03 May Do I really need to be frugal?
If I earn in the top 5% of all salaries in my country, do I really need to be frugal? As what I alluded to in a previous post, you need to spend less than you make in order to get ahead. It doesn’t matter whether you make $15,000 a year or $150,000 a year.
Frugality can be adjusted relative to your net income. But it can not be dismissed. A $7,000 TV set is definitely “affordable” to a doctor, but combine that with a $1000 weekly restaurant budget, $10,000 annual vacations, a new lease on a $60,000 car every three years, a $250 monthly cable and internet bill, and that $150,000 income doesn’t seem that much anymore. The key is to pick what your splurge items are, but restrict other miscellaneous luxuries.
I know a gastroenterologist who swears by his fancy German automobiles (all of which purchased new, and less than 5 years old), but lives in a modest home in a middle class neighborhood. Another doctor drives a 15-year old Chevrolet and brings his lunch to work daily but takes international vacations every year.
- Develop a strict budget. Set your monthly allowable living expenses, recreational expenses, and investment percentage.
- Make sure you have enough socked away for a rainy day. If you end up losing your job (that can happen to doctors), you may end up going through a period of unemployment, job search, and moving.
- Develop a written financial goal. This allows you to stick with a game plan that can help you get to your retirement. I admit that I haven’t finalized mine either, but I do have a guideline set for my minimum monthly savings given my income.
Any other tips or suggestions? Please sound out below!