The challenge in achieving financial freedom is that there is no single route to reach your goal. This means that there is no single cookbook to building wealth, only a countless number of recipes that others have written accounting what has worked for them. The frustration that many of us have in reading about others’ success is that there is never any guarantee that you or anyone else could replicate the outcome. But that is life; we just have to learn from others and make the best possible decision for ourselves.
Doctors are fortunate in that their occupation tends to be relatively stable despite the growing factors that erode physician satisfaction or autonomy. To this end, most doctors can just work hard at their day (or night) jobs for income and focus on controlling expenses. Controlling the doctor financial freedom pathway is actually pretty simple in theory. Let’s see how we can stratify the trajectory to financial freedom below:
Allergic to debt
The majority of students, residents, and early career doctors I encounter fall into this category. They are debt averse, maybe because they have read so many accounts of others who have been in their shoes go through living a bare-bones existence. Discounted Pop-Tarts, 12 for $1 ramen packs, leftover grand rounds meals—you name it, these guys have done it. Some of them avoid getting traditional loans for their education by borrowing from their parents at a set interest rate. Some of them carve out their homes and apartments into rentals. It’s quite creative and impressive some people go about cutting costs and avoiding debt.
The reward? Being debt-free confers a good deal of psychological affirmation. It also gives you absolute control of where you income goes (none of it goes towards repayment of debt). As your income rises in your career, you can put more of it towards your final net worth. Is this method the fastest way to get to financial freedom? Some people would think so.
You went into medicine because you like stability. No gambling, no risk taking…just good ‘ole fashioned intelligence and hard work. If you can grind through the high volume of patients and put up with ever-increasing administrators, you can get a good income. Save as much of it as possible, and you’ve got yourself a good nest egg.
The career workhorse is not debt averse; she borrowed for her medical school education and for her home and vehicles. There is nothing wrong with leveraging capital in order to live a lifestyle that you worked hard to earn. The way to financial freedom through this trajectory is simply to automate a fixed amount of savings from your paycheck. Set your savings rate to 20% of your paycheck, go for a standard career in medicine, and you will reach financial freedom. Period.
Income and side-hustle focused
There are also physicians who are keen on focusing on ancillary income. Real estate, book deals, courses, and whatever else that can generate income is fair game. There is a fascination with passive income these days, where the effort is put forth ahead of time to generate income with little upkeep indefinitely. Some of these are low yield; others, like real estate can be high risk and high reward. Many of my colleagues have been fortunate to bet big on ancillary investments outside of their profession and built up a revenue stream independent of their work.
The very fortunate side-income physicians have been able to supplement and subsequently supplant their primary working income as a doctor. How common is it to be able to achieve financial freedom through this route? You be the judge.
The majority of doctors are going to be career workhorses. There is nothing wrong with that—that’s how we advise students. You should choose a career that you actually want to focus your time on. If you happen to find another calling to supplement your income, so be it.