has an interest rate of 6% or higher, pay it down. If lower than 6%, it likely makes more sense to begin investing. This method will likely give you a better bang for your buck because your long-term investing returns will be higher than the low interest rate you are paying.

How to avoid this mistake: 

Using the 6% rule, we recommend prioritizing paying high interest debt as soon as possible. Depending on your individual circumstances, you may benefit from debt consolidation. Our PRN personal loans may be a good option to help you refinance toxic credit card debt or other high interest debt.

Mistake 3: Ignoring Personal Finance Goals

Don’t focus solely on debt while ignoring other personal finance goals. At first glance, this statement may seem to contradict the second mistake, but it does not. Though you do want to pay high interest debt quickly, don’t neglect other financial goals. We recommend paying down debt while improving your financial security in other areas.

Consider how paying minimums on current debt could allow you to contribute to your 401(k) account to receive your employer’s match. These matching funds are a guaranteed return, and the sooner you save for retirement, the better.

This perspective can also allow you to build an emergency fund as a safety net for unforeseen circumstances. We recommend saving enough to cover expenses for 3-6 months.

How to avoid this mistake: 

To strategically pursue all short-term and long-term goals, look at your financial picture holistically. This will help determine how much of your earnings to put toward your different needs. Use the previously mentioned 6% rule to determine how aggressively to pay your debt.

Before You Go…

More often than not, finances and financial planning are difficult to tackle. ENTs, and doctors as a whole, are put at a unique financial disadvantage early in their careers because of their high amounts of debt. If you are looking to make the best decisions for long-term financial health, avoiding these mistakes can help you get there. 

Each person’s circumstances are different, so if you are looking for a fuller understanding of the best way to deal with your finances, we recommend consulting a financial planner. 

If high debt, surprise expenses or other setbacks are affecting your finances, we at Panacea offer doctor-specific banking to help you remedy these issues.

For otolaryngologists who are members of the American Academy of Otolaryngology-Head and Neck Surgery, we provide benefits like cash back on student loan refinance and personal loans and special pricing on life and disability insurance policies. Click here to learn more about how these benefits can help you!

Founded for doctors, by doctors — we are here to help.

Panacea Financial, a division of Primis. Member FDIC.