3 Money Concepts Healthcare Professionals Often Don’t Understand

  • After paying off her student loans, medical assistant Kristin Burton started helping her colleagues with money.
  • She says most medical professionals haven’t learned three important financial concepts.
  • Most important is the debt-to-income ratio, the amount of debt you have relative to your income.

After graduating from college, 30-year-old medical assistant Kristin Burton was shocked to learn she owed a total of $161,000 in student loans.

“The very first step for me was to cry a little bit,” Burton told Insider. “And then I realized I had to make a plan.” Burton took on as many extra shifts as possible while living off her husband’s salary. She used 100% of her six-figure AP income to aggressively pay off her student loans in just 16 months, according to records reviewed by Insider.

During the pandemic, she continued to take extra shifts and continued to pay off her mortgage and become completely debt free. Now, Burton coaches her colleagues on personal finance through her company, Strive With Kristin, where more than 1,000 medical professionals have signed up for her classes and purchased her e-books.

Burton says most medical professionals don’t learn three basic personal finance concepts that could dramatically change their financial outlook after graduating from college.

1. Debt to income ratio

The debt-to-income ratio is a measure used by many lenders to compare the debts you have to your income. A good debt-to-income ratio is 36% or less, however, Burton says most medical professionals graduate after many years of study with a debt-to-income ratio of 300% to 400%.

“The No. 1 problem is huge student debt that’s higher than most people’s mortgage payments,” Burton said. “If you look at the average student loan debt for a PA, it’s over $100,000 just for PA school, and that’s not even counting undergrad.”

2. Compound Interest

Compound interest accrues when previously earned interest is added to the principal balance you originally borrowed or invested. This may work against you in the context of debt, but it may work in your favor if you are investing money.

Burton says, “Because many of us are in school until we’re at least 30, we miss our prime investing years when other people can invest even greater sums of money. small and see huge progress.”

Other professionals who enter the workforce fresh out of college at 21 or 22 have the advantage of spending time in the market. In the eight or nine years that other professionals are hiding 401(k) contributions or other investments, their money is growing at a higher rate due to

compound interest

. Burton adds, “There’s a huge upside to being able to start investing at 22 or 18, and a lot of us really miss it.”

3. The Lifestyle Creep

Lifestyle creep occurs when you start splurging on luxury items as you earn more money, becoming accustomed to a higher standard of living in the process. Burton says medical professionals new to the workforce are trying to “keep up with the Joneses” and splurge on luxury items they can’t afford.

“In the world of medicine, there’s usually a culture that your lifestyle should look a certain way,” says Burton. “For example, a new PA that probably has a negative multi-six digit

net value

will feel like they need to have the same car, same house, same things as a PA who’s been earning six figures for 10 years.”

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