5 Reasons CRNAs are Bad with Money

It’s safe to say CRNAs are smart cookies. It takes quite a bit of academic horsepower to make it through all those years of schooling. And then practice a challenging discipline of medicine with impressive outcomes. Good job profession, you are a smart group of folks.

One could say the same for other healthcare professionals. This is relevant because of the stigma that doctors are bad with money applies to CRNAs as well.

It’s reasonable to generalize, intellectuals are generally bad with money. There are many reasons why this is true. Many of these do/did apply to me. And I’m sure you can find one or more that apply to you.

Coming in at number one…CRNAs are too smart for their own good.

Yes, this is actually a bad thing when talking about money. Early on the career path, we were told not worry about the money. Focus on studying and learning the craft. Become a great CRNA. Then land a job and the rest will fall into place.

Outsmarting the Market

The stock market returns between 8 and 10 percent annually depending on the metric. If this is the average return, surely I can do better. Common thought. Unfortunately, the common result is subpar returns.

I have tried the fancy investing techniques you are thinking of. Timing the market. Day trading. Swing trading.  Holding onto debt at 5% because you can get 8% from the market. The list goes on.

These techniques are a mix of emotions and mathematics. At the end of the day, there are teams of mutual fund managers that can’t consistently outperform the market. They live and breathe the market and still fail to consistently produce superior returns.

Guys like Michael Burry made millions off a single financial move during the subprime mortgage crisis. He timed everything perfectly by an educated guess.

Renaissance Technologies is the greatest hedge fund of all time. It’s a room filled with super nerd mathematicians and supercomputers running extremely complex investing algorithms. That’s what it takes to consistently beat the market.

These guys are the exception. Don’t go overboard with active investing because you are smarter than everyone else. It will cost you in the long run. Take an average return and be happy.

Risk Aversion

Working as a staff CRNA, the money is good. Better than most jobs out there. We become risk averse to financial avenues because those with high paying jobs have farther to fall when the business flops.

Most small businesses fail and those that survive, lose money for the first few years. Spend countless hours and dollars developing a solid product or service. Client acquisition comes next. It’s tough to not make money for the year when $200,000 annually is the norm.

If you continue working and start a business on the side, it will take longer to see growth because you can’t reasonably invest 60 hours per week into the business and another 40 giving anesthesia.

So, we are risk averse. I’m definitely in this “risk averse” group. This is unfortunate because there are great opportunities and services we could offer. Acting on these business opportunities could result in significantly higher lifetime earnings.

Dan Pena, a $500 million oil investor, says what most people need to make money is 30 fewer IQ points.

It’s a lot easier to gamble a $14 per hour job starting a company than walk away from $200,000 per year.

Unfortunately, what’s done is done. I’m not saying quit giving anesthesia to open the next great patisserie. There is nowhere to go but forward.

Career Path

High opportunity-cost professions have a high satisfaction rate. Likely because of the extreme amount of work required to achieve such a profession. The career path sets many up for failure.

Through anesthesia school, Miller’s text consumes all the brainpower as we page through day after day. We don’t allocate sufficient thought to the bigger picture. And by the time we make it to Miller’s text, it’s too late to avoid the student loans.

For one of many reasons, we get these “blinders” for a significant number of years. Many of us finish school in our 30s and wonder where the past 15 years of money-making has gone. This is even more of a blow to the ego if graduating with hundreds of thousands in debt.

Early in my career, there was the decision to work an entry level healthcare job to obtain healthcare experience or work construction to pay for college. I chose the latter and don’t regret it for a minute.

Lack of Financial Education

My financial education started early in life. Do an entire day of chores for $2. Learn the value of a dollar. Understand things aren’t free.

Disclaimer -- Being formally educated does not indicate you are a smarter, better, nicer, more successful, or more anything…than anyone else.

For those Robert Kiyosaki readers out there, I was raised in a “poor dad” family. 1 of my 4 grandparents finished high school. One of my parents, a 2-year degree, and the other, a high school diploma.

My high school educated father was a construction company superintendent for 20 years and successfully operated his own construction company for another 20 years. Profitable each of the 20 years, surviving multiple economic recessions.

Solid businessman. Great profit margins. Did what needed to be done to provide for a family. He deserves a great deal of respect. Not cut out for academia – and that’s okay.

This is why my parents encouraged the “go to school, get a degree, work a decent job, live below your means, and retire at 65” mentality. And I don’t fault them for any of this. They taught me invaluable financial lessons starting from a very young age.

Many CRNAs were not fortunate to have an upbringing where I knew I would need to work through high school to pay for college. And work hard as a nurse to pay for anesthesia school.

Speaking of school, the public school system did a poor job of teaching financial education. I think economics was required, but personal finance was an elective course.

Ironically, economics was one of the classes I was nearly kicked out of because I said vehicles are a depreciating asset and should be purchased with cash and not leased. The teacher said making such a purchase with cash was not possible. We can debate all day about who should educate children about personal finance.

During my senior year of high school, it was assumed that all collegegoers would simply take loans to pay for tuition and expenses. Shame on them.

