The following is a reader take by Docblogger.
The notion of a wealthy doctor is ingrained in our society. If you ask one hundred random people who the wealthy people are, most would name doctors and lawyers. Mothers still dream of their child becoming a doctor or at least marrying one.
Doctors, especially the younger ones, would probably disagree. And not because of what their outstanding student loan balance is, or all those years of delayed gratification spent doing residencies and fellowships.
It’s because when we are finally done with all the training and become attending physicians with a better salary, we do not feel any richer than when we were residents or fellows. And most of us ARE not any richer.
There are several reasons for that. Physicians as a group do not have any basic financial education. We spend years acquiring medical knowledge and have no idea about budgeting, investing and saving. Nobody ever taught us how to handle our own personal finances, let alone business matters.
We think investing is too complex and defer our personal financial matters to “professionals”. It is known in the financial industry that doctors make the worst investors.
For a doctor, the idea of not acting in the best interests of the patient is unthinkable. The financial industry is far from such a noble notion. Do we have a slightest idea about the true reasons why our financial advisers recommend a particular mutual fund or annuity? How sure can you be that your interest is the only interest considered by those you entrust with your money?
We live in the age of conspicuous consumerism. The powerful message that society gives us is to spend. Spend conspicuously. Don’t just buy a car, buy an expensive car. You’re a doctor, after all. High income equals wealth or so we are made to think. All those years of delayed gratification mentioned above don’t help either, you WANT to live that conspicuous life everybody tells you to live.
How long can you sustain yourself if your paycheck stops coming, say, next week? How far are you, in financial terms, independent from your current source of income? Your job? How much are you truly paying for your lifestyle in interest on your mortgage, car loan, and credit cards? How “expensive” is your 401(k) in terms of all the fees they charge you for the privilege of having YOUR money under THEIR control? What do we know about the basics of investing for the long-term and the most cost-effective way to do it?
These are the questions we need to have an answer to. They are not as hard to find as it might seem. Remember, the only people truly and genuinely interested in our financial independence are physicians themselves.
Docblogger is a physician who blogs at Doctor’s Wallet.
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{ 15 comments }
We doctors may not get paid in the upper echelons of the global pay scale, but we do very well in terms of the big picture. The tragedy in our society is that teachers, in whose hands the future of civilization lies, get paid so little.
As a lawyer (who represent doctors) I can tell you that you hit on the #1 reason I believe lawyers (and probably doctors) aren’t as rich as people think – peer pressure. I fight daily against the mindset that just because I graduated from law school, I should suddenly live in “that” neighborhood in a house twice the size of what I need (or can afford). The unbearable shame of not having an interior decorator or a $50K car… I don’t even WANT that stuff, but I feel the peer pressure worse than in high school. Blech.
Hi Kevin,
You are absolutely right – I am a GP in the UK, and likewise was encouraged to buy numerous mutual funds, insurances etc by various financial advisers. It was only after a year of extra-ordinary financial education that I realised what I was missing out on – I now invest in property and business, and have a virtual account on the US stock market – to go live when I am getting consistent results. When I think how little return I had on funds on the stock market (my funds performed less well than the FTSE) and what I am now likely to make in buy to let property (well, as long as I buy the right target properties) I am just grateful that I am where I am!
Because of all this information that I have learned, I have set up a website to let other doctors know about property and the stock market etc – http://www.FinancialFreedomForDoctors.com – do take a look!
All the best with your investing!
KR
Alison
Dr Alison Grimston
alison@alisongrimston.co.uk
What a load of crap! People are taught the financial basics by their parents — just like all the other basics; at home, as they are growing up, long before they’ve selected their career, much less begun training for it. It’s the fact that the “financial IQ” of the general public is so abysmal which accounts for so many lousy decisions made by so many — including doctors.
I don’t follow your logic. You seem to blame the public for having the perception that doctors are more wealthy than they really are, but you also acknowledge that you’re buying the expensive cars and houses due to “peer pressure” and feelings of entitlement.
There is a section of our community filled with $650,000+ homes, and yes, most of the people living there are doctors. Most are not private practice; they belong to a large clinic association which essentially has a monopoly on our health care. Maybe I’m wrong, but I strongly suspect these people have the money to back up their lifestyles.
Those who don’t, however, have no one to blame but themselves. Peer pressure is a pretty weak excuse for living beyond your means, whoever you are.
