Ask the Expert: How can I improve my financial literacy?

Dear Dr. Jerkins: I recently graduated from dental school and started my first associate position. While I understand the clinical side of dentistry, I realize I know very little about managing my personal and professional finances. What advice do you have for improving my financial literacy and securing my financial future? 
— Financially Curious

Dear Financially Curious: Financial literacy isn’t just about managing money — it’s about securing your future, avoiding costly mistakes and having the freedom to make the right career and life decisions for your needs.  

Many dentists enter the workforce with significant debt but little financial training, which can lead to stress. Developing financial literacy early will empower you to make informed decisions, reduce financial stress and build wealth.

Here’s why it matters and how to get started:

1. Your financial health impacts your career flexibility 

Many new dentists assume that earning a high salary will solve all financial problems, but without financial literacy, even a six-figure income can lead to financial instability. A lack of financial knowledge can:

• Trap you in poor job choices: High debt and limited savings can force you into positions based solely on salary rather than professional growth or work-life balance.

• Delay practice ownership: Practice ownership is a big undertaking, professionally and financially. Not having your finances in order may limit your ability to become an owner when you’re ready.

• Create long-term financial stress: Poor financial decisions as a young dentist can snowball, making it difficult to achieve financial freedom later.

2. Avoiding debt pitfalls can save you thousands

Dentists graduate with an average of more than $300,000 in student loans, and without a solid repayment strategy, interest can add up quickly. Being financially literate allows you to:

• Understand how debt-to-income ratio impacts your future: If you want to buy a home or practice, lenders will assess your debt burden. Managing student debt wisely makes future borrowing easier and more affordable.

• Avoid credit card debt: Many young dentists rely on credit cards, leading to high-interest debt that could have been avoided with better planning.

3. Smart investing and saving starts now, not later

Many dentists delay saving for retirement or investments, assuming they can “catch up” later. However, time is your greatest asset when it comes to building wealth. Financial literacy helps you:

• Start investing early: Compound interest means that even small investments now can grow into significant wealth later.

• Understand risk and diversification: Poor investment decisions or a lack of diversification can lead to lost earnings. Knowing the basics of investing prevents costly mistakes.

• Leverage tax advantages: Contributing to tax-advantaged accounts like 401(k)s, 403(b)s, IRAs and health savings accounts can significantly impact long-term savings.

Financial literacy equals career freedom

Becoming financially literate gives you the freedom to make career choices based on your goals rather than financial constraints. It allows you to confidently take on new opportunities, whether that’s starting a practice, buying a home or transitioning into a new role.

Dr. Jerkins is the president and co-founder of Panacea Financial and a practicing physician in Little Rock, Arkansas. Panacea was founded by doctors, for doctors, to provide banking and financial solutions tailored to their needs. It is endorsed by ADA Member Advantage as the exclusive provider of practice financing, which includes partnership buy-ins. Learn more at panaceafinancial.com/ada. Panacea is a division of Primis Bank and insured by the Federal Deposit Insurance Corporation.