Note: inspired by much of the discussion at my College of Pharmacy regarding financial planning, this was written in the same vein as the content from the good folk over at the White Coat Investor, a personal finance blog aimed at high income professionals. I have personally learned a great deal from his writing although much of it does not apply to me at the moment (i.e. real estate). In the spirit of paying it forward I re-imagined many of the good financial principles as a cure to the ails that many soon-to-be-recent-graduates like myself must contend with.
Many recent graduates suffer from a condition known as mountains of debt. Symptoms of this often debilitating disorder can include insomnia, GI upset, fatigue, and feelings of dread and/or helplessness. Mountains of debt has been identified as a risk factor in divorce, crushed dreams, and ramen noodles.
Luckily, there is a cure.
The tools contained within the Financial Formulary that follows offers a few of the proverbial prescriptions for success that can be easily adapted to prevent and treat even the most serious cases of this pervasive condition.
1) Primary Prevention
If heart disease and compound interest teach us anything, it’s that a few little changes early on can make big differences down the road. Just as the cardiovascular risk reduction seen with atorvastatin and aspirin compound to help protect you from a heart attack, making a few modest lifestyle changes now as a student to minimize your loan burden and invest in your future could mean hundreds of thousands of dollars more when you reach retirement. A little bit of fiduciary diet and exercise can go a long way in minimizing the number of years it will take to reach a secure, heart healthy retirement—not to mention shave a few inches off your waistline.
2) Personalized Pharmacotherapy
While best practices exist for the treatment of most any disease, the knowledge and clinical judgment of the provider accounts for the final successful application of these guidelines to each individual patient. Developing this same personalized approach is necessary to establish any savvy financial plan. Define your goals and priorities—ask yourself where you want to be in five, ten, or thirty years—then adapt your income to those priorities in a way that will let you hit that target. There is no one always-works cookie-cutter approach in either pharmacy or finance. Optimal pharmacotherapy always depends on more than just patient age or comorbidities. Likewise, work to find the balance between your desired quality of life, achieving your goals, and building the financial security that will carry you through your golden years.
3) Rescue Medications
No matter how well your patients might be managing their asthma, angina, or diabetes, you’ve prepared them to be ready for the unexpected. It’s not a matter of if, but a matter of when the asthmatic will need their albuterol or the coronary artery disease patient will need to reach for their nitroglycerin. The same can be said for financial surprises, be it a car repair, medical bill, or broken appliance. As a student, resident, or recent graduate, keeping a few thousand dollars in the bank for unwanted excitement will help keep otherwise small emergencies from snowballing and potentially derailing your carefully laid plans. Speaking of emergencies, don’t forget to have insurance for those catastrophic moments—like lawsuits and surgeries—that could otherwise ruin you.
4) Evidence-Based Medicine
It seems like every five minutes someone—whether it be your financial advisor, your college roommate’s half-brother, or that one guy on television—has the next surefire thing to beat the market. Just like that expensive new brand name medication might not stand the test of time, chances are your in-law’s hot investment won’t live up to the hype. Trends like gold, tech-stocks, or green coffee bean extract prove that trying to time the market is a losing proposition. Remember, the only thing that is going to appreciate when investing along with those talking heads is your blood pressure. Be sure to carefully evaluate any prospective investment strategy just like you would any new clinical trial. If you do your due diligence, by retirement age you’ll be enjoying the warm tropical sun rather than banking on the next sure-fire investment secrets to pay the bills.
5) Medication Adherence
For the same reason you shouldn’t stop taking your antibiotic as soon as you feel better, be on guard for lifestyle inflation. It is much easier to complete the course by keeping expenses low to wipe out your debt quickly after graduation. The alternative—waiting until later when the debt has re-multiplied and resistance has developed to reigning in your expenses—could mean tens of thousands of dollars in unnecessary interest payments and years of avoidable stress and complications. Sit down and develop a debt management plan early on. Evaluate the patient, identify the bug, and then target that 22% APR MRSA with some financial vancomycin and repeat with your next debt. Don’t be afraid to enjoy a bit of your new salary, but remember that the principles of compound interest work just as well for the bank as they do for you.
6) Therapeutic Drug Monitoring
Chances are, your blood pressure and hemoglobin A1c aren’t going to stay the same forever. Don’t even get me started on INR for you warfarin users out there. There is a reason you should go in for—at the very least—an annual checkup. No hospital is going to dose gentamicin and forget about it, and no dentist is going to tell you that your recent root canal is the last word in your oral health. The plans and priorities you have today will change, your financial situation will change, and life always finds a way to surprise you. Getting married? Buying a house? Diagnosed with cancer? A periodic reassessment of your priorities, assets, and strategies will let you catch problems early, make adjustments as necessary, and ensure that your treatment of choice remains appropriate.
7) Continuing Education
So you’ve graduated, opened all of your retirement accounts, and started paying down your debt. Did you think you were finally done? Just as your newfound profession requires you to stay on top of a constantly evolving set of medications and standards-of-care, the world of finance doesn’t allow you to set-and-forget. Much like any hospital formulary, the rules governing taxes and investment vehicles are constantly in flux, and ignorance of changes can lead to costly mistakes. The most effective and efficient treatment is provided by those working at top of their game, and it follows that those who stay abreast of new developments in the world of finance will reap the greatest rewards.
Summary
While mountains of debt is often unavoidable for most new graduates, with good adherence to the prescriptions for success outlined in the Financial Formulary, it is a condition that is easily managed and—given enough time, discipline, and planning—even cured.