I think “rich Doctor” perceptions are a carry-over from the 70s and 80s. At that time the ratio of physician incomes to the general public was much greater. I have seen a pay-stub from an internist that worked at a multi-specialty clinic here in the south (he was also a part owner). He was making 100k/month!! This was the late 70s. So, in relative sense, he was extremely wealthy at that time. Because there has been a loss of income over the last decades compared to inflation, the ratio of MD income to the average income has shrunk. Other fields absolutely trump medical incomes now (Wall Street, big law firms, etc.). Many physicians note these incomes in other fields and feel the need to keep up with those “jones” as well as compete within their own ranks. So, you see the fancy cars and houses, etc, when, on 250k income, they are just upper/middle class now. Additionally, most docs I know spend almost everything they make each month. So, they have no wealth, only income and toys (many of these toys on credit). It is a very delusional way to live and I think contributes greatly to physician dissatisfaction. Those who strive for money or stuff are never happy because you can never get it all or have enough….(Remember when my dad the doctor made ….xyz). Those were the good old days. But, those days are far gone. If physicians would realize that if they want to live large and make serious bank, they should have gone to MBA school from the start.
Vera is absolutely correct.
“As a lawyer (who represent doctors) I can tell you that you hit on the #1 reason I believe lawyers (and probably doctors) aren’t as rich as people think – peer pressure.”
The issue is largely how much of this is self-imposed. I live very simply compared to my peers but suspect I am far better of in terms of wealth and security. I am the anti-Jones, the person who makes you feel comfortable as a friend because you don’t feel the need to keep up.
Much of the rat race is all about image rather than substance. And you senior partners in any practice would like to keep their wage-slaves spending, dependent, and needing to work, rather than able to negotiate from a position of wealth and strength. After all, they made the same mistakes and need someone to finance their bad financial habits.
The rich doctor “perception” is actually the reality. US physicians are the highest paid profession in the world by far.
Now, what you do with your money is another story, but your average income is over $150,000/yr. The next highest is almost $50,000 behind you.
marianas… I hate how people lump doctors in with teachers. Teachers get three freakin months off a year, as well as every holiday and several weeks with christmas and spring breaks. They also get a sweet pension and benefits. You know what I get when I’m on vacation? NOTHING. And how many calls do they get in the middle of the night or on weekends? Gimme a break. They are more whiny than any occupation out there. I don’t know where this mentality about the “poor teahcer” even came from. Let em spend 110 hours a week on call and then they can bitch. My high school teachers were some of the laziest and dopiest people on the planet. Did you forget about your own expericences with teachers? All of them were altruistic saints living in poverty? Gimme a break.
Along with being the wealthiest profession in the world, I believe the Dept. of Labor also concluded that physicians are the most self important and yet whiniest profession as well.
It’s quite a trifecta.
Mike,
I suppose we all carry our own experience with us. I’m thankful for my high school teachers, who were a dedicated bunch of folks. In addition to being a physician, I co-founded a school and work with teachers as a Board member. Every profession (including ours) has its slackers. Nevertheless, the role that teachers play in advancing civilization is one of the most important ones. I’d like to see society hold them in high esteem, which does not mean that any esteem or any money has to be taken away from you. In Asia, teachers are considered as prestigious and as respected as doctors (if not more so).
Certainly, when you look at the real value of professions to a society, it can’t be argued that football players and rap stars and investment bankers are more valuable than teachers. Well, you could argue it, but I would have to respectfully disagree.
David
i know that this is not related to the post but i was wondering what your take was on this article
http://www.commonwealthfund.org/publications/publications_show.htm?doc_id=640980
anon 9:50 pm:
the highest paid professions are investment banking, portfolio managment, and some of the other financial professions, if you include the bonuses that make up a large part of their compensation:
http://wiki.answers.com/Q/What_are_the_highest_paying_jobs.
I am not complaining, or whining. I’m just pointing out that a doc’s salary is often most of his total compensation; we don’t get stock options and bonuses. By the way, as a (mostly) self-employed physician I have to pay for my own health insurance and my own retirement out of my “salary”, there’s no company match for me.
marianus/dave…once again, you miss what I’m saying. They DONT WORK AS HARD AS DOCTORS!!! They get plenty of compensation. As Michael RAck said, I get NO BENEFITS! I’m not saying teachers aren’t important. Hell, I need my GARBAGEMAN more than football players. But so what? Are you saying teachers work harder than garbage men? Or Truck drivers? Teachers make pretty much what they ought to make. They are held in high enough esteem in this country or any other. They arent hated and called “whiny” like doctors (on this site anyway)
Humm….As I was looking for another document, I ran across this. I find this so amusing. I teach…I do so 11 – 13 hours per day, with a 20 minute lunch and no prep time. I go from 8 a.m. to 9 p.m. and let’s see plan, plan plan until I collapse at 2 a.m. in the morning. Oh wait…tonight…I don’t get to sleep I get to right that 90 page monthly report and translate it…I do it every month off the clock. And then let’s see I got to call the parents and CPS, and all the fun things off the clock. Nice! Let’s see….I think I make less than $3.00 per hour when I consider all the things I do off the clock.
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