Why physicians are not wealthy

“Money talks. Mine just says goodbye.” A physician client of mine once grumbled to me. He is in good company.

Physicians by and large, are horrible wealth accumulators. Thomas Stanley, author of The Millionaire Next Door, found that among all high income groups, physicians have the lowest tendency to accumulate substantial wealth.

This finding is not at all surprising to me. My wealth management practice focuses on physicians, so I’ve seen this happen firsthand.

Here are the top five reasons I think physicians don’t accumulate substantial wealth:

  1. They start making good money later in life. Medical school takes years and a lot of borrowed money; after that, there is residency. By the time they can practice on their own, they are in their late 30s, usually with a family to take care of and debt up to their necks. Their C+ classmates who went into sales (or law or politics,) have already been making money for 10 years.
  2. They have to live a lifestyle that befits a doctor, which usually means big houses, expensive vacations, and luxury cars.
  3. They are very busy. After work and family, they have no time left to take care of finances.
  4. They think they can do it all by themselves.
  5. Unlike successful entrepreneurs, they can’t sell their practices for good money.

Numbers 1 and 5 are impossible to overcome; they are the nature of the beast. However, 2 through 4 are within a doctor’s control.

If you can make the following adjustments, money will not say goodbye to you again.

  1. Live a lifestyle within your means.
  2. Focus on what you do best and delegate the rest. John Bowen, (my practice coach,) likes to say: “Focus on bringing home the big check.” Doubling yourself as a nurse practitioner, or a claim filer, will certainly not bring home the big check.
  3. Dedicate at least one hour per month to family finances. Stanley has found that people who do that are far more likely to be successful wealth accumulator.

Not every doctor has the inclination to do personal finance. If you don’t, you should delegate that to a highly educated, trustworthy financial advisor.

If you do, you nevertheless need some basic education. A little knowledge goes a long way. I recommend the books written by none other than a neurologist turned expert investor William Bernstein, particularly his latest, The Investor’s Manifesto.

Investing is not be all and end all of wealth management. There are other areas (asset protection, tax mitigation) physicians should pay attention to.

Michael Zhuang is founder of MZ Capital, an independent wealth management practice specializing in helping physicians achieve financial freedom.

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  • vito j rizzo

    The other truths that need to be told is that in medicine payments today are lower than they were 20 years ago. Unlike ALL other occupations, there is no opportunity to earn more for years of experince. All practice expenses rise always. This is a domed business model for the average practitioner.

  • paul

    wait… i have a big house and luxury cars? why wasn’t i informed??

    • http://Www.twitter.com/alicearobertson Alice

      They need to deny you exist:). Our doctor just bought a $2 million dollar house….said he can’t afford private school for the kiddos.

      I thought stats showed the average doctor makes five times what their average patient makes?

      Just depends on how you define rich….and how you view your self worth.

      • http://medschoolodyssey.wordpress.com Med School Odyssey

        If your doctor lives in a place like California and has a family, he or she might not have a choice but to buy a $2 million dollar house.

        • http://Www.twitter.com/alicearobertson Alice

          Actually, the house is in an upper class neighborhood so they can use the public schools. I do not begrudge it to him….he is a fine doctor who did well…that is the whole point…doctors should stop defending that they make much more than the average earner. It is not your scarlet letter. Paul was honest…he is willing to say he did well…..good on him for that and his honesty.

  • http://www.mzcap.com Michael Zhuang


    Maybe you are an exception. I know more than a few doctors who make $500k-ish and yet have retirement savings less than six months of their income. They spend their money in big houses, luxury cars and investment properties that are under water and not producing positive cashflows.

    There are many physicians who are bad at handling their wealth. I’ve written a white paper for them on the basics of prudent wealth management, you can get it at no cost here.

  • ManAlive

    This FP lives very frugally – yet still struggles financially.
    The big expense for middle-aged doctors like me is our kids’ college education. FAFSA and various government policies make scholarships unlikely for doctors’ children; we pay full freight.
    Meanwhile my Medicaid patients drive up in $40,000 cars…

    • PhD

      First of all, merit-based scholarships are open to all. I was awarded full tuition scholarships from two universities, one public and one private. Both programs are still in existence and one has expanded.

