Financial Planning for Doctors

Much of the personal finance blogosphere directed at physicians spends time discussing spending money. And for good reason.  Physicians have a spending problem.  While I am all about educating people about their personal finance shortcomings, it is also important to find balance in life.  Some things in life are worth the money, because they provide happiness despite not building your wealth.  One might even argue that these non-monetary things are the best investments.

So, today, let’s talk about a few things that my family spends money on that make very little financial sense, but that help us find the work-life balance we are looking for while we prevent burnout in medicine.

Building Wealth: Finding the Best Investments

For a bit of background for any new readers, I believe in spending money intentionally.  This can be done by figuring out the big picture first (by going through the Three Kinder Questions), and then living your life as you’ve designed it.

In order to achieve that intentionally designed life, we need to be using money to build wealth.  This involves putting money towards our investment savings or towards destroying our debt.  Any dollar that isn’t put towards these endeavors does not build wealth.

Does that mean that it is wasted money?  I don’t think so.

See, the hard part in life isn’t knowing what to do.  The hard part is finding balance between saving every nickle and dime that we can and spending money to find some happiness here today.   Stress can be produced when we find ourselves on either ends of this spectrum.  Some, like me, find financial stress when money is not saved.  Others, find it stressful when they cannot spend money on things that they really want.

Here are three things that my family has decided are worth the “wasted money” not placed into investment accounts.  If you need help figuring out how to find this balance, it is worth figuring out your Wealth Accumulation Rate, which will help you answer the question, “how much should I be saving?” 

Best Investment #1 – Golf

As I write this post, I am sipping on some hot breakfast tea in anticipation of my first member-member golf tournament at our country club.  This isn’t a free experience, and neither are the country club dues.

Here’s how the math shakes out for this membership.

It costs us $250 per month to be members, and we are expected to spend $50 per month on food.  So, the baseline cost of this membership is $300.  When I play 9 with my kids on the weekend, it costs about $10 for a cart fee.  So, on average this membership costs us $350 per month (or $4,200 for the year!).

Using some back of the napkin math, if we invested that money over the next thirty years instead of spending it at a country club, that would amount to ~$350,000 (assuming 8% earned interest).

Are we insane?

Nope.  This money provides my family access to the pool from Memorial Day to Labor Day, six tennis courts, a free driving range, two 18-hole golf courses, and the clubhouse where food is 50% off for members.  But it costs $4,200 per year!!

You know what it also provides?

It provides two to four hours of one-on-one time with my kids when they play golf with me.  It gives me the chance to check in with them and to see how they are doing.  I also get to ask them tough questions, and make sure that I’m doing my job as a dad.

That, my friends, is just like the Mastercard commercials… it’s priceless.

Best Investment #2 – Our Marriage

Do you wanna know something that is really expensive when you have three kids?  Babysitters and dates.

The cost of any babysitter makes pretty much any typical three to four hour date with my wife cost around ~$150 regardless of what we do.  My wife and I need to be better about having regular dates, but let’s assume we have two dates per month.  That’s $300 per month.  That means that the math is pretty similar to our monthly golf club expenses.

That said, investing in our marriage provides the highest return on investment of any investment.  It improves our marriage, our family’s health, and our own personal well-being.

In the end we have to keep the forest for the trees.  Fighting burnout is tough.  Fighting burnout while dealing with a bad marriage is much worse.

We don’t want to look back in sixteen years when our kids are out of the house and find out that my wife and I have nothing in common.  In order to prevent this, we have to spend time together without the distraction of three screaming kids.

So, while this is going to cost us north of $300,000 over the next thirty years, I won’t miss a single dime of the money that could have been invested.  After all, no one on their death bed looks back on the masses of wealth that they have accumulated.  Instead, they think about the sweet memories they made with their family and friends.

