Bad financial habits that doctors should break in 2021

By Jesse Cramer
Published December 21, 2020

Key Takeaways

2020 was a slog for the American physician, to say the least. While contending with the pandemic, many also had to contend with some downright awful financial advice. Avoid these habits, and you'll be on your way to a more profitable 2021.

Here's our list of the worst financial advice of 2020.

The worst in personal finance

Let's start by looking at some of the terrible day-to-day advice. This is bad guidance that could affect your everyday financial choices, paychecks, or monthly bills.

“You only live once … so spend it all now”

A surprising death can leave us stunned, and Kobe Bryant's passing in January was no different. And then the pandemic hit, forcing physicians to confront more death. So many sullen reminders that death can come knocking at any time. And as such, we ought to take advantage of the time we're given.

But unfortunately, that has led to some short-sighted financial advice in 2020. For example, let's look at the advice of “you only live once … so spend your money now.” It's philosophical, sure, but it's also dumb.

While tomorrow isn't guaranteed, it is highly probable. Smart money ought to rely on that kind of high probability. You don't have to save every dollar for retirement, but you should find a smart balance between enjoying today and saving for tomorrow.

We plan for our futures all the time. Among the reasons you went to medical school likely was the ambition to achieve more success in the future. We invest in our relationships to have strong social bonds as we age. Personal finance should be no different.

If you want to approach it scientifically, consult an actuarial table. The average 40-year-old American has another 38 (male) to 42 (female) years of life ahead. A “YOLO” attitude of spending your money right now will likely lead to regret in the future.

“You gotta support the economy!

When shutdowns and social distancing began in March, many experts realized that our economy would take a huge blow. Business revenues would drop; unemployment would increase; growth would slow.

We began to hear politicians and other leaders imploring average citizens to “support the economy.” This is a euphemism for “spend some money right now!” This is not one-size-fits-all advice. Individuals have been facing unique financial challenges during 2020. Even physicians have seen elective procedures canceled and practice revenues decline. Some have even been furloughed or laid off. Money is tight, and even a doctor’s paycheck isn't a given.

Support your family. Support your loved ones. But don't buy a Jet-Ski because a politician asked you to “support the economy.”

The economy will recover, and perhaps your dollars will play a small role in that recovery. But don't sacrifice money to “support the economy.” There's nothing wrong with first ensuring that you and your loved ones have the support you need.

“Stop buying item X”

This infamous personal finance trope of the past decade continues to rear its ugly head in 2020. The traditional targets have been lattes and avocado toast, but plenty of financial “experts” have items they love to hate.

The thinking behind the idea—that little expenditures can really add up over time—is fine. But any advice that focuses on such small items is usually just small advice. Why do I say that?

First, this advice misses the forest for the trees. Focusing on small items neglects our most consequential financial choices—like living expenses (rent/buy), transportation, and educational costs. Who cares about saving $3 on a latte if you're spending $1,000 too much on rent?

Second, this advice ignores conscious spending. It's the idea that spending on “extras” is perfectly fine, as long as you're conscious of it. If you love lattes, then buy lattes! That's great! Just make sure you know how that spending fits into your overall budget. It's really that simple.

“Don't pay off your credit card…”

“…it'll look like you can handle some debt, and it'll increase your credit score.”


It doesn't matter what year it is. This is awful advice. Credit card debt is dangerous. You'll do well to stay away from it. And that means paying off your credit card in full every month.

Credit card companies and credit agencies do not give you credit (no pun intended) for carrying a balance from month-to-month. It's plain bad.

The worst in investing

Many of 2020's biggest financial headlines focused on investing and the stock market. It's an easy (but not always accurate) measurement of the economy. Let's take a look at some of the worst investing advice in 2020.

“Invest your money right now!

The stock market went through initial turbulence in late February, dropping about 12% in value from February 20 to February 28.

Some stock market “experts” used this drop to proclaim, “Stocks are on sale … buy right now!” Their logic is that stocks were cheaper than a week before, and any sale is a good sale.

But in the next 3 weeks, stocks would drop another 30%! If you had listened to those “experts,” you would've seen your investment immediately lose 30% of its value.

The point is this: timing the stock market is a loser's game.

“Pull all your money out!”

Other stock market “experts” looked at the tumbling COVID economy and saw nothing but doom. They suggested that people pull their money out of the stock market, due to an impending depression!

But just like the last section's experts, these folks were wrong too. Sure, the market dropped by about 35% in March. But it has since recovered and is actually up in 2020 (as of writing this).

When you make a big move like this, you have to be correct twice. First, you have to predict when to remove your money from the market correctly (ie, predict a market drop). Then you also have to identify when to buy back in (ie, predict the market's bottom).

This is very hard to do, even for the so-called experts.

COVID-centric stock picks

Some stock-pickers saw (or thought they saw) specific opportunities in the early weeks of COVID-19. And in hindsight, who can blame them?

Looking back, it's easy to see that companies like Zoom, Netflix, and Peloton would do well when we're all pent up at home. But hindsight is 20/20. It's much more difficult to have the foresight or the ability to predict the future accurately.

For each correct prediction (“buy Zoom!”), there is someone out there on the opposite side of that trade. Each stock purchase requires another person to sell their stock. So while some investors correctly bought Zoom, an equal number of shareholders incorrectly sold Zoom.

The point is this: predictions are hard. So if someone comes to you with sure-fire investing advice, ask yourself, “Does this person really know what the future will look like? And why do other people out there believe the opposite?”

The worst is over

For all of our sakes, let's hope the worst of 2020 is over. But if more troubling events occur, keep in mind that some of the corresponding financial headlines will be downright terrible.

Now, I'm sure there was some good financial advice in 2020, right?! 

This post originally appeared on Dollars for Docs, a blog for healthcare professionals, brought to you by Your Money Geek. Dollars for Docs provides the medical community with the latest information in personal finance, careers, and lifestyle. 

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