My early financial experience

When I think of the early periods of my career and my financial management at these stages, it seems that I do not recall having asked myself a rather fundamental question.  The question was should I be a penny pincher or a free spender?  I remember times when my income had increased and how I seemed to have a pretty simple thought process about how I would spend the money.  But I don’t recall times where I thoughtfully considered how I was going to work to pave my financial path and save money.  It’s very easy to think about how to spend extra cash.  My wife and I were pretty quick to spend our extra money on travel and vacations, and I’m sure that many other physicians have done the same.  We spent our money on nice furniture and clothing, and we often spent more money on gifts at special times such as birthdays or Christmas.  So, I’m sure it would not surprise you now to hear me say that I wish that we had spent more time in those early years thinking about saving for financial success.

Savings can make or break your financial path

What I would like to propose is that you would make a conscious attempt to consider savings at all financial stages when there is an overabundance of cash.  From the simplest of views, the more you save, the more you earn.  But here’s a financial example to help you think about it.  Let’s say there is an overabundance of $5000.  Instead of spending the entire $5000, perhaps you might only spend half of that.  The other half you save.  I won’t go into the details about what to do with that savings just right now, but the more that you read Physicians In Finance, the more you will come across multiple subjects on this.  So, now that you have saved that money, time passes and you come upon the next overabundance.  Again, let’s say that amount is $5000.  Now, you have $7500 at your disposal, and your financial options multiply.  Perhaps, you again save 50%, but this time instead of $2500 to spend, you now have $3750.  Yet, you are still saving!  This is just a simple example, of course, and if you think about it, the options are really endless.  Even if you did the wrong thing financially and spent the entire $7500, you still had an extra $2500 to spend!

Financial management when extra cash comes

The situation really applies well to physicians who at different times during their financial careers find that there is an increase in income.  Certainly the biggest increase is when you go from residency out in to practice.  But there are solid financial opportunities at later points such as partnerships and profit sharing that allow for bonuses which create the situation that I’m describing.  The point is that the simple description that I am making might actually involve $10,000.  It might involve $50,000 or even $100,000.  The larger the amount, the more powerful saving can be.  Again, as I’ve mentioned before the more efficient we can become with our money, the easier it is to grow wealth.  Just keep saying it to yourselves.  Saving is very powerful.

But how do you save?  Well, one of the things that I have mentioned before has been about how important having a financial plan can be.  For example, if you and your spouse are anticipating a bonus in June, make the concept of how much you are going to save be the first item of discussion.  If you’re both on the same page about that and speak about it first, then you really have taken care of the most important financial thing.  It’s like tithing for church.  If you do it before you do anything else, then you have taken care of the most important thing first.  I want to spread the word to physicians about how important it is to think about savings first and what it does for your financial peace of mind.  Until next time, here’s to your wealth.

Disclaimer