Building wealth: Take these initial steps post-training
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Key takeaways:
- Make a one-time splurge to get the pent-up delayed gratification out of your system.
- Then, buckle down and live like a resident — pay off student loans and begin to build wealth.
The concept of delayed gratification has been ingrained in us throughout medical school and residency. This mentality can sometimes lead to explosive spending as an attending when one enjoys a significant salary boost.
Try not to fall into that trap. Get the pent-up delayed gratification out of your system by making a one-time splurge. Take a nice vacation or buy some designer clothes or do whatever feels luxurious to you. But do so within reason. Then, buckle down and live like a resident for the next few years until you pay off student loans and begin to build wealth.
Time and compounding
As a young attending with youth on your side, time and subsequent compounding can help you grow an impressive next egg — one that could someday provide enough cash flow to cover your annual expenses. Imagine your portfolio working harder than you.
The prevailing philosophy of many young physicians focuses on work-life balance and shuns saving as an agonizing form of austerity and self-denial. However, having the discipline to save at least 20% of your gross income enroute to financial independence is a potent form of power and freedom.
Live below your means
Living below your means is the fundamental tenet of achieving financial independence if you wish to save and grow an investment portfolio. It is tempting and easy to live paycheck to paycheck, regardless of if you earn a resident’s salary or enjoy a several-fold-greater attending physician’s salary.
For more information:
Chirag P. Shah, MD, MPH, is a soccer and Nordic ski coach, who also practices medicine and teaches in Boston. He can be reached at cshah@post.harvard.edu.
Jayanth Sridhar, MD, is an award-winning podcaster, physician and educator who is chief of ophthalmology at Olive View Medical Center in Los Angeles. He can be reached at jsridhar119@gmail.com.
Editor’s note: Healio wants to hear from you! Our Residency to Retirement authors cover all facets of financial planning, asset protection, insurance, investment and tax planning. What topics should our authors cover next? Email Kristine Houck at khouck@healio.com with your suggestions.
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