Nothing messes up a good plan for a balanced financial life more than overspending your income. It’s human nature, but it’s like a siren call luring us to our death—as doctors we spent so many years under financial restraint, when it’s lifted we tend to go overboard. We buy too much house, too many toys, a car we have to finance, and quickly we are out of balance.
If residents learned to reach a balance in their financial life before getting their big pay raise as attendings, they could avert many financial problems. They could start out with a sound financial plan that includes balancing debt repayment and retirement planning from the outset. The lifestyle they choose would fit in and not tip them out of balance. I wrote The Doctors Guide to Starting Your Practice Right to help them do just that.
All too often, I meet with a doctor who didn’t start off on a balanced path, he came out of the gate with his credit card blazing and, years later, realized retirement is not within his grasp. The decisions needed at this later point are a lot harder than those made earlier. The course correction needed when you are flying over Atlanta on your journey from San Francisco to Washington D.C. is much larger than what’s needed when you are over Denver. Buying a house that fits your spending plan, for example, is much easier than selling a house you and your family have grown accustomed to but cannot afford. The house is sucking away all the money you could be using to have a great life. Don’t despair if this is you—a late correction is still better than no correction at all. Just don’t keep putting off the decision to make a correction.
Balance must be restored before financial peace can be achieved. Overemphasis on present consumption—spending too freely—leaves nothing to accelerate debt payments or save for your retirement. The flip side is also bad, being unwilling to loosen the purse strings enough to enjoy life which may lead to a pauper’s lifestyle; spouses aren’t too hip on that—and life is too short to not enjoy the journey. Doctors earn a good living and deserve to live a fun and fulfilled life. Isn’t that why you work in the first place? To make a living? Just don’t get so far out of balance that it negatively affects your life.
Do you have a written spending plan? If not, you don’t know how much of your current income is available to spend now as opposed to what portion is already allocated for something you want or need or already purchased. Having a good spending plan gives you the freedom to spend your money and enjoy life. Why? Because if you know the money you are spending is free and available to spend, you can feel good about your spending and not have that sinking feeling that you will not be able to pay your bills next month.
Develop a good spending plan this month and you will be free. Don’t put this off. If you have never done this or don’t know what to do, or feel you need an unbiased opinion to help you develop a plan that will get you everything you want in life, then contact me about doing some one-on one work and I will help you set up a spending plan that will set you free. Isn’t it time you started managing your money instead of letting your money managing you? Set up a spending plan then go forth and spend with confidence.
