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Financial Literacy in Healthcare: Are we missing something?
My first career was Occupational Therapy. I had received a bachelor's degree in Psychology with a business minor. After that I took a year of pre-requisite classes and then right into a 3 year Master’s program for OT.
We never want to think about the costs of health care, especially when it’s a need.
According to a recent SIPP survey, people in the United States owe at least $195 billion in medical debt. They also found that 23 million people, or around 1 in 10 adults, owes significant medical debt. Medical debt occurs across all demographic groups, all levels of income and savings, although the study found that Black Americans and people living in the South or Medicaid non-expansion states were more likely to owe significant debt. About half of those in the survey reported owing more than $2,000 in medical debt.
Few careers are as rewarding as medicine. From the ability to save human life to research into the next generation of drugs and treatments, there’s an expansive, highly beneficial field that attracts millions of people every year. Schools around the world turn out graduates all year long, and those students go into residency or further medical programs, along with hospitals, laboratories, and research centers. In the United States each year, an average of 26,641 people graduate from medical schools. No matter what you’re looking for or want to do with your medical career, someone has a program for you.
We all have needs in life. The biggest include food, clothing, shelter, access to medical care, and electricity for the home. Few people can live successfully without these things (although plenty have tried, and some do so). So, we accept these as needs rather than wants, though we also want them. This is an important distinction; it helps us see what we should value and how we should pay for it, and what we should pay to obtain it.
We can’t escape money, and we can’t escape payment systems. But what we can do is prepare, budget, save, and spend wisely while taking care of ourselves for the duration of our lives. If we do it properly, we can also prepare and take care of the financial lives for our children and our extended family. We have the ability to create extended, connected circles of financial care that serve us and our loved ones for generations.
Being a financial advisor has a lot in common with being a therapist. We listen to problems, offer advice, use different methodologies and lenses to analyze worldviews, and try to help our clients sort through their challenges most effectively. There’s also lots of listening and lots of understanding. Financial advice, like therapy, involves delving into our own backgrounds and experiences to understand and motivate solutions.
I’m sure most of us hate the idea of New Year’s resolutions. We have trouble keeping with them, and when we lapse, we feel like we’re failures. The most popular resolutions are weight loss, sobriety, going to the gym consistently, or maybe getting a new job. While any resolution can be good for you when taken with the right attitude, there’s one resolution I can definitely get behind that we should all consider trying regardless of the time of year: financial resolutions.
If we’re saving for retirement—and I recommend it—and we’re making great money, is it possible to speed up our retirement age? If instead of putting, say, 30% of our income into savings to retire at 65, we put in more like 70%, could we retire sooner? Would we be able to stop working at 60, or maybe even 55? Are we describing a pipe dream or a genuine financial possibility?
You want to hear a mind-boggling statistic? As of September 2021, American consumers have a combined debt of $14.96 trillion. The average American debt rate among consumers sits at about $92,000. Between college, homes, kids, cars, business expenses, credit cards, home improvements, you name it, Americans have accrued massive debt to pay for their bills, their lifestyles, their needs, and sometimes just their wants. It can decades to pay it all off.
We’re only now coming to realistic grips with the COVID-19 pandemic and its effects. For the last year and a half, this deadly pandemic has upended our news, our plans, and our world. What once seemed so simple and straightforward has taken on new urgency and life all around us daily.
But the thing about milestones is that they aren’t often cheap. In fact, some of them can be downright expensive. We’re accustomed to the idea of an arm and a leg in exchange for the big things we need: weddings, births, health events, funerals, college funds, mortgages. Our first car and our first child are both milestones, but they’re also far apart on the financial scale. Whereas a new car can cost thousands of dollars, a child can cost hundreds of thousands. Factor in other costs such as college, and your balance sheet keeps going up.
If you’re considering college, great! College education can open up innumerable doors. It’s not for everyone, but, depending on the field that you want to work in, a college education might be required. For example, most healthcare positions, lawyer, engineer, computer scientist, accountant, or another specialized field, almost always require a specialized college education. If you just want to get an education but aren’t sure what you want to do, college can help you find it. Education has tremendous value inherent in itself.
The “Great Resignation” and How to (Responsibly) Change Careers
The average person changes jobs 10-15 times throughout their career, with an average of 12 job changes. Job pivots usually can be chalked up to more money, better benefits, a better opportunity, or better working conditions (such as boss, coworkers, etc.). Some people who change jobs just want a change of scenery. Others can’t stand where they’re at and need change for their mental and physical wellbeing.
This line of thinking doesn’t apply to any one thing; most of us consider it at many different points in our lives, and for as many topics. But I’d wager it comes up for one topic more than any other: finances. Personal finances can be a complicated, headache-inducing endeavor that makes many people give up before they even try.
Each year, we get to deduct money from our paycheck, and then come spring we get to compile W2s and 1099’s from each place we worked and carefully calculate numbers and withholdings, along with deductions. We get to think back on business purchases we made, and find enough receipts to help prove what we can write off. We then get to file and hope we don’t get an audit. And if we do get an audit...
It’s relatively straightforward to maintain a checking account balance: you never spend more than what you have. Spend too much and you have a deficit; spend less than you thought, and you have a surplus. From a budgeting point of view this is easy to maintain. It gets more complicated with larger budgets and investments, of course, but at its course the idea is maintainable and widely understood.
Ask almost anyone about financial planning, and you’ll probably get different answers from each person about what it is and what it can do. Some will say it’s best for taxes; others will say it’s best for portfolio investments or retirement funding. You might hear that it’s only for the rich, or that it’s just an expensive luxury that goes along with having money in the first place. Some will say it’s good for nothing, and it’s a waste of money and time.
This is a distilled conversation, but not an imaginary one. I’ve heard it countless times; every financial advisor or planner has. Clients declare that, in order to make more money, they need to take bigger investment risks to make it happen. The part that seems to elude people’s understanding is that you tend to make higher AVERAGE returns in the market with higher risk investment over a LONG period of time.
Pretend that retirement is a road trip and that you want to go to the West Coast from the Midwest. San Francisco sounds nice this time of year. You know the direction, and you drive your car straight toward it. Simply head west straight, you say to yourself; it’s so easy you can set the cruise and fall asleep and you’ll wake up at your destination. The autopilot will take care of the whole thing.