The same dogma showed up again when applying for anesthesia school.

And I’m the odd duck in the class who can’t answer when the Grad PLUS money would hit the bank account.

During the final year of anesthesia school, we had a brief presentation from a CPA. He was essentially a financial advisor and accountant to CRNAs in our area. So now that we have an income we can pay for the education and guidance that can be had elsewhere for free.

It’s better than nothing, but there is a better way.

That’s a lot of ranting to explain why I started The Financial Cocktail. I’m genuinely sick and tired of seeing my peers struggle financially. No flame towards those not doing well, but rather frustration with the financial situation of the profession.

It makes me think, “What can I do so CRNAs (and everyone else for that matter) can get ahead financially.” And yes, this blog is all I have so far. It’s a work in progress.

A Solution

One can not force financial literacy, but I can attempt to make it as painless as possible. This blog is about reading dense information I pulled from many books and personal experiences.

Budgeting and investments. I have a “must-read list” that elevated my understanding of personal finance.  J.L. Collins is where I would look for budgeting and investing. Ric Edelman and Dave Ramsey are good for budgeting but lack efficiency for high income earners.

Complex Financial Investments

With money comes opportunity. You will have the opportunity to have all sorts of accounts that have their own special rules. You may be approached for venture capital or collective investment opportunities.

Real estate is appealing. Great potential. Most new investors underestimate costs and overestimate rents. Sure, the tax advantages are sweet, but if you don’t make money on the buy or have a bad tenant, good luck.

Your financial status will make you an “accredited investor” meaning you can do whatever you want and are not “restricted” by safeguards that protect normal investors.

Again, stop being too smart for your own good. J.L. Collins and many others say to buy the entire stock market and keep fees low. Easy, passive, automated.

He speaks about which tax-advantaged accounts should be filled first. I have a few pieces on the site explaining a similar hierarchy.

Just be careful. Invest in assets you understand. Know what kind of return you are looking for. Know how hands-on you need to be. Know the tax implications, especially as retirement is no longer beyond the horizon.

Peer Pressure

This is a heavy one. If you haven’t been guilty of lifestyle creep at some point, you are lying to yourself. It happens to us all. I’d bet you don’t share a dorm room and eat ramen every night.

I know plenty of newly graduated CRNAs who stretched for a big ol’ house and 2 new SUVs with their signing bonus. It doesn’t matter if society says, “you have an upper middle-class income, so you need an upper middle-class lifestyle.”

This is the whole “keeping up with the Joneses” concept. It’s extremely difficult to deflate lifestyle. Enough said. Take a look in the mirror and honestly evaluate your financial health.

I don’t want to get the reputation for being a fun hater who never spends money. I spend money. I spend a lot of money. Heck, Mrs. TFC and I are about to write a check for $60,000 for a new vehicle. Total liability. Technically depreciating asset, but same thing. Big Benjamin bonfire driving off the lot.

Do it right

Selective spending is key. Avoid impulsive decisions. Budget for the expense. Research the item or experience. Finally, pull the trigger on a guilt-free purchase.

It’s okay to see your lifestyle inflate provided it’s controlled. Take care of the high interest debt eating away at your paycheck. Set a couple bucks aside in an emergency fund. Invest regularly. Now start upgrading aspects of your daily living. Live that CRNA life.

Focus on what is important TO YOU. Taxes and investments come first. Period. Then food, water, shelter, and utilities. Then spend it on what makes you happy.

Time Constraints

Many CRNAs receive their first gas passing paycheck in their 30s. Maybe 40s. Time is not on your side.

Graduate high school at 18 and retire at 65. That’s 47 years of working. And saving for retirement. I despise that thought process for numerous reasons starting with the fact that retirement is a net worth to cost of living ratio, not an age.

I speak regularly about the eighth wonder of the world, compound interest. Let’s use an inflation adjusted 6% annual compounding return to see how much a single dollar is worth over time.

Every $1 invested at age 18 is worth $15 at age 65.

Every $1 invested at age 30 is worth $7.70 at age 65.

Every $1 invested at age 40 is worth $4.30 at age 65.

Every $1 invested at age 50 is worth $2.40 at age 65.

So, yeah, time matters.

All high opportunity-cost professions have the time penalty. Most young workers in their teens and 20s don’t have the disposable income to invest. That’s okay because the power of time will compensate for the low principle investment.

Folks who do not save early in life must save a huge portion of their income. Those with terminal degrees typically fall into this category. Most money earned during the early years goes towards education. And income during the first few years of practice goes towards student loans.

Let’s not overlook other possible expenses such as medical bills, family crisis, overinflated lifestyle, etc. Whatever the reason delaying retirement inveting, time doesn’t get to work much magic.

Put your money to work, so you don’t have to.

I emphasize getting on the advantageous side of compounding interest as quickly as possible. That means paying off things with interest ASAP. And putting your money to work via the investment of your choice.

There is not a right or wrong with any of these. I’m certain many of you disagree with my opinions – and that’s okay. This list is anecdotal based on what I see in the CRNA community. The goal is to bring awareness and possible solutions.

As always, thanks for reading!