23 Nov You must have a financial goal in mind in order to achieve it
Doctors undergo a regimented course throughout their training. We are used to having clear milestones during the journey to achieve our goals. What do I have to do to get into a residency? Get good grades, crush the USMLE Step 1, and get recommendation letters. Each single step can be broken down into a series of tasks and checklists. If you can sustain it for your entire medical school, residency, and fellowship, you reach your goal of becoming a doctor!
Unfortunately when it comes to securing our financial future, the goals are less defined. We all want to have a good lifestyle, enjoy our hard work, and have enough left over for retirement. That magic number is different for everyone. If you like to vacation every year in the Seychelles and want to continue doing so when you’re not practicing medicine, you might want to beef up your bank account. If you plan to live off the grid, grow your own vegetables, and farm your animals, your stash probably doesn’t need to be as substantial.
Work with a goal in mind.
The first step in establishing a financial plan is to have a goal in place. The more concrete you can define your goal, the easier you can figure out how to achieve it. From your goal, you then build a financial map. For most people, the answer may not be clear. We all start with a vague notion of what we want. Whittle down the details as we progress in our careers. Our goals may change depending on life changes. You don’t have to figure it out right away, and that is okay. It’s taken me several years to figure out exactly what I want, and my goals are still evolving.
In the meantime, build up your nest egg.
Refine that goal.
Once you have a goal, you can start building your financial map. Is there a certain age that you want to retire from your medical career? Do you love medicine enough to practice until you die? How much are you earning now, and how much do you anticipate earning a decade from now? Map these concepts out in writing. Some people build lists, others have flowcharts. Whatever you do, put it in writing.
New questions will always arise in the process, but the first step is to estimate how much your living expenses are even if you don’t track every single penny that you spend. You have to know how much you spend in order to know how much you should save. Each decision point in your financial map should trigger new ideas, unknowns, and more immediate goals. At each step, you should ask yourself what you can do now to help you reach that step in the future.
Then act upon these mini-goals and tasks.
It is okay to change your mind.
The decision tree in creating our financial map sort of correlates with a working diagnosis in medicine. When a sick patient rolls into the emergency room, we form a series of possible causes based on signs, symptoms, and lab work. The list of possible diseases becomes refined as we establish more data. The same applies to our financial goals. If your daughter wins a full scholarship to Harvard, you can mark off tuition payments on your list and recalculate your financial needs.
Don’t be afraid to learn.
When you first encountered an unknown condition in medicine, you sought out the textbooks, research articles, and papers. In creating your financial map, you will encounter many subjects that you are unfamiliar with. Be resourceful and learn. Figure out how much you spend per year, how many years you will likely need, and calculate how much total wealth you would need to build up by the time you stop bringing in a full working income. Keep evolving as you build your knowledge and understand your financial situation more. You will make mistakes. That is okay.
Just remember, you have a lifetime to get the details right.