6 Goals for doctors seeking financial independence

By Jonathan Ford Hughes | Fact-checked by MDLinx staff
Published October 7, 2022

Key Takeaways

  • While a medical career comes with high earnings potential, you still need to be smart about your finances.

  • Setting a budget, paying off debt, and saving for retirement are key to financial independence.

  • If you're worried that you've missed your window, know that it's never too late to get smart with your money.

Being a doctor offers many rewarding opportunities, one of which is the opportunity to achieve financial independence. But what does financial independence actually look like? It can vary from doctor to doctor because each doctor has their own set of financial goals. 

As Stephen Covey suggests, it helps to begin with the end in mind. In other words, what are your financial goals? Establish those goals, and financial independence becomes a bit more concrete and achievable.

Getting started

Before you take another step in determining your financial goals, you need to have a conversation with your spouse or significant other if you have merged finances or live together. If you want to achieve your goals, you need to first make sure that they are aligned with your partner’s views and goals. If they aren’t, then any financial systems you put in place are bound to fail.

You can use this communication roadmap to achieve shared understanding. Ask your special someone what their parents’ relationship with money was like and what lessons or values they derived from it. Whether they were wealthy, poor, or somewhere in between, their experiences with money at a young age have shaped how they think and feel about it now.

From there, explore how they feel about money in the present. What are their beliefs and values? How have they changed, if at all?

For example, being charitable might be a priority. Or, if money was scarce in childhood, maybe building cash reserves is important. Maybe they’re buried in student loan debt and that’s something they’d like to avoid for their children. The only way to discover these things is to talk about them. Once you’ve established a consensus, you can then move on to entertaining some possible goals. Here are some options.

Set and stick to a budget

Budgets are where most of us set out with the best intentions only to end up binge-spending on shoes, electronics, or fitness equipment we won’t use. Setting and sticking to a budget is difficult and has a high failure rate, but it’s a critical and worthy financial goal. That’s because your budget is your roadmap to financial well-being.

How to start: Thankfully, technology has made the budgeting process much easier. Apps that automatically link to your accounts and monitor your spending abound. You can set spending limits, monitor cash flow, and track trends over time.

Build an emergency fund

This is perhaps the least sexy financial goal, but arguably the most important, second only to your budget. The idea is to have anywhere from 6-12 months of living expenses in cash that you set aside and forget about.

This cash reserve prevents you from amassing debt when dealing with unexpected events, such as auto repairs or illness.

How to start: Open a high-yield savings account and use direct deposit to send a portion of each paycheck into the account. Online banks and credit unions typically offer higher interest rates than you’ll get with brick-and-mortar banks.

Pay off student loans

In 2018, doctors graduated with an average of nearly $200K in student loan debt. For the sake of argument, let’s say that many of these loans carry an interest rate of about 6%. That means the average doctor is paying about $66K in interest over the course of a 10-year loan. You can buy a car for that amount.

How to start: While you might be saddled with student loan debt, the good news is that you have options for paying it off. The best news is that you might be eligible for student loan forgiveness if you meet certain criteria.

Save for retirement

Nobody wants to work until they die. You may love medicine, but there will likely come a time when you’re ready to hang up your stethoscope and pursue other interests. Saving for retirement is a goal that’s often thwarted by an overload of options and information. The keys are starting simply and early.

How to start: Odds are, your employer offers some sort of retirement plan. Some may even match contributions to retirement accounts up to a certain percentage. As soon as you’re hired, start contributing something to your account, even if it’s a minuscule amount. You have time and compounding interest on your side.

If you can, take advantage of any matching contributions by contributing the maximum that your employer will match. Otherwise, you’re leaving free money on the table.

If your employer doesn’t offer a retirement plan or if you’re self-employed, things get a bit trickier. You can either go the DIY route and handle your own investing, or you can hire a financial advisor to manage your investments for you. DIY is free, but you might blunder and lose your shirt. A financial advisor comes with costs attached, but it mitigates some of the risk, provided that you choose an ethical and sound advisor.

The bare-minimum approach is to open an individual retirement account with a major financial institution and contribute what you can as soon as you can. However, you will want to revisit this once you start amassing wealth. You may need to hire a professional or get more serious about managing your own money.

Save for a house

Shelter is one of life’s necessities, and for many doctors, owning a home someday is better than being a renter. But this goal is low on the list for a good reason. Successful and relatively pain-free home ownership is contingent on many of these other financial goals. If you check out this post, you’ll see that many doctors make three big mistakes when buying homes:

  1. They buy too much house (A house that’s unnecessarily big)

  2. Too soon (Prior to creating a budget, building an emergency fund, and paying off loans)

  3. With the wrong form of financing (Obtain a 30-year mortgage or worse, a doctor loan)

How to start: See to the other goals on your list, then revisit this one. It takes a lot of cash to buy a house. And homeownership, unfortunately, comes with a lot of surprises. As in, surprise, you need a new furnace! Or surprise, your attic has a mold infestation!

Save for college

Maybe you don’t want your child to be saddled with student loan debt like you were. Tuition costs are expected to keep climbing in the years ahead. How much money will you need to set aside?

How to start: As soon as your child is born, start setting money aside. In most states, a tax-incentivized 529 plan is the best way to save for college. These accounts are similar to individual retirement accounts except the funds are used for education expenses.

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