Financial Investing For PAs, Kyle Johnson, PA-C

Let’s face it, Physician Assistant (PA) School is expensive. However, being smart by paying off student debt, and then using your income to support your life goals is one of the major benefits of becoming a PA. Financial investing was something I didn’t fully understand until recently, and so if you feel a little lost like I was, read on!

The financial burden of my education was one of the major deciding factors when I looked at becoming a PA versus going to medical school. I had worked as a paramedic all through college and was responsible for ALL of my education and living expenses while getting a bachelor’s degree, and so I was left with some student loan debt before I even applied to a PA program. When comparing the money it would cost and the time it would take before I could start working, I realized that the return on investment for PAs is solid because our income potential is much greater than many other professions. Now I understand that if you choose wisely, becoming a PA can be one of the fastest ways to build wealth.

Today’s guest post is from Kyle Johnson, a PA who owns ThePAInvestor.com a website with tons of FREE information about how to make sound financial choices, including how to invest. Kyle believes that if people have their finances in order, they can live happier, more fulfilled lives, and provide better patient care, and I have to agree!

I’ve been a PA long enough to know that the decisions that I made right after I graduated from PA school still impact me today, almost 10 years later. I truly wish I’d had some of his financial investing advice when I was a new graduate! Hopefully, it will inspire you to look at your own financial situation a little differently. I’ve since learned that “money makes money” and that sometimes all you need is a small investment and time to grow a nest egg.

Disclaimers and legal jargon the lawyers make me write: Kyle Johnson PA-C is not a licensed accountant, attorney, or financial advisor. Empowered PAs, LLC shares this information is for entertainment purposes only. Readers should always consult a professional financial advisor or accountant to assess and take responsibility for their individual financial situation and risk, including tax implications. Read below at your own risk.

Kyle’s Story:

Imagine being a college student as an undergraduate during the 2008 recession. Tuition is increasing, class sizes are getting larger and you discover the PA profession and begin to follow the necessary steps to get into PA school. Despite the economic struggle, you finish school with minimal debt and start a new job as an EMT making $10.50 an hour. Your parents are nice enough to allow you to move back home so you can save money. Every day you bicycle your way to work, rain, or shine. Like many other applicants applying to PA school, you try and become a better applicant. You beef up your application by becoming a Field Training Officer (FTO), you volunteer, and eventually land a job in the Emergency Department (ED) as an Emergency Department Technician.

There you meet brilliant and talented providers including a few PAs that you look up to. You work and shadow a couple of PAs and eventually apply to PA school. You land a spot in the Bay Area and attend school. Despite its difficulties, you enjoy every moment of it. The struggle is real but you’re passionate about your future career. Eventually, you graduate in December of 2019 and look for a job when all of a sudden a world pandemic happens. You’re in the middle of the second worse economic downturn since the Great Depression but despite that, you land a job in the ED as a PA.

This was my journey and where I’m currently at. Despite the hurdles and struggles, I can’t express how thankful I am to start practicing let alone in the ED again. However, this current time is unprecedented. Many students are graduating later because of the pandemic, almost everyone is hurting financially and the future seems uncertain. The control we once had over our lives is currently not there. I can’t guarantee security in the future but what I can offer is a greater chance of financial security.

During PA school, I discovered the White Coat Investor’s initial book. It’s a personal finance book geared toward physicians. Although there are some differences in terms of compensation amongst PAs and physicians, I gained invaluable knowledge from the book.

When I had a few minutes to spare from studying, I would continue reading finance books, forums, and blogs to increase my financial literacy. It’s a topic that I don’t expect everyone to totally love but this is something that affects all of us. I want to share the knowledge I have acquired to empower PAs. After school, it’s so easy to fall into that hedonistic treadmill where our jobs are there to support our inflated lifestyle. I’ve seen this all too many times in professionals living in high cost of living (HCOL) areas. This contributes to burnout, lack of empathy, worse patient care, unhappiness, and a greater sense of lack of control in one’s life.

I’m not here telling you how to become rich like a late-night infomercial. Instead, I want to give you the tools to empower yourselves to live the best life possible. In my perspective, I strongly believe that by having the financial security that we all crave, PAs will face less burnout, have more choices available including leadership roles, take more chances and simply have more control over your lives.          

