Unexpected expenses every physician should prepare for

Many would think that establishing an emergency fund equaling six months’ expenses would be a no-brainer. And for people who earn between $30,000 and $100,000 a year, financial experts agree that an emergency fund is good insurance against life’s unexpected curveballs. But what about physicians and other high earners? Do they still need emergency funds?

In a pinch, some would argue, a doctor can secure a high-limit credit card to cover expenses and pay off everything after things return to “normal.” There are two problems with this calculus. First, after your life steadies and the emergency passes, you’re stuck with the high-interest debt. Second, what happens if the financial strife lingers?

Here are five emergency expenses that can put a serious dent in your finances. 

Job loss

Let’s start with the elephant in the room: unemployment.   

The prospect that physicians would have trouble finding a job was once unheard of—especially with numerous projections that the United States is facing a physician shortage. But COVID-19 rocked the job market, and for the first time in decades, more physicians are looking for fewer jobs, according to an analysis conducted by Merritt Hawkins, a leading physician search firm.

“Over our 33-year history, most physicians had little difficulty finding a job opportunity, with multiple offers to choose from,” said Travis Singleton, executive vice president with Merritt Hawkins/AMN Healthcare, in a press release about a 2020 physician jobs report. “Today, we are seeing a growing number who are unemployed with a limited number of roles available. This is unprecedented. COVID-19 essentially flipped the physician job market in a matter of 60 days.”

The agency saw an increase in physician-search engagement during the 12-month period ending March 31, 2020. However, since that time, demand for physicians has decreased by 30%, while even more physicians are looking for jobs, according to the report.

As many know, the soft job market for doctors is due to the devastation wrought by COVID-19 on hospitals and health-care systems, which lost an estimated $200 billion in the first quarter of 2020, noted Merritt Hawkins. Moreover, physician practice revenue dropped by 55% during this period due to fewer patients willing or able to seek treatment. Fewer hospitals are seeking physicians as they deal with lower revenues and the challenges of caring for those with COVID-19.

The good news is that this downturn in the physician job market is likely temporary, according to Merritt Hawkins. When COVID-19 eventually passes, things should perk up. But until then, more physicians will deal with the specter of job instability.

House expenses

According to the 1% rule, you should set aside 1% of your home’s purchase price annually for repairs. Some years you may spend less than this amount, but some years you may spend more—or much more if bad luck strikes.

Heating and cooling system on the fritz? Replacing an HVAC system can cost up to $5,000-$10,000; a new deck to replace the old rotting one, $4,000-$16,000; and replacing your siding, $5,000-$14,000, according to estimates by HomeAdvisor.com.

To keep home expenses down, it’s a good idea to stay on top of repairs and tackle issues as they crop up. You may also want to invest in earthquake and flood insurance depending on where you live.

Pet emergencies

People love their pets, and when their dog or cat falls ill, getting help as quickly as possible is critical. But after the health scare passes, you may be left with a massive bill. According to estimates from PreventiveVet.com, birthing issues that require a C-section can cost up to $3,000; an intestinal obstruction, $4,000; a poisoning, $6,000; injury by a motor vehicle, $8,000; and a bite from another dog, $10,000. Moreover, if your pet is old or severely ill, you may get hit with several bills at once.

There are certain ways to avoid emergency health expenses associated with pet care. You can take your pet in for yearly checkups and do your best to keep them away from poisons. You can also use tethers or fences to keep your pets safe outside, and spay your pet to prevent pregnancy.

There is also the option of buying pet insurance, which can cost a few hundred dollars a year, but these policies often have limits that can save plenty of out-of-pocket expense. Lastly, some veterinarians may be open to negotiating to bring costs down.

Overall, it may be wise to set up an emergency fund to cover pet expenses.

Dental emergencies

Keeping your gums and teeth healthy is an integral aspect of your physical and emotional health. A trip to the dentist can be quite pricey, and, like pet insurance, dental insurance may limit out-of-pocket expenses. 

Keep in mind that, according to some estimates, a single crown or implant can cost up to $3,000. And full-mouth reconstruction can set a patient back $80,000.

So, is an emergency fund advisable for physicians? The old adage probably applies here: Better safe than sorry.