How much do you love money?

This is a loaded question.  Most of us opted for a career in medicine not because of the money.  I knew that doctors made a decent living when I considered applying for medical school, but my main goal for becoming a doctor was to be able to do something really cool.  Cool stuff like saving lives or eradicating disease.  Activities related to money were not on the radar.  Tax lost harvesting? Indexing? No way! As a doctor who went through the hellish initiation process of medical school and residency, I should be immune to dealing with the toils of real life!

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Boy I was so wrong.  You can lose out in life if you don’t know how to control your finances. Guys like RootOfGood, Retireby40, and FinanciallyAlert are the smart ones who got it right early so that they can enjoy life.

You can make a lot of money as a doctor.

Herein lies the fallacy.  Just because you can make a lot of money in the medical profession doesn’t mean that you will.  It certainly doesn’t mean that you will get rich either.  I’ve met too many middle-aged doctors who have taken one too many fancy vacations and funded their kids through one too many private schools.  I’ve met plenty of doctors who end up taking poorly compensating jobs in highly desirable places. Both of these situations aren’t conducive to building a solid net worth.

I blame the salary bump that we all get after residency.  I tripled my income after fellowship.  Sounds amazing, but I probably should have increased it by a six-fold instead if I had picked a smaller town to live in.  Nonetheless, this significant jump in income plays tricks on you.  It makes you feel really rich even though you are not.  You have to pay taxes to Uncle Sam for having such a high income.  And Uncle Sam doesn’t really care if you have a negative net worth either.  It hurts to pay high taxes on everything while you still have a negative net worth.

Realizing that the medical system puts doctors at a huge financial disadvantage has actually helped me pay more attention to finances and money.

Doctors generally work pretty damn hard.

This is also a problem.  The nature of medicine puts doctors at a financial disadvantage. The long hours that doctors have limits what can be done outside of work.  If you work from 6am until 8pm—my friend Moe often works even longer hours—you aren’t going to have time to shop for discount groceries or cook dinner.

As much as I like Tikka Masala, I will rarely have the time or energy to cook it myself like Justin @RootofGood is able to.  (j/k)

All joking aside, most doctor lifestyles aren’t conducive to saving money.  And we all know that savings rate is a key component in building net worth, especially early in your working career.  The doctor with long hours is more likely to order take-out, have a housemaid, hire out lawn services, and take fancy vacations to compensate for the challenging lifestyle. That’s human nature. It’s not possible to run at high gear all of the time.

For these reasons, I’ve learned to respect money. We work long and strenuous hours. It’s easy to burn through our earnings relatively easily due to the stress of our work.  My long term goal has been to find a work arrangement that is conducive to a reasonable work-life balance with adequate compensation.  Not easy, but it should be a goal that all of us strive for.

You can work as hard as you want.

There are a lot of ambitious people out there. The great thing about our society is that ambition, hard work, and a bit of luck can get you far in life. Without a doubt, you can earn more if you work more. I know some doctors who work two jobs.  They like it. I know surgeons who operate while they are on vacation (they are licensed and take some locums opportunities). I know some who take time to do more medical work in charity. If the money is good and your health is good, you can theoretically work until you croak.

Don’t keep rolling that rock up the hill if you don’t know what’s going to happen next!

Make sure you have an end goal in mind.

It’s important to reassess your goals frequently. If money is what you want, then just work harder and spend none of your hard earned money. Otherwise, figure out what you really want out of your day, week, year, and life. Where does free time come into play, and how much of this can you control? When you are considering your financial goals, think about how much you actually need, and how much your heirs would get out of your excess earnings and whether that would even be beneficial to them.

(Photo courtesy of Flickr)

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