Did you know that it’s possible to make great financial progress while you spend money on things you enjoy? Yep, you read that right.

You can figure out how to save money and still enjoy life.

It might be surprising to hear this in the financial space, but you worked hard to get to where you are. You already know saving money as a doctor is important. But you also deserve to enjoy some of the spoils and riches of all of the work you put in to go through college, medical school, and residency.

In the physician finance blogosphere, financial gurus will paint a dichotomous picture of only two possible money management options. Either you eat ramen for five years after you finish residency so you can meet your financial goals. Or you fall into the camp of YOLO hedonism, living it up, spending every dime and not saving anything.

This black-and-white approach skips the view that you can do a little bit of both.

You can be financially responsible for those first three to five years and for every year after that. AND, at the same time, you can actually enjoy life.

Saving money as a doctor is all about balance

I saw author Ramit Sethi speak before he made it famous on Netflix, and he’s all about “living the rich life.” Yet he teaches people important personal finance principles. These aren’t mutually exclusive concepts. 

It’s possible to take care of your personal finance needs by paying your future self first. And you can also live the rich life as Ramit would say, or spend guilt-free as I would say.

It can be hard sometimes to find the line between “I actually can spend this money” or “Nope, I should have saved it”, but if you have a certain percentage diverted to your separate accounts first(investments, savings etc.), then it helps you know what’s safe to spend and enjoy that portion of your money.

I preach balance and moderation because I’ve seen too many doctors start judging themselves for their financial decisions, for not “saving enough.” Eventually, they become doctors who refuse to take vacation with their family because the cost of the trip added to the cost of taking time away from work feels like too much spending and not enough saving. 

This is why it helps to have guidelines, like Lisha’s 25% that goes directly towards her wealth-building accounts. That way, you can see in a tangible way that you’re accomplishing your financial goals AND giving yourself permission to spend guilt-free.

Easier said than done? Practice. The psychology of money is huge, and if you don’t give yourself some credit for the financial work you’re already doing, you land in what I call a suck-fest. You’re judging yourself, you’re shaming yourself, you ruminate on how you wish you’d spent your money differently, and nothing you do will feel like enough. 

Reframe your thoughts about how to save money using the 10% rule

As we approach July, some of you are going through big transitions from trainee to attending, and depending on your area of expertise, you could be looking at a decent sign on bonus. 

Maybe your organization offers pay incentives for certain metrics that are met. 

Maybe you even come into an inheritance. 

The question is, when you get an income increase in some form, what will you do with the money?

The 10% Rule I teach in my book basically states that you take 10% of any increase and spend it however you want.

So for example, if you go from $3,500 earnings per month as a resident to $13,500 per month as an attending, that’s $10,000 more than it was the month before.

Using the 10% rule, you can spend $1,000 per month however you want. 

Now, these may not be your exact numbers, but it helps to see it at least as an example of what you’re free to do with your money. Because the other 90% is going towards your credit card debt or student loan debt, auto loan debt, etc. 

I can’t tell you how many people have reached out to me about this rule to say how deeply impacted their goals were just by having that financial guardrail there for the first couple of years after residency. How much it saved them because they finally felt like they could enjoy their money.

Decide ahead of time how to save money when you start to build wealth

One particularly helpful way to make the whole savings process go more smoothly is to decide ahead of time how you want to spend extra money. You don’t want to slip into your own version of The Diderot Effect, after all.

In short, the Diderot effect illustrates that when humans are being human, we’ll definitely spend the money when we get the money. But if there’s a plan in place for where you want it to go, you don’t even have to think about which buckets you want your money distributed between.

Like Lisha explained, the extra money she gets that actually hits her bank account is split between three buckets. One for an emergency fund, another for a short-term savings fund she’s designated for student loans and a home down payment, and the last is her vacation fund. 

Having a plan for your money ahead of time helps you not get stuck in analysis paralysis, plus it helps you continue to make financial progress you can see and track and give yourself credit for.

Summary

Yes, you’re saving money as a doctor, AND you deserve to improve your standard of living and quality of life. That’s the beauty of working with behavioral finance to meet your goals. One of the best parts is, you can use your own percentage for your own purposes when it comes to your savings rule. It could be 10%, 15%,  20%, and if you don’t have a lot of debt, it could even be a 30% rule. It all depends on what you want your end result to be. The idea is to see what could be possible for you when you work to create the financial balance you want. 

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