Physicians belong to a very respectable group of professionals, people trust us with their lives, in some cultures physicians are considered next to GOD and there is belief that doctors can’t make mistakes.
But when it comes to money, this same group of genius physicians become one of the worst groups of high networth individuals who lack basic financial intelligence. No one trusts us with money, not even physicians themselves. I always wonder why our medical school or residencies don’t include basic money management as a part of training for this very high income group.
I don’t claim to be an expert in finances and investment but in just 4 yrs i have achieved tremendous success in new start ups and creating different sources of Passive income through education and better networking. I’m a teacher and my Motto is , Learn, Practice and teach.
If I know I can share my knowledge with someone and motivate them to change the course of life, I think it's worth an effort.
Challenges of poor Financial Intelligence
After finishing a long and hard road of medical school and training, physicians start making high 6 figure salaries. With no financial intelligence and high educational debt, Physicians continue to live a stress full life which often result in burnout, severe depression or even suicide. I agree that not all physicians suffer from financial setbacks, their stressors are multifactorial as discussed in the previous article, but poor financial habits and poor financial decisions do contribute significantly in the stressful life of the majority of physicians.
Physicians also suffer from this limited belief that they can Not learn how to manage their hard earned money, so they hand this responsibility to a “financial guru”, who loves physicians because of their high net worth and poor financial IQ. Most physicians never do any research on how to choose a reputable and Fiduciary financial expert, they never ask the whereabouts of their money and some physicians don’t even know their annual return. Some physicians do risky investments with family members or friends without understanding the business itself. Most importantly, a great number of physicians try to maintain a fake lifestyle and have no control on spending. Living above their means right from the beginning cost them fortune and to maintain this lifestyle they work long hours, take extra night calls, do extra procedures and bottom line, more time away from their loved ones and from things they love to do.
Set Early Goals, Dream Big!
Early start always gives you more time to put your life on the path to prosperity and financial independence. Without big dreams and actions, you will always be a part of the rat race. Sooner you come out of this race, sooner you will start enjoying life.
Physicians need to understand that they are a smart group of people and there’s nothing they can not learn if they put their mind to it. The first investment they need to start with is to invest in themselves, educate and learn the game of money. After I suffered from burnout myself 4yrs ago , I took some steps that changed my life and I would like to share those steps so you can accomplish more and much sooner than I did in my life.
1- Set Goals, short term , medium and long term goals, be very clear what you want to achieve and when. Without goals and direction, your life will be harder and unaccomplished.
2- First 5 yrs of your professional life when you are young and energetic work really hard and long hours, pay off your debts( Except mortgage), accumulate cash and learn basic money management and different kinds of investments, like Stock market, real estate etc.
3- In the first five yrs build a network, hangout with people who are more successful than you are, big business people and entrepreneurs, find them in your family and friend circle or try Meetup app and attend mastermind groups. You have to do your due diligence before you start investing with these people. Without risk there is no prosperity.
4- Every business or partnership takes time, be patient and know the business well before you invest in it, no matter if you are investing in stocks or a start up, know the business.
5- Your goal should be to create multiple sources of income in 5-10 yrs. I personally like investment and businesses where I get passive income every month or quarter. Famous philosopher Jim Rohn once said “ Salary makes you living but profit makes you fortune”.
6- Buy real estate for rental income and tax benefits, try to minimize the high taxes you pay as a physician and it's only possible with commercial real estate investment like apartment buildings.
7- Grow your practice by hiring NP or even physicians for additional locations, change your mindset from an employee or self employed physician to a practice or business owner who hires people to work for him or her.
8- If you have trustworthy friends in different specialties, partner with them and open a multispecialty clinic or a free standing surgery center, think big!
9- Own medical offices where you open up your practice or even your friends and family members want to open the practices, doctors rarely move and they pay rent on time and sign a long term contract. Make sure you love the location.
10- Set a goal to create 5-6 sources of income in 10 yrs, sooner you start sooner you will achieve this but patience and planning are the virtue.
Traditional Vs Real ways to Grow money
If you want an extraordinary life you have to take extraordinary measures.
Most physicians play either very risky and trust the wrong people or they play so safe that they never achieve financial security.
Most traditional ways of investment usually work for most, like saving money and investing in pre tax Retirement funds but these are not the ways that make you financially free. I like retirement funds for two reasons, if your employer has a great matching program then it's worth the free money, the other reason is pre tax where you lower your taxable income and in some instances you grow this money tax free. But remember this is the money you cannot touch until your retirement may be 30 -40 yrs if you are a young professional right now. So my philosophy is why fund so aggressively for something you are not going to see for a long time and you don’t even know if you will be able to live that long or what will be the law of the land at the time you retire.
Why not do something for the near future where you invest or create businesses which start paying you in next few months to yrs. Imagine if you have a couple of good businesses or commercial real estate investments which give you decent returns and most importantly these are tangible assets which you can see or touch, these are not paper investments like stocks or retirement funds. These tangible assets are something that pays you profits for all your life, you can even pass it to your children as your legacy. Think big , think Real like real estate.
I personally do both traditional and real ways of investing, being a physician you don’t have many options of saving taxes, i do it basically for the above mentioned two reasons.
Risk Vs Reward
There is nothing big in this life you can achieve without taking some risk. Doctors think their high salary is enough to help them live comfortably, but then why so many doctors are suffering from financial trouble of some sort, one of the main reasons for physicians burnout and depression is their long hours at work in pursuit of more money. They fail to enjoy life and family because they are the slave of this rat race.
Life is much more than just worrying about money, create more time for yourself and your family. Learn how to make money without hard work, even in your sleep. Learn how to lower your taxes and create tangible assets.
Solution
Change of mindset is required to help our physicians and other professionals who are suffering everyday and losing their well being just because they are either fearful or have no knowledge how to manage their finances.
Medical schools or residency programs should arrange some kind of financial training for these future high networth physicians.
Practicing physicians should have better financial discipline, control their spending habits and learn how to live within their means. Educate themselves and learn the basics of investing in the stock market, safer business and commercial real estates.
Take risk and create sources of passive income.
No one can take care of your money better than yourself, if you have to hire an expert, hire someone with a long and successful track record and your financial expert should be fiduciary.
Final Message
Please learn how to achieve financial independence early in your life.
Work really hard when you are young and energetic but for the sake of longevity and happiness, create other sources of income so you can slow down after 8-10 yrs in your professional career.
No physician should work more than 40-45 hrs a week after 10 yrs in practice.
Less work does not mean less money, create passive income to offset your loss in earned income.
Your health, your family and your well being should be first and it's only possible when you come out of the rat race and enjoy the luxury of passive income.
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