What I Wish I Knew About A Career In Medicine: Physicians Who Don’t Prioritize Financial Freedom Are Making a Huge Mistake
How would you feel if your evenings and weekends could be totally free of work obligations? Are you practicing medicine on your own terms? Have you ever found yourself so frustrated at work that you contemplated leaving, only to remind yourself that you still have debt to pay off and a family to support?
These are questions that were pushed to the periphery during the frenzy of residency and fellowship, but are now front and center as a mid-career physician with a family to support. Finances, or lack there of, could be your greatest limiting factor. But it does not have to be.
Whether or not you want to retire early and travel the world, or simply have the freedom to practice medicine on your own terms, it is critical to not be trapped in golden handcuffs.
Money, money, money
Do you feel trapped, disillusioned or burned out? You may be early in your career and want to be prepared for inevitable shifts in priority down the line. Or perhaps you are mid-career and you are contemplating a career downshift or career pause. Maybe early retirement is already on your mind. You will need to consciously pivot so that your worklife and reflect and support these priorities. In order to make progress toward this new chapter, the first critical step is having sufficient funding to execute the pivot.
Many physicians are shackled by overwhelming debt. It is common to immediately increase spending habits when they earn an attending’s salary. There are those in primary care who will always be behind the 8 ball. A wise way to approach this is to ensure you are prioritizing financial freedom from the start of your journey (as early as medical school but certainly during residency). This is critical in order to position yourself favorably should you choose (or need) to leave your current job for any reason.
Recently, I wrote about financial considerations for those looking to lean more into family life. There are an abundance of resources on the internet including: Bonnie Koo, Physician on Fire, White Coat Investor and Passive Income MD, and many more. I will not try to rehash the wealth of information they, and many other physician financial bloggers, have compiled. I simply direct you to their vast vault of valuable information. I will be linking heavily to these resources below.
The key to this is steps toward financial independence. Whether or not you want to retire early (FIRE) and travel the world, or simply have the freedom to practice medicine on your own terms, it is critical to not be trapped in golden handcuffs. We deserve to live a fulfilling life and our families deserve to have the best version of ourselves.
When you achieve financial freedom, you have the power to pivot or shift when you want to and ultimately practice medicine on your own terms.
When you achieve financial freedom, you have the power to pivot or shift when you want to and ultimately practice medicine on your own terms. Here is how I would break down a simple approach toward financial freedom and planning toward independence. More in depth resources will be linked.
As simplistic as it sounds, it starts with these 4 main principles
- Minimize debt
- Maximize savings
- Maximize income
- Curate expenses
The Checklist
1. Minimize debt
- Eliminate redit card debt. We still start with the basics. Pay down any credit card debt you have, starting with the highest interest rates. Then, do not accumulate any more debt, spending only within your means or paying only with cash
- Lower interest rate on student loans
- Student loan forgiveness
2. Maximize Savings
- Contribute to tax-sheltered retirement accounts EARLY. Roth IRA yearly, with backdoor Roth conversions
- Start retirement savings in residency with a 403b (or 401k, or 457 for those who may qualify).
- If you have children, contribute to a 529, which is an investment account to use for higher education.
- Automatically put away 10-20% (or whatever you can afford) to a savings account. Money that you never “see”, you will never miss.
3. Maximize income
- Maximize the salary of your current full-time job with effective negotiating
- Be aware of the plethora of non-clinical jobs, some which may pay more than the average pediatrics salary
- Passive income– including investments. Make money with minimal effort, ideally even when you are sleeping.
- Develop other streams of income . Many more examples are listed on this post and here as well.
- Don’t give up your hobbies, interests and skills outside of medicine. Doctors have a lot in common with successful entrepreneurs. Those with an entrepreneurial spirit, there are many books including “How to Get Paid for What You Know” about building an online stream of income. I also love listening to this podcast from a former UK registrar turned successful YouTuber/content creator.
4. Curate expenses
There are different philosophies about how to minimize expenses and to what degree. There is the Financial Independence Retire Early (FIRE) movement with proponents of lean FIRE and fat FIRE. But either way, my advice to early attendings is to continue to live like a resident, save aggressively, pay down debt, maximize retirement, and then consider how you will allocate your increased attending salary. Furthermore, some find it helpful to use tools like YNAB (You Need A Budget), Mint or Personal Capital to track your expenses.
Conclusion
This is a compilation of the financial tips I gleaned over the years that now, looking back, I wish I had implemented more faithfully as a resident. I was pretty adept at minimizing debt, curating expenses and saving for retirement but very poor at maximizing my income in a lower paying medical specialty.
This information about work mindset and finances hopefully will be helpful for those of you early in your career to avoid much of the frustration I have encountered. I hope this will also be useful for those of you who are mid-career like me who want more options for the next chapter of your life. Diversify your income, grow your hobbies and talents. That way, you will build the life in medicine you want and have the leverage to leave when your job no longer aligns with your personal goals.
Diversify your income, grow your hobbies and talents, save wisely. That way, you will build the life in medicine you want and have the leverage to leave if your job no longer aligns with your personal goals.
We need to nurture physicians who are happy, healthy, well-rested and enjoy the practice of medicine. Financial freedom is critical in building and sustaining the next generation of empowered and fulfilled physicians.
Related posts:
What I Wish I Knew About a Career in Medicine: What is a Healthy Mindset?
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