Treat yo self? Maybe don’t... To be clear, splurging on the occasional luxury item is a perk that any financially secure physician should take advantage of. You work hard — especially right now — and you deserve to be rewarded for your service. But what if big-ticket purchases become more of a steady habit? You could be showing symptoms of a ruinous financial disease.
Ever heard of lifestyle creep? Investopedia defines lifestyle creep thusly:
“Lifestyle creep occurs when an individual’s standard of living improves as their discretionary income rises and former luxuries become new necessities. The rise in discretionary income can happen either through an increase in income or decrease in costs.”
Physicians are especially susceptible to the disease of lifestyle creep. Think about residency. You endure 3-7 years of what amounts to minimum-wage work, sleep deprivation, and the whims of senior attendings. You do this work while shouldering the burden of record-level student loan debts. Then, finally, with residency complete, that first big paycheck comes. And where does it go? Toward more prudent financial priorities, or toward replacing the beater you’ve been driving since senior year of high school?
Symptoms of Physician Lifestyle Creep
Over the years of writing about personal finance, we’ve seen lifestyle creep appear among physicians in a few consistent ways.
Physicians often miss early onset of symptomatic lifestyle creep — bad financial habits. You finally have that big, steady paycheck, and it’s making you feel a bit more financially secure. So, you start buying your coffee on the way to work daily. Maybe you feel that your wardrobe needs an upgrade. Every time a new sale from one of your favorite brands hits your inbox, you make a purchase. Or, a new streaming service is offering a free trial. You happily input your credit card info and later, the $25 monthly charge gets lost among the others.
Doctors like nice cars. Don’t think so? Next time you go to work, take a look around the physician parking lot. You’ll see an arms race of luxury. And perhaps for good reason. While many doctors were in medical school, they watched their non-physician friends out in the workforce go off and buy their first nice car while they stuck to their beaters. But what happens when you finally buy that Acura? Are you happy with it, or do you now ‘need’ an Audi? And once you have the Audi, you might as well have the Aston Martin, right?
We subscribe to the hermit crab analogy for physician home buying. You don’t see hermit crabs walking around with enormous shells on their backs. They get the smallest shell that will accommodate them, then get a bigger shell when they grow out of their old one. Some doctors, unfortunately, succumb to lifestyle creep here, too — and for reasons similar to the car lifestyle creep. They buy a sprawling, well-appointed home, even though it’s just them and a spouse, thinking they’ll grow into it. Maybe they do. Maybe they have four guest rooms that never get used. The creep keeps on creeping, and soon they’re purchasing a second home — usually by a body of water or a ski resort.
Physician Lifestyle Creep Treatment
If you or a physician you know is suffering from lifestyle creep, take heart. All hope is not lost. Recovery may take a little bit of work, but it isn’t impossible. Here’s how you can start turning things around.
New Doctors: Live Like a Resident
That first big paycheck is tempting, but you need to resist the urge to spend. Instead, continue to live like a resident for at least another year or two. Deploying that new cash strategically will pay dividends later. Priorities might include paying down student loan debt, building your emergency fund, or saving for a downpayment on a house.