Though physicians earn high salaries, the wide range of expenses they face causes many to fall behind in their savings goals. Here are some simple tips to stay financially fit.
“He who does not economize will have to agonize.”
I can’t say my physician-dad gave his children much in the way of money management wisdom: When asked what made him really content, my father would often respond: “Money in the bank.”
A friend of mine, who is currently going through a prolonged illness, told me of the anti-dad doctor. He recently had a fascinating conversation about money and life with his oncologist (the specialty with a $359,180 average annual income, according to Doximity).
This very busy physician told my friend that he was “technically broke.” When you add up paying for home, auto, and med school loans, household furnishings and technology, education expenses, utilities and services, food, clothing, entertainment/vacations, charitable contributions, insurance, taxes, and “other things,” the doctor said very little was left over. “We’re saving almost nothing,” the doctor explained. “It all gets spent every month.” Bottom-line: if this doctor didn’t go to work every day and earn his salary, he would “be in the poorhouse.”
Sounds hard to believe, but a recent survey seems to lend credence to the matter. About 15% of physicians admit to living “beyond their means;” and more than 60% report just “living within their means”—and I’ll wager it’s very close every month. And this is certainly in keeping with another of the few significant things my father told me about money: “you spend what you earn.”
The single best piece of financial advice I ever heard was: “Pay yourself first.” This means setting up some sort of automatic investment plan and having a certain amount of money taken off the top of your paycheck every month and/or week. Begin at 10% and increase it gradually (that’s at least $1,500 monthly for most docs). Done properly, it will hurt so good!
And consider these other thoughtful “rich tips” from Bankrate.com:
• Quality counts—“The rich tend to adopt the ‘quality over prestige’ mindset when purchasing big-ticket items. For the important things in life, buy quality; take good care of it, so you buy it once."
• Hunt for bargains—“Wealthy people are all about getting the most bang for their buck. Among those with high household incomes, nearly 75% use coupons at least some of the time when shopping online.”
• Control buying impulses—“Wealthy people are not reactionary; they have a tendency to be a little more thoughtful. One of the greatest fears of high net worth individuals is becoming poor—so, they tend to take their time with purchases.”
• Avoid debt—“The rich are often ‘money vigilant,’ meaning they're more likely to pass on a purchase if they can't pay cash. Learn to stretch your money and accumulate wealth, regardless of your income level, by living below your means.”