      Second: my children will be attending state college (unless they earn merit-based scholarships). They’ll graduate with reasonable loans, and the finances are doable. The only kids of my (Ivy League) college classmates who are attending our alma mater or a comparable “name brand” are those whose parents earn high incomes… many of the physicians’ kids, now that you mention it.

      Of course, it’s nice to say your kid attends Ivy College, and less prestigious to admit to State U, which goes back to the point made by the OP in #2…

      • Kristin

        I was in the obnoxious middle range of kids whose parents couldn’t afford college and who didn’t qualify for need-based scholarships. I was a National Merit Scholar, which meant I could have had a full ride, but I had my heart set on a state university (18-year-old me had different priorities–namely a boyfriend who lived near that college), so it only ended up getting me ten grand, which covered less than a full year. I sympathize with anyone who’s putting more than one child through school, especially if their kid isn’t the brightest bulb in the box. Merit-based scholarships are only useful if you qualify, and by definition, most people don’t. Just because two smart people have kids doesn’t mean their kids will be smart. And even if you get merit-based scholarships, you have to be mature enough to use them wisely, and you still need to consider the offers in light your ultimate goals. (I was accepted with a full ride to a university in Arizona, but they had a reputation for being a party school, and when I visited, their honor students lived in a separate compound… surrounded by barbed-wire-topped fences. Not exactly the red-brick vibe of my state school, and not impressive on a resume.)

        Some kids I know who got good scholarships are in more debt than I am, two years out from undergrad. It depends–it always depends–and castigating someone for spending money on educating their children is not productive in terms of dealing with the economic pressures on physicians. Yeah, if they’re pushing their kid toward a school the kid doesn’t care less about for the social value, that’s crap. But for every objectively bad parent, there are a lot of good, confused, anxious parents who don’t need to be told what a bad job they’re doing.

        • PhD

          The fact is, state schools are affordable, even on a PhD’s salary, and definitely on a physician’s salary. That is why that’s why my kids are going there. They’ll graduate with loans, but nothing they can’t manage.

          I’m guessing many physicians are just like my college classmates: their kids are attending private colleges, and the parents are paying. Come to think of it, many of the kids are attending private high schools, middle schools, and elementary schools. Luxuries, not necessities.

          • http://Www.twitter.com/alicearobertson Alice

            And for those making a half to a third of doctors we finance college for our kids. Manage to feed them to, and we deal with all the same stress with far less income. Maybe some kids just learn to expect the best on their parent’s income? And some kids work hard academically because they can’t rely on the income of their parents?

            Our daughter worked over 100 hours a week and saved every penny she could to pay the several thousands to get into nursing school. We financed private college for our son….never again:)

            I thought stats showed tgat maybe 80-90% of students finance their own college?

  • AnnR

    Don’t forget that choosing a spouse with similar accumulation priorities helps.

    If your better half, working or not, shares your feelings about lifestyle a major source of pressure to spend beyond your means is eliminated.

    • Max

      That’s why many physicians just happen to choose spouses who are also physicians. Hmm..wonder how that happens…and why.

      • http://Www.twitter.com/alicearobertson Alice

        Choosing a spouse by income? Um….maybe Tina Turner was right….What’s Love Got to do With It?:)

  • http://BeyondMedSchool.com A.p.s.h

    It is precisely because of reason #4 that I think doctors should consult with a financial advisor at least once in their careers.

  • http://myheartsisters.org Carolyn Thomas

    Oh, please . . . Should we plan a big telethon to help those unfortunate beleaguered MDs who “….have to live a lifestyle that befits a doctor, which usually means big houses, expensive vacations, and luxury cars…” ?

    How would such docs ever get accepted into medical school in the first place if they are too stupid to know you can’t live beyond your means? My parents, who were uneducated but hard-working farmers, somehow instinctively knew that reality their entire lives. This post is insulting to physicians as well as to those of us will never have the kind of earning power that medicine brings.

    Does anybody else smell a self-serving plug for Mr. Zhuang’s “independent wealth management practice” here?

  • http://www.mzcap.com Michael Zhuang


    I found your comment debatable in a number of points.

