Like their peers in other fields, many young psychologists face unprecedented financial pressures as they begin their careers.

Student debt is rising, as are the costs of setting up a private practice. A survey by APA's Center for Workforce Studies shows that graduates with a PsyD in clinical psychology reported median debt of $120,000 in 2009, more than double the $53,000 reported in 1997. For clinical PhD recipients, median debt was $68,000 in 2009, up from $55,000 in 2007.

Practice costs can vary greatly, depending on whether a psychologist rents a luxury suite or a no-frills space. Those working in big cities also encounter high living expenses that take a big bite out of what can be a modest paycheck. There's the cost of benefits, too. "Health insurance has skyrocketed, and that is one contributor to the increased cost of practice," says Atlanta financial psychologist Mary Gresham, PhD.

Among those just starting out is Alec Baker, PsyD, who completed his degree last August and is launching a private practice in Denver. "It's going pretty well," he says. He shares office space in a small group practice and has eight weekly clients. But he faces $155,000 in student loans, which would have meant monthly payments of $2,000 if he hadn't deferred the debt and rescheduled payments that will be contingent upon his income. He expects monthly payments of about $300.

Baker keeps his overhead low. He pays office rent by the hour, only when he uses the space. He uses the same computer he had in school, set up his own website for $75 and had a friend take his photo for the site. He doesn't have billing software and uses a cellphone app that accepts clients' credit cards for a 2.75 percent charge per transaction. "I've invested a little more in networking and marketing costs," says Baker, reporting that he spent $1,000 on a one-year membership in a professional group that sponsors networking events.

But despite Baker's success, money management often isn't easy for psychologists, says Gresham. Professional training doesn't cover financial literacy. Some psychologists—particularly women—find it difficult to negotiate fees and salaries. Data from APA's Center for Workforce Studies show that in 2009, male psychologists with doctoral-level degrees earned a median $65,000 working full time in their first year of practice, compared with $58,300 for women. The resulting income setback can have career-long repercussions. After 20 to 24 years in practice, women earned a median of $88,000 compared with $107,000 for men.

Young psychologists can also find it difficult or uncomfortable to discuss payment with their patients. "We're taught to be helpers," Gresham says. "We don't want to punish people, and some might perceive charging for a missed appointment as punishment. But it's not." It's part of keeping a business afloat, she says, and it's best to have a matter-of-fact talk about fees and cancellation policies with new clients up front.

Besides negotiating fees or salaries, Gresham says psychologists who specialize in cost-saving interventions or have in-demand skills might have a little leeway to negotiate reimbursements with insurance companies. "It is possible, but I'm not saying it's easy," she adds.

There's always a bottom line, and Klontz says it is this: "You need to take care of yourself financially, or you're not going to be able to take care of your clients."

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