If wealth is your goal, academic science will be a frustrating path. Your college friend, the business major, will probably step into a reasonable job when he or she graduates with a Bachelor of Business Administration. Getting a B.S. in biology, on the other hand, mostly positions you for further education; the job postings available to a biologist fresh out of college can be pretty limiting. The two-to-seven years of graduate school after college could instead have been spent establishing your career with a corporation. There’s a significant opportunity cost for going through graduate training. Happily, many biomedical research graduate programs offer some sort of financial support for students through training grants. If you serve as a post-doctoral fellow after completing the Ph.D., that first job may have a lower stipend than the your college friend made on his or her first year with a company. We should be clear in our minds, then, that we get this training because we want to be able to contribute new knowledge to the world through research, not for the money.
Is it possible to make money with a biomedical research career? Oh, yes. For researchers who can make the jump to tenure-track professorship in grant-driven research, the salaries are pretty solid, especially after achieving tenure. Not every senior professor drives a Ferrari, though. Generally speaking, academic researchers assume that scientists in corporations are making more money than faculty members. Your ability to gain such a position will depend upon your having developed skills that a corporation perceives as valuable, and your position with that company will last only so long as that technology is producing the results they want.
How, then, do scientists deal with this long-term absence of money? As my faculty mentor likes to joke, it doesn’t cost a lot of money to be me. I am able to leave the country and take a lower salary in large part because I have taken very close care of my finances for the last two decades. I hope that some of the lessons I’ve learned along the way will be helpful to others.
As Thomas Stanley noted in The Millionaire Next Door, many people in the United States have gained tremendous fortunes (at least in part) by not spending money. We are continually barraged with messages about things we can buy, but we can ignore them. Many times I will look at something I want, and a friend will say, “go ahead, you can afford it.” My response has often been, “but I don’t think that it is worth what they are asking.” If your costs are linked to what you need rather than what you can afford, you’ll save a lot of money. I found that tracking my daily expenses in Quicken was very useful for seeing where all the dollars went.
I am a firm believer in investing in things that appreciate in value. Many people, for example, borrow money to buy a car, and they’ll probably be ready to sell that car by the time they’ve finally paid it off. That car, though, will be worth less than they paid for it new. In this case, they’ve lost money to interest payments and to the diminishing value of the car itself. Just as early as I could, I invested money in the condominium where I lived during graduate school. Yes, I spent some money in the interest payments for that loan, but when I sold the condominium after four years, it had gained significantly in value. Even better, I hadn’t paid any rent while I lived in the condo! I know that we often have uncertain time lines when we move for academic training and careers. My rule for home buying is that if I’m going to be in a place for two years, I plan to purchase a home rather than rent. That’s a shorter interval than many others would find comfortable.
My attitude toward loans is a poisonous one. When I have a loan, I always make it my first priority to obliterate the debt. The amortization schedule that your loan company provides is almost always in their interest. You will pay much more to have borrowed that money than you could have by paying it off early. I apply every spare dollar I have to eliminating the loan principal. This is not always in my financial interest, but I simply breathe easier when I don’t owe money. Could I instead invest that money in some nice stocks that would appreciate in value faster than interest on the debt was accumulating? Yes, especially since interest rates are near historic lows right now. In my view, though, the interest I will be charged on a loan is a guarantee; they’re sure to take that money from me. The return on an investment, though, is only a possibility. If I have a loan interest rate of 5% and I get a 7% return on my investment, that’s nice, but my net gain is only 2%. I’d rather destroy the debt.
Because of the way my life has unfolded, I tend to be somewhat abstemious. In my first year of college, I might have been learning the pleasures of beer, but I was still quite a staunch church boy at the time. I continue to be surprised, though, at the amount of money people will invest in alcohol and tobacco. I am not averse to a bottle of wine now and then, but the bar tabs that I have seen friends produce is quite sobering to me. Since I have worked in cancer research for quite a while, I am ardently against smoking for health reasons, but it has a very real front-end financial cost just for the cigarettes. Our society as a whole seems to think we should cut back a little, and we have created “sin taxes.” Maybe these are effective in reducing these activities, and maybe they’re not. Either way, I don’t want to pay them.
In many jobs, saving for retirement is something that your company is willing to help you do through a 403(b) or 401(k) plan. For Vanderbilt faculty, each professor contributes 3% of his or her income, and Vanderbilt will contribute a matching 3% to retirement every month. If a faculty member decides to contribute an extra 2%, Vanderbilt will match that 2%, as well. I am amazed that some people do not contribute the extra 2%. Why leave money on the table? Just because I take part in a 403(b) plan does not mean that I cannot contribute to my own IRA, though. I started on a Roth IRA when I was in graduate school (using stipend money that I wasn’t paying for rent). The limits on how much you can contribute to an IRA are fairly low, but the long-term benefits of the investment are pretty high.
Life choices certainly matter. I had hoped by this time that I would be married and have a couple of kids. Life didn’t turn out that way. Many researchers have found that family life and science careers are uneasy companions. Because I took care of my finances early in my career, I now have a lot more flexibility in my career choices. I don’t want to wait until I retire to benefit from my retirement savings; instead, I am glad that I can take a position that pays a bit less but gets me closer to what I want to accomplish with my career!