As a physician, you’ve dedicated your life to helping others, often at the expense of your own financial well-being. Despite earning a high income, many physicians find themselves living a middle-class lifestyle, unable to retire early or achieve true financial independence.
Why does this happen? It’s often due to habits and mindsets that hinder wealth-building.
Below are seven things that might be holding you back—and how to overcome them to secure your financial future:
1. Living Like You’re Rich Instead of Building Wealth
Many physicians feel pressure to showcase their success with lavish homes, luxury cars, and extravagant vacations. This overspending traps you in a cycle of consumption, leaving little to invest in assets that grow over time.
Wealthy individuals prioritize productive investments—like real estate or private equity—over depreciating purchases. To break free, live modestly and redirect your income toward wealth-building opportunities. Seeking status with depreciating assets is disease that will side track your efforts to build wealth.
2. Delaying Investment Due to Career Demands
The road to becoming a physician is long, with years spent in medical school, residency, and sometimes fellowships. Working 60-hour weeks is challenging – I get it. This often means you start investing later than others, missing out on the power of compound growth.
Time is your greatest asset—don’t let it slip away. Begin investing like the UHNW (ultra high-net-worth) as early as possible to set the stage for long-term wealth. Don’t rely on 401Ks and money managers that only sell you Wall Street products.
3. Not Educating Yourself on Personal Finance
You’re an expert in medicine, but personal finance might not be your forte. Many physicians lack the time or inclination to learn about investing, leading to suboptimal choices like high-fee funds or undiversified portfolios.
Knowledge is power—take time to understand basic investment principles or partner with a trusted advisor to make informed decisions. Make time to discuss your financial objectives with those in the position where you want to be and the financial planner down the street. Obtaining insights from those already at your destination can be the paradigm shift you need.
4. Sticking to Conventional Wisdom
Traditional investments like stocks, bonds, and mutual funds are familiar, but they may not maximize returns or tax benefits. More importantly, they are exposed to more volatility.
Wealthy investors turn to alternatives—like private equity or commercial real estate—that offer higher growth potential and tax advantages, with less reliance on volatile markets. Explore these options to diversify and enhance your portfolio.
5. Relying on a Single Income Source
Your medical practice income is substantial, but relying on it alone leaves you vulnerable to economic shifts, healthcare changes, or unexpected health issues.
Passive income streams from investments can provide stability and growth. Consider opportunities like cash-flowing real estate or private businesses to reduce dependence on your day job.
6. Overlooking Aggressive Tax Planning
Taxes can erode your investment gains if not managed wisely. Many physicians miss out on tax-efficient strategies, such as investing in private partnerships that treat long-term gains as capital gains, taxed at lower rates. A smart tax plan can preserve more of your wealth—consult a tax advisor to optimize your investments.
7. Letting Pride Prevent Seeking Help
You’re used to being the expert, but investing requires a different skill set. Overconfidence or reluctance to seek guidance can lead to costly mistakes. Partnering with experienced investment groups can leverage expertise to your advantage, ensuring better outcomes without the burden of doing it all yourself.
Breaking free from these habits can transform your financial trajectory.
Focus on productive investments, start early, educate yourself, diversify income, plan for taxes, and embrace expert guidance.
Shed your old beliefs about investing and employ the principles of those already in the position you want to be.