Are you in a financial position to do what you want to do when you want to do it? Explore the relationship between physicians' income and their ability to build wealth.
Are you in a financial position to do what you want to do when you want to do it? Could you afford to retire, care for ailing parents, or reinvent your medical practice?
Wealth buys the freedom to decide how you spend your days. My investments gave me the safety net to leave my conventional surgical practice and launch into a career as an author and speaker and consultant promoting better medical outcomes.
Here’s the dirty little secret. Most physicians are economic slaves to their practices. Our high incomes do not reliably translate to high net worth and the freedom wealth buys.
Income vs Wealth
Practicing physicians earn top dollars. The US Bureau of Labor Statistics culled data from tax records to conclude that nine of the top 10 earners in the US call themselves “doctor.”
Indirect evidence supports the assertion that physicians fail to build wealth. In a recent survey, half of physicians are behind where they would like to be in retirement planning. Professional medical associations are exploring how to assess competency in older physicians who continue to practice because they cannot afford to retire.
The Reasons Physicians Fail to Build Wealth
What keeps physicians from building wealth? Here are the reasons usually cited:
This is like saying patients become obese because they eat too many donuts. It may be true, but it fails to tell the whole story.
Further it fails to lead to sustained solutions that deliver different outcomes. Budgets work about as well as diets.
The Real Causes of Unrealized Wealth
I believe that physicians’ failure to build wealth is a symptom of a deeper financial ill: their dysfunctional relationship with money.
Physicians as a group are intelligent people who:
The real barrier to financial freedom comes down to a conspiracy of silence around money. For physicians, money is the ultimate taboo topic. You cannot fix problems that you cannot talk about.
Here are three reasons physicians avoid conversations about money:
The Path to Wealth
Physicians have the ability to build wealth.
As Einstein says, problems are not solved on the level at which they are created. The solution begins with physicians’ willingness to tolerate the discomfort when discussing money.
Here are three steps to help physicians achieve financial freedom:
1. Coach physicians
to proactively engage in conversations with patients about the costs of medical care.
2. Explore—with compassion–the forces that drive spending.
Here are some things that struggling physicians say to themselves.
3. Replace wealth-eroding beliefs and habits with new wealth-building tools and skills.
Just as we have mentors to guide us through the art and science of caring for patients, mentors and coaches helped me change my beliefs and behaviors around money. I offer my son—headed for medical school–basic financial literacy lessons I never got. I hope he aligns his spending habits with Einstein’s insight, “Compound interest is the eighth wonder of the world. He who understands it, earns it; he who doesn’t pays it.”
Wealth-building is not a do-it-yourself job for most physicians. If you or a family member had a rare medical condition, you would not treat it yourself; you would seek the help of the expert. Manage your wealth with the same strategies you use when you manage your health.
Financial advisors know about the complexities of “referred financial pain” the same way you know about the association of right shoulder pain and an inflamed gallbladder. Could you acquire this knowledge? Absolutely. The real question is whether you want to invest the time and effort.
Physicians can achieve financial freedom. With the economic stresses posed by the Affordable Care Act, now is the time for physicians to take control of their financial destiny.