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10 Ways Keep More Money You Make


The name of the game is how much you keep, not how much you make. I’m not advocating extreme financial hoarding; I’m advocating smart stewardship of your hard earned dollars.

The name of the game is how much you keep, not how much you make. I’m not advocating extreme financial hoarding; I’m advocating smart stewardship of your hard earned dollars.

Like WCI always says, physicians have won half of the wealth building battle. They’ve got high income. The other half is learning to manage the high income appropriately so that high income translates into high net worth.

While many attending radiologists I know are making 300k+ per year, I’m astonished by how little their net worth is relative to that giant income. Very few of these doctors with low net-worth-to-income ratio are true spendthrifts. Where did their money go, you ask?

Here I’m sharing a few tips on how to keep more of those dollars, though on the surface seem high, when adjusted for 26 years of schooling/training, ½ million in educational costs, really isn’t very high. (Whether becoming a doctor is a financially sound choice or not is a discussion for another day.)

1. Pay taxes yesterday: Roth.

Buy your nest eggs on sale, with paying lowest taxes possible during training years. The decade spent in medical school and residency/fellowship is critical to efficient wealth building.

2. Tax-advantaged retirement saving accounts.

Maximize tax shelter by stowing away money in Tax-advantaged retirement/ health/ education saving accounts (18k in 401k, 5.5k in Roth/Back door Roth, 53k in solo 401k, 14k per child in 529, HSA.) Don’t start a taxable brokerage account outside of these tax-sheltered saving until you max them out!

3. Turn your hobby into a business.

Businesses pay themselves first before paying taxes. Employees like many doctors pay taxes first before paying themselves. Be a business.

4. Pay your family, especially kid(s).

Pay your child 5.5k this year for their labor or work, and allow them to pay their own taxes and fund their ROTH IRA. If your child is Mini’s age (8 years), by the time he/she retires, there will be more than 300k from this one time 5.5k contribution.

5. Transfer your income into lower tax brackets.

Paying family members/kids in lower tax brackets is a great way to decrease your taxable income (high tax bracket) and increase their taxable income (lower tax brackets).

6. Stop Churning.

If you are a supersaver and maxed out all tax-sheltered saving accounts, and started a brokerage. Don’t churn (i.e. buy and sell frequently) or your return will be heavily reduced by the taxes associated with transactions.

7. If you churn, churn with Roth dollars.

If you are vain and believe in turnover, at least do it in Roth dollars so that you are paying more taxes on top of the transaction fees.

8. Spend your business income.

Pay yourself and your business first by investing in assets. Spending your business income on assets, will not only bring you more money (by definition of assets), but also reduce the net taxable income from your business.

9. Spend less with your employee income.

Your income from employment is post-tax, so saving a penny equals making 2 pennies.

10. Make tax free money.

Smart credit card use, gets yourself cash back with purchases. This cold cash IS indeed tax-free. There’re debates on whether there’s a limit on how much cash back one can make before paying taxes on it. I believe there’s no such threshold. I made 4k cash back last year and did not have a tax form associated with it. But you better check with your accountant and see what he or she says :)

If you like this article, you might enjoy other DWM articles on Personal Finance, Investing, Retirement, Practice Management, & Lifestyle.

All articles by DWM are for informational purposes only and not intended as a substitute for professional advice. Please consult a professional accountant, financial adviser or lawyer, before making financial decisions.

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Victor J. Dzau, MD, gives expert advice
Victor J. Dzau, MD, gives expert advice