You’ve endured years of medical school, grueling schedules and lower pay. Once you’re finally earning money as a full-time physician, it can be tempting to upgrade your lifestyle accordingly.
This is called “lifestyle inflation,” and it’s a money downfall that many doctors are all too familiar with.
It doesn’t matter how much money you make if your expenses keep you broke. Here are some tips to keep overspending at bay while still enjoying your life:
Avoiding Lifestyle Inflation: Take Stock of Your Debts
First up, carefully calculate what you owe. If you’re like most doctors, you have some hefty student loans to pay off. You might also have debt you accumulated during school and residency – credit cards, car loans, etc.
Get a firm grasp on what you owe so you can make a plan to tackle it head-on. Making your debt payoff a priority will free you up financially later on.
Catch Up on Retirement
If money was tight during residency, you probably have some catching up to do on retirement. Take your new income level into account and make sure you are adequately putting away the right amount. (Hint: Don’t rely on your 401(k) alone.)
This is where working with a fee-only financial planner can be a huge help. If you’re not sure what to save now that you’re making more, or you simply don’t have time to sit down and do it, a financial planner can help you get on track.
Don’t Try to Keep Up With the (Doctor) Joneses
Being a doctor can bring pressure from society, friends and family to live a certain lifestyle. This pressure can even come from seeing how other doctors live, and might cause you to cave to lifestyle inflation.
But your income can be very different from your colleagues’, and your spending and personal goals should reflect that. Even if you make the same amount as someone else, don’t feel like you have to buy the bigger house or the better car right now just because they did.
You need to take care of yourself and your family first, so keep your attention focused on your own financial goals.
The past decade or more of your life might have felt like a whole lot of waiting for “someday” – when you got into the school of your choice, or landed your dream residency position, or cashed that first big paycheck.
But having patience can seriously pay off in the long run. Driving your old car for a few more years or postponing a move until you have a bigger down payment saved up might just feel like even more waiting. But the time will pass, and having that extra money in your budget can go a long way.
Enjoy Yourself – Just Stay Mindful of the Price
There’s nothing wrong with buying nice things that you can afford. If you have the money to take the family trip you’ve always wanted to go on or upgrade to a safer car, then go for it. But those decisions should be well thought-out and budgeted for, so you’re not left regretting it later.
The cliche is true – the best things in life are free (or pretty darn close to free.) You might enjoy most of the purchases you make, but after awhile, the luster fades. So keep your spending in check and pay close attention to what has brought you the most happiness over the years. That will help you determine which investments are truly worth it.
About Your Richest Life
At Your Richest Life, Katie Brewer, CFP®, believes you too should have access to financial resources and fee-only financial planning. For more information on the services offered, contact Katie today.