    1. I don’t know if you have the opportunity to observe doctors and how they handle personal finance up close. In my job, I got to see many doctors who are extremely successful in their practices and yet still are utterly un-disciplined in their personal finance. (I have seen frugal and financially prudent doctors as well, but they usually don’t need my help.) It does not reflect badly on their intelligence. It actually takes mental energy to “live within one’s means.” Medicine is a high pressure job, it is highly likely many doctors simply do not have much extra mental energy to spare. They are certainly not beyond me giving them a friendly reminder.

    2. Is there a little self-serving element in my post? Absolutely! I do want doctors to know about my services and the white paper I wrote for them. But I can tell you, in my profession (wealth management,) it will serve me far far better if I spend the time playing golf with corporate chieftains instead writing educational blog posts for physicians.


  • kms,RN

    As an RN & wife of a LI cardiologist, I found this article to be pretty accurate. However when I read comments like from ALICE-it annoys me because I can guarantee “her neighbor” practices surgery-their incomes are higher than my husband’s because they can bill for procedures/surgeries. My husband who has over 20+ years of expertise in Nuclear Cardiology is doing 1/3 less stress tests due to INSURANCE COMPANIES refusing to allow the test or just flat out will not pay him for these necessary lifesaving tests. My husband has not had a salary increase since 1994-mostly in part due to decreased reimbursements & increasing business costs. I would like to know if ALICE knows what is like to work 14+ days & then be on “call” all night & then a good 1/3 are unnecessary calls of people trying to avoid going to see him for an office visit & just happen to have “sinus infections” @ 3am and need antibiotics for example. MD’s don’t get paid when they are call. You also left out the expense of malpractice insurance-my husband’s insurance is outrageous-but that’s the price you pay for practicing medicine in litigious NY state. My husband along w/a great number of physicians I have worked side by side with practice because they want to help people not just buy a fancy “car”,etc…I would love for Carolyn to have to follow an MD for an entire week & see if she still feels so many MD’s are just careless spenders…

    • http://myheartsisters.org Carolyn Thomas

      kms, it’s not clear if you are directing your comments to Alice or to me, but you have missed my point. My only objection to this post was in Mr. Zuang’s offensive characterization of docs needing to “live a lifestyle that befits a doctor” even when, according to him, they are living well beyond their means. That’s an insulting portrayal of any lifestyle, doctors included. Nobody is comparing hard-working cardiologists to procedure-billing surgeons here, so I’m not quite sure why you’d be so defensive about a comparison that didn’t exist.

      • http://www.mzcap.com Michael Zhuang

        I have advised many doctors that their lifestyle is beyond their means. None got offended. In face, many of them hire me to keep them on track financially.

        I am sure many doctors tell their patients their eating habit is not helping their health. I wonder if Carolyn is offended by that as well.

    • http://Www.twitter.com/alicearobertson Alice

      Well….your irritation is mislead as your foundation of your own practices. My doctors are salaried, and only people with money hire people like you…the rest if us need every penny, and do our own financial type of counselor to survive…not thrive.

      I wonder though…..just how good you are with details? You missed several.

    • http://Www.twitter.com/alicearobertson Alice

      You assume way too much. My husband’s salary was almost cut in half after 9/11 and I have six children, one with cancer…one who had cancer.

      I think doctors are usually paid fairly….some are rogues who play games like the surgeons who made millions each by not reporting problems with a device (it’s in the news this week…15 surgeons made about $4 mil each).

      Patients do not grudge doctors a good living…they grudge all the whining and denialism….that this thread is exposing so well…..the masses just want treated well and when that happens things will improve….but this type of outrage just feeds the stereotype others lean on to make their point….some doctors or their wives want to play kill the messenger and act like spoiled children demanding respect that needs to be earned…you hurt the good, hard working doctors who are worth more than they earn)

    • http://Www.twitter.com/alicearobertson Alice

      Okay…cut out the insurers…make some easy money off the governmentvso you can live even better than the surfs. And hurt more patients. Keep your eye on the prize…not the patient.

      Andrew Carnegie said: There is no class so pitiably wretched as that which possesses money and nothing else.

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