6 goals for doctors seeking financial independence

By Physician Sense, for MDLinx

Published August 2, 2019

Key Takeaways

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.

Start here

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 cohabitate. 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 wellbeing.

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. Check out this overview of financial apps and pick one that best suits your needs.

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.