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I have seen many headlines in the last few weeks about the Bloomberg Report telling the world that Taylor Swift is a billionaire. When they discuss how they came to this conclusion it becomes clear that a mistake has been made. Everyone reporting this has confused the concept of earning a billion dollars over a lifetime with having a net worth of a billion dollars. Without talking with Taylor Swift or her accountant, no one could know her actual net worth.
Physicians deal with this issue as well. We earn a very high income, yet due to high debt and spending, we could have a negative net worth. In fact, I recently met a physician who had been earning $800,000 a year for the previous ten years. According to the Bloomberg calculations, they might say he is worth $8M. Yet, his net worth is near zero. He spent the money as fast as it came in.
When looking into the Taylor Swift story, the only thing they discussed that could be considered part of her net worth (an asset) was her music catalog, which is estimated to be worth about $500M. Everything else that was listed was something she had earned (income). At best, they could only estimate how much of those earnings belonged to her and how much was spent on overhead in producing that income. There was also no mention of her ongoing expenses, which are crucial to calculating an amassed net worth.
This issue of equating net worth and income throws a lot of people off when looking at their own finances. If a prominent organization like Bloomberg can make such a mistake, so can us mere mortal physicians. Let’s examine what we do know about Taylor from this report and how it might translate to physicians.
Taylor Swift is a musical phenomenon
There is no question that what Taylor has done is remarkable. She has earned over a billion dollars making music. I am a musician who used to earn money playing music in a local band. But local musicians do not make much money. Only a few musicians make it big like Taylor has.
I recorded an album of my original music while in medical school. After completing the album and not finding a specialty that I enjoyed, I almost quit medical school to pursue music full time. What stopped me? There were so many musicians who were better than me who had to bum a ride to work. It’s a very small percentage of musicians who can make a living playing music. In contrast, there are very few physicians who did not earn a very nice income for their work. I decided to stick with the path that was nearly guaranteed to do well financially. Eventually I rotated to a specialty in which I fell in love with, general surgery, which sealed the deal.
I heard a joke when I was trying to make the decision between music and medicine.
What is the difference between a large pepperoni pizza and a great jazz guitarist? The pizza can feed a family of five.
Taylor doesn’t have a side gig
Side gigs are becoming popular to those working in the medical field. About one third of doctors do something to earn money outside of medicine. Yet very few physicians need to have a side gig. They make enough money to live a very good life while saving for retirement. But they feel the need to have a side gig to earn even more money, to have an even more expensive lifestyle.
The same thing happens to the big stars in music. Once they make a name for themselves and have a platform, they can get endorsement deals or start another brand and their following will spend money on their recommendations. These include clothing lines, beauty products, alcohol, fragrances, restaurants, and books.
Taylor did not cross the billion-dollar earnings mark by using side gigs. She did it with her main gig, music. She has used many ways to capitalize on her music: royalties as a song writer and as a performer, concert revenue, selling her merchandise at live events, filming her concert and releasing it as a movie, cutting out the middleman who distributes the movies and instead going straight to the theaters, and re-recording her old albums that others own so she has full ownership and control.
Physicians should take this to heart. If we want to earn a greater income as a physician, there are things we can do with our skills that can boost income: being available to take consults; working extra shifts; negotiating a production bonus; getting a signing bonus; having student loans paid by employers; moonlighting; providing ancillary services in the office such as ECGs, audiology, x-rays, ultrasound, vascular studies, EEG, sleep studies; and more.
All of these listed activities are extensions we can use to get more income from our services just like Taylor has been using to make more income from her music. If you really think you need something else, check out the book, The Doctors Guide to Smart Career Alternatives and Retirement.
Owners make more than employees
Taylor learned this lesson when her recordings were owned and sold by her label, and only a portion of the proceeds from her albums went to her. Big money goes to those who own the recordings. So, she re-record those albums herself and is the owner of the new versions. There are now two versions of her older albums, Taylor’s version, which she owns, and the original, owned by someone else. Her fans will likely buy her version. She also negotiated with her current label so she will own her recordings in the future.
Physicians need to take heed. Unfortunately, many of us have become employees of big hospital networks, so the hospital then owns the fruits of our labor. They collect the money from our work.
Medscape has shown us that we lose, on average, about $30,000 a year by becoming employees. That doesn’t include all the ancillary services we could have profited from if we were the boss, like ECGs, audiology, ultrasounds, vascular studies… Maybe it is time we got that money back. Time to own our work and retain all the profits from our labor.
Don’t let the side gigs take over
Taylor may not be capitalizing on her value with side gigs, but she doesn’t have to. Other musicians have shown that side gigs can be a huge source of income once they have a big platform. Sometimes, the side gig takes over and the original gig gets pushed aside, especially if the side gig pays better.
I have seen this many times when a side gig becomes the main gig. If the platform is large, you can sell anything, and most do. Taylor, however, has stayed with her passion, music.
I have witnessed physicians who start a side gig to create passive income so they can cut back on work to enjoy more family time. Then they quit medicine, work just as hard at their side gig, and still don’t see their family. Beware of this phenomenon. Also, beware of the temptation to sell anything to make a buck when starting a side gig.
Once you have a platform, there will be a big incentive for you to use your platform to sell things for others who want to take advantage of your platform. They will pay you well for the privilege.
I have been approached by many people who want space on my website and in my blogs who want to sell things I don’t believe physicians should be involved in. I politely decline their request. I’m not sure if I could have said no if I was convinced I needed the money or if they offered me such a large amount I might have a hard time turning down. Fortunately, I already have enough money so it is easy to politely say no.
I don’t know if Taylor Swift is a billionaire. She might be. No one else knows either, but it does make great headlines. I guess I fell into that group when I used her name in my headline.
Don’t mistake earnings for net worth. You can earn a lot of money, but if you spend it all, you have nothing in the end. It is not about what you earn, it is all about what you keep.
As physicians, you will have great earning potential throughout your life. Be sure to use it well and keep a good portion of it. Sock away at least 20% of your income for the future to build your net worth. My wife and I lived on only 50% of our income starting a few months after we were married. That savings rate has grown into a great nest egg. We all can live a great life on only a portion of our income. Don’t make the mistake of thinking you need to spend it all as fast as you earn it.