Living Like a Student

            Near the end of my program, I gave a finance lecture to my class and showed them this picture:

I live in San Francisco and would cross the Golden Gate bridge every day to school. On Halloween day of 2018 a passenger pushed me against the center divide. My front plastic bumper fell off and I ran over it and drove past it. Everybody was fine but there was some cosmetic damage to everyone’s cars. Later that night, I called California Highway Patrol to see if they picked up a bumper off the Golden Gate. To my amazement they had it and it had the license plate that I needed. Later on I finally replaced my car after it was failing despite the car crash and hitting a deer the year before. I bought a used Toyota Prius and it’s been great. The point I’m trying to make is to live like a student for 1-3 years after PA school.

I could have bought a brand new car on top of the student debt I had already. Anybody will tell you that buying a new car is a horrible way of investing your money. My Prius gets great gas mileage, has low maintenance and insurance costs plus it drives like a dream. I know I probably fit the stereotype of California or San Francisco by having a Prius but I love it. I strongly encourage everyone just graduating to live like a student after they finish school. This is to build new habits so you don’t immediately get onto the hedonistic treadmill.

Many new grads are tired of living frugally and want to live the good life immediately.

I can’t emphasize enough how this mistake will compound in your life down the road. Many of us will have student loans, some will buy a new car, a new house and increase their lifestyle after they graduate. Sooner or later you’re over your head and barely getting by. So again, please live frugally for the first few years out of school. I urge you to increase your lifestyle modestly.

What’s Next: Saving and Investing

Next, you need to save properly and invest regularly. Not just for your 401(k) but in other accounts as well. Many of you may be unfamiliar with this portion or have some basic knowledge. I could write all day about investing but this needs to be digestible. I encourage you to read this post first about what it means for your money to compound. Eventually, over time, you can think of it as another entity making money for you. If you save and invest enough you could potentially retire early or work part-time. The Physician On Fire is a gentleman who did just that and is retired from medicine.

Now I’m not encouraging you to retire early. If you wish to, that’s totally fine but there are other options that you can do. Instead, I encourage you to invest properly so you have more options. This could be going into another specialty that you’re passionate about but pays less, volunteering, working part-time, doing medical trips abroad, or whatever else. The point of discussing all of this is to empower PAs to have as many options available. Here is some basic information that everyone should know no matter who you are. The basics of personal finance could be written down on a postcard. It’s not difficult to follow and anybody can do it.

• Fund your tax-advantaged accounts first such as your 401(k), Roth IRA, 529, Health Savings Plan (HSA), and other accounts. Each of these accounts provides tax savings of some sort. Your money will grow more by maxing out these accounts first. Make sure that these accounts are filled with low-cost index funds. An index fund is a mutual fund that mirrors a part of the market like the Standard and Poor 500 (S&P 500). Make sure the fees are low, especially the expense ratio. The expense ratio is the cost of running those mutual funds. A good expense ratio is 0.05%. Beware if your accounts have an expense ratio of 1% or greater. It might not seem high but I assure you, you will pay tens of thousands over time.
• Look at your portfolio. In each account, you should have some combination of 3 common asset classes: stocks, bonds, and international stocks. Jack Bogle, the founder of Vanguard popularized this 3 fund portfolio and the mutual fund industry has been copying it ever since its inception. To determine how many stocks and bonds to have in your overall portfolio, you can use your age in bonds. For example, I’m almost 30 so I should have about 30% in bonds and 70% in stocks. The reasoning behind this is because I’m young and won’t retire for probably 30 plus years so I can afford to take some risk. I will get greater returns by having more stocks in my portfolio. However, stocks are volatile so they can swing wildly up and down. Hold onto your investments over time and as you age switch more of your stocks to bonds. Bonds are less volatile and don’t swing as rapidly as stocks.

Insure Yourself

Lastly, insure yourself properly. This includes disability, term life, malpractice, auto, home, and something called umbrella insurance. Each of these policies will protect your assets in the case of disability, damage, malpractice, and even death. This is to ensure you have as many barriers between you and your livelihood. These are not areas to skimp. The older you get and acquire more assets the more protection you should have.

That’s about it. If you’re like me and are really interested in personal finance you can check out my website at The PA Investor. I post new articles 3 times a week to help fellow PAs and their finances. This isn’t a total summary of personal finances but rather a quick synopsis of what everyone should be aware of. I encourage you to read and ask questions. I hope this post will empower you to make better financial decisions so you can live the best life possible.

Thanks to Kyle for sharing his story and creating a website where PAs can learn more about financial investing! You can read more if you visit his site at ThePAInvestor.com.

-Courtney

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