How to set yourself apart

The journey out into better finances and wealth will require making some difficult choices. For the beginning physician, one of the most difficult choices will be how to manage your money at the beginning. Without a doubt, most of your colleagues will begin down a path that actually moves away from wealth. They will spend money on things and excesses which are pleasing in the short term. They will buy fancy cars, large homes, country club memberships, swimming pools, etc. If you can avoid this trap from the start and actually begin your career living on 80% of what you make, you will have some major opportunities in time to come.  Your wealth will be jumpstarted.

Let me first clarify that you must be using your net income as a reference base. You’re already going to be paying a large percentage of your income in taxes. So, remember to begin with the correct reference point. At the start of your career, I do think it’s a good idea to be contributing the maximum amount allowable to a retirement plan.  I do have some different opinions about just how great tax-deferred retirement plans really are, especially if individual tax rates skyrocket between now and the time that you start withdrawing your retirement funds. But for now, focus on this one point. Try to simply eat what you kill. I know it’s very difficult to do this perfectly, but we don’t need perfection to create wealth. We just need guidelines that we can use to the best of our abilities.

 

Again, like I mentioned in “Keys to growing wealth as a physician”, you will be making more money than you ever did before. So, it should be easier to set some controls on your spending at the beginning versus being out of control and getting yourself into a rut. If you live on 80% of your new net income, then you can focus on immediate debt (such as school loan debt) as well as safe investing. Growing your salary slowly and growing your wealth over time is a solid plan. Make every attempt not to spend money on things that don’t increase your wealth.

 

The key is to start out this way. If you do so, you can create a regular learned pattern. Then, if you can maintain it for a few years, you can actually be well on your way towards financial independence. Then you’ll be able to focus on medicine, and you can practice for as long as you want to. Even if medicine isn’t quite the lucrative opportunity that it once was, it is still a wonderful job, and you will enjoy it much more with well-managed finances.

 

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