One of the biggest sources of struggle for new physicians is the social construct that a doctor can afford anything—that the title of M.D. should instantly grant a millionaire’s lifestyle. Unfortunately, this is simply not the case. In light of exorbitant student loans, higher taxes and the social expectation to spend, spend, spend, physicians need to be free from the pressure of the Joneses next door and know when to rein in their spending and receive help for doctors financial planning.
Learning to embrace frugality
It’s easy to believe that your happiness level will increase exponentially with your paycheck, but studies show this to be untrue. In fact, researchers have found that the maximum amount of income related to happiness is $75,000 per year, far below the average physician salary.
“Having healthy kids, a loving spouse, vehicles that run, a roof over our head, and a stable job is about as good as life can get,” says oncologist Matthew Cassell, M.D. “The size of my house and the symbol on the front of my vehicle have no influence on my happiness. It’s a matter of contentment.”
Seven reasons to go frugal
- Expensive medical school loans leave physicians with hundreds of thousands of dollars in debt when they complete residency.
- Physicians are experiencing a less-than-certain financial future because of increasing costs of compliance, the move to an employee model, some patients’ inability to pay their bills and many other factors.
- Saving for retirement should begin as soon as a physician completes residency, especially considering physicians have fewer working years because they complete training at a later age.
- Life insurance and disability insurance are particularly expensive for doctors, and the higher your cost of living, the higher your insurance.
- The progressive income tax code requires high-earners like physicians to pay out a higher percentage of their income.
- The fact that society expects doctors to spend lavishly doesn’t mean they should; in fact, this is a good opportunity to buck the stereotype.
- Your own personal, financial and professional goals should be about freedom, and it’s prudence—not excess—that will get you there.
By embracing frugality, you’ll manage to maintain a healthier—and happier—lifestyle while working in the medical profession.
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