It’s always nice to have an escape plan for happiness. As a doctor, you don’t want to be tied to your practice at age 68 because you still have to fund your daughter’s college education. If you are practicing medicine at that age, you’d want to be doing it because you love being a doctor. Fortunately the effort you put into becoming a medical doctor does pay off with a relatively good income, no matter where the healthcare system ends up. This allows you have that luxury to control your financial future. All you have to do is to play your cards right.
I often overhear discussions in the doctor’s lounge on how to “get out of medicine”. Sometimes I get sucked into the discussion peripherally. There are often two categories of doctors who seem to get involved: (1) late-career doctor who is still working due to financial needs, and (2) early career doctor past her happy-that-i’m-making-some-money phase but realizes that the hospital is paying me pennies on the dollar for my work. It’s unfortunate that there is a lot of negativity floating around, but the key to longevity in our profession is to focus on the positives while crafting what you envision your future to be.
Goals for the early, early career doctor
You’ve finished either residency or fellowship! Congratulations! Maybe you’re even board certified now. Perhaps you feel very comfortable with your specialty already and are willing to tackle all of the challenging cases that are thrown at you. The truth is that you still need a few more years to really become a hotshot. This is your opportunity to become highly proficient in your specialty. This is what you should focus on.
You might not be getting the best salary for your field, but remember that this is your post-training training. If you’re lucky, you might even find a few mentors who could help guide your way. Watch out for lifestyle inflation, start repaying your loans, and you’ll be ahead of the game.
All doctors need to focus on their savings rate
There is evidence that your percentage savings rate impacts your happiness level. This is independent of your income. If you are the paycheck to paycheck type, now is the time to make the change. You will never be happy with a $50,000, $200,000, a $500,000, or even a $2 million income if you grow into your earnings. The wave doesn’t last forever, and we all will need the prepare for that day. I’ve met a few ER doctors who travel the world, live in luxury, but always seem unhappy. Some of these gals (and guys) are picking up more shifts in the process. They also seem pretty unhappy during these shifts too. Maybe they have a big purchase coming up, who knows. Most ER doctors earn more and work less than the average internist, so income probably isn’t even a problem. Maybe the problem is really a spending problem.
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The beauty of focusing on a savings rate is that you will never exceed your earnings. Your expenses will also be tied to a percentage of your income. If you don’t cheat yourself, you will always be able to save. Your lifestyle can improve as your job position grows, but you can keep ahead of your savings by controlling the percentage of income you spend. Some of the more popular money bloggers out there actually treat their savings rate like a game, and track their savings rate obsessively every month. Fortunately, we don’t have to to micromanage our savings rate in order to win the finance game. Slow and steady wins the race, and doctors don’t have to have to play any strategic financial game in order to win. Focusing on your savings rate will get you far into your financial career.
Financial happiness comes automatically with the appropriate savings rate
Financial happiness appears to correlate with savings rate. The more you save, the less you become dependent on your day job. Early in your career this tends to be more psychological, although staying ahead of your basic financial needs builds your financial independence. The less you depend on your day job, the happy you will become.
Even if you never receive a raise for the rest of your career–and you might not in this existing healthcare climate–you will be able to estimate how much you will have saved when you decide to retire. If you need more for your nest egg, you can increase your savings rate by spending less or earning more. Easy peasy.
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