Sports metaphors are great if you understand the sport that is being referenced. Unfortunately I have limited understanding of many sports metaphors, but offense and defense are two terms that seem obvious enough to me.
I have been told by numerous finance-oriented people that a strong offense will definitely win over a strong defense. I agree with that statement. In general a higher income will help you overcome many frugality shortcomings.
Case in point: extreme savers often promote their own incredibly high savings rate. Crazy numbers like 60%, 70%, or even 90% of their post-tax income. They argue that this has allowed them to retire by the time you were halfway through medical school. What is downplayed is that your savings rate becomes less impressive the greater your income becomes. It sure as hell easier to save 50% of a $250,000 income than 50% of a $50,000 income.
Increase your income.
Saving money is fine and dandy, but wouldn’t it be even better if you could crank up your earning potential? There are financial bloggers out there approximately my age who have over twice my net worth but have jobs that generate less than half of my income as a physician. According to my calculations, it will take me about five more years to over take their net worth at my income rate and spending. Overall there are two learning points that I can glean from this comparison:
- Compound interest is your friend. The sooner you can enter the workforce and start building your nest egg, the longer your money can work for you.
- A high earning potential and rate can eventually compensate for the lack of compound interest.
Since most of my readers have spent a decade of our lives training to be in the medical field, there really isn’t much turning back.
What you can do for yourself is to figure out how to become a rich doctor and have that army of earnings work their compound interest magic. You’ve worked hard getting to where you are at, and it’s time to reap some benefits.
Have you considered how you can improve your financial offense?