Best Investment #3 – Investing in My Business

Running a blog isn’t free.  Here are some common expenses:  paying for hosting, plug-in tools, email services, equipment, and much more.  Actually, in the first year this blog existed I wrote off almost every dollar that this blog made, which was a four figure amount.

In addition to the investment in items that help the blog run, I’ve also spent money investing in myself.  For example, I’ve invested money taking courses that help physicians build their online businesses. These courses teach you how to brand your business, learn about search engine optimization, and how to leverage social media.

Though it is money well spent, investing in The Physician Philosopher blog is not free.  However, as this grows, there will be potential for me to find that work-life balance I’ve been looking for since starting this site.

At some point, I hope to be working three to four days per week doing anesthesia and two to three days per week teaching physicians how to become financially literate through this blog.

Best Investment #4 – Investing in Our Children

Kids aren’t free.  In fact, Physician on FIRE has written previously about how expensive it is to actually raise kids.  He even has a calculator on the cost of raising children.

For those that don’t feel like clicking through those links, let’s just say it is expensive!

My wife and I have three kids.  And it seems like there is a new cost that comes up every single day.  From school photos and birthday parties to tae-kwon-do camps, christmas gifts, summer camps and clothes – there is always something. Oh, and we have to feed them occasionally, too!

Now, my wife and I could limit our kid’s experiences in order to save money so that we could get to financial independence sooner.  But at what cost?

I want my kids to look back on their childhood and have to very specific thoughts: (1) My parents really loved and supported me, and (2) I had a really full childhood with plenty of good memories doing the things I love.

There is no price tag that I could put on that, and honestly my kid’s experiences are limited more by the schedule associated with two full-time working parents than they are by the cost of extracurricular activities.

That said, this is absolutely the number 1 reason I am hustling hard to get to that work-life balance I described above (three days doing anesthesia; three days blogging on my own time).  I don’t want to miss a single soccer game, recital, or after-school activity that my kids are involved in later in life.

My Hell Yes policy helps me maintain the balance needed here.

Take Home

Some things in life cost money.  Money spent is money that cannot be saved.

However, we have to keep the right perspective and realize that – as long as we are achieving our big picture financial goals – it is okay to spend some money.  In order to accomplish this balance, my family and I use a backwards budget that guarantees our financial success and also allows us to enjoy the here and now.

So, get out there.  Make some memories.  And invest in the things that matter to you; many of which will not be found in an investment account.

What are some things you spend money on that are well worth it, but don’t build wealth?
Do you see these things as investments?  Or does the additional spending cause stress?  Leave a comment below.

TPP

5 thoughts on “Investing in What Matters Most: The Best Investments”

  1. Hey TPP,
    I love your honesty here and appreciate the friendly reminder to keep our ambition in check. The only critique I would have is that marriage should be moved to #1. Think about how many physicians you have come across in their 40s,50s, or 60s that have gone thru a divorce. There are few things that could torpedo one’s retirements goals faster. Keep up the good work 🙂

  2. Well said TPP. I do pretty much everything on this list except #1. Money is meant to be spent and what better way than to spend it on the important people in your life. I see people who have plenty of money at the end of their life, but are socially and emotionally bankrupt. That’s something I want to avoid. Great job on the blog and congrats on joining the WCI network. Your hard work is paying off!

  3. Well balanced post. I actually see it as a counterpoint article to many messages I see on other financial blogs.

    With #4 for example, I think most physicians have the same mindset but for many they take it to an extreme that destroys their wealth. I’ve lost count of the number of residents and attendings who “won’t put a price” on their child’s happiness and end up spending $10-20,000 a year for private school, or extracurriculars.

    In TPPs case, it’s wise, intentional spending, because of his proven track record of paying down debt and building wealth. But I also think there are a lot of parents making poor financial choices and using their children as cover. My best friend insisted on going further into debt in medical school so his 4 children could take piano and dance lessons. Sometimes investing time instead of just money works just as well, especially when it’s money you don’t have. Balance in all things.

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