After studying, stressing, and sweating for the better part of a decade in medical school and residency, new doctors and other health care professionals deserve to enjoy the perks that come with their profession. Usually, that includes great benefits and high salaries. In fact, based on data from the Bureau of Labor Statistics' Occupational Employment and Wage Statistics program, the 14 highest-paid jobs in the U.S. are all positions in health care.
But high earners in any profession can be vulnerable to "lifestyle creep," a phenomenon in which folks spend more as they earn more. Medical professionals can be especially susceptible because of the long hours they spend with their high-earning peers, and because of how inseparable that hard-earned M.D. or D.D.S. and appropriate compensation can become from your sense of self.
Here are three tips that can help medical pros avoid lifestyle creep and stay focused on improving Return on Life.
- Build a budget and follow it.
According to the American Medical Association, the average first-year resident physician earns approximately $60,000. That might feel like a lot of money if you're young, single, and thrilled to be finally cashing a paycheck. But it might also be a fraction of what you owe in student loans. Before you start applying for credit cards and upgrading your home theatre system, work out a budget that will allow you to live comfortably while also paying down your debts and putting some money into saving and investing accounts.
Once you do complete your residency, you need to be prepared to manage the jump in income responsibly. According to Salary.com, the median starting salary for a doctor in the United States is $207,532, and the numbers only climb if you're an in-demand specialist. Don't treat that bounce like a windfall. Instead, revisit your budget, scale up your comforts appropriately, and continue to pay down your debts and invest in your future.
- Don't worry about how others spend their money.
Again, issues of money, accomplishment, respect, and identity can be very difficult for some health care pros to navigate, especially at the beginning of their careers. You deserve to enjoy the money you work so hard to earn. But trying to keep up with Dr. Jones and his new boat could stretch your resources too thin too quickly. And replacing all that student loan debt you just paid down with high credit card bills or luxury leases could hurt your ability to grow wealth in the long run.
Besides, buying stuff rarely provides the kind of sustained happiness we think it will. After a few laps around the lake, your new boat will just be … your boat. That’s when less disciplined high earners might start eying sports cars for that next hit of pleasure.
Stay focused on your own goals, not someone else’s. And if you do feel like treating yourself, consider spending on an experience that will create lasting memories and expand your view of the world.
- Regularly review your life and financial goals.
As you progress in your career, it's likely that your goals are going to change. Maybe you'd like to scale back your hours so you have more time to mentor, teach, of volunteer. You might develop an entrepreneurial itch and consider opening your own practice. Or, if you've gone above and beyond when it comes to saving, investing, and planning ahead, you could start eying an early retirement.
Sticking to a financial plan can give you the tools you need to make these kinds of changes. A powerful part of our Life-Centered Planning process is that it can help people adapt and work towards new long-term goals without sacrificing the experiences that will make your present fulfilling as well. Wherever you are on your professional journey, let's talk about how we can help you take the next step.