The Physician Philosopher Podcast
TPP 84: The 3 Best Financial Mindsets for Physicians
When it comes to personal finance for doctors, one of the biggest mistakes I see doctors make is their intense focus on numbers. Why? Because it is the most measurable part about money. Yet, the numbers don’t mean anything if you don’t get the mindset right, first. Here are three money mindsets everyone needs in order to be successful with money.
Start with the End in Mind
Stephen Covey famously said that we must “Start with the end in mind” in his book The 7 Habits of Highly Effective People. The point? It is hard to get to where you are going, if you don’t know your final destination.
It is the same with money.
People often ask me very specific questions. They usually go something like this. “Hey, Jimmy…
- I just inherited some money and am thinking about investing it, what should I do with it?
- What kind of asset protection should I get?
- Would you recommend that I get a financial advisor? Or should I do it all on my own?
Now, none of these questions are inherently bad. Yet, none of them can be answered if we aren’t clear about where we are heading.
For example, let’s take investing as an example, because it is the easiest one to understand.
Investing for Retirement
People often ask me how much they should be saving for retirement. This kind of question always makes me laugh internally. As if there was some “magical number” all of us can save to get to financial independence.
Yet, it turns out that how much you need to save for retirement depends on how much you plan on spending in retirement each year. The number you need if you plan to spend $10,000 a month in retirement is very different than if you plan to spend $15,000 per month.
It also depends on where you plan to invest the money. Often when I dig deeper when people say they are “saving money” they will then follow that up with… “I am have saved about $50,000 in my savings account at my bank.”
For the record, that’s not saving. This year alone they have lost more than 8% of the value of their money to inflation.
So, in order to answer this question of how much money do I need to save for retirement each year… you have to know (1) how much you’ll need, (2) your investment philosophy, and (3) how much risk you are planning to take.
And this brings us to our second point…
Your Money Mindset Matters More Than Math
When I start talking about money with people it becomes apparent really quickly that what is usually preventing people from doing the right thing with their money isn’t math. It’s their mindset.
For example, many doctors think that money is hard. And they are afraid of making financial mistakes. These are the same people who cross-clamp patients aorta or diagnose patients with Alpha-1-Antitrypsyin disease (and actually know what that means).
If you can learn medicine, you can learn money. Money is much simpler. Yet, what prevents most doctors from investing money in the market… or learning enough about personal finance to make sure a financial advisor isn’t taking them to the wood shed… is that they are afraid of doing something wrong.
If you constantly worry about getting it wrong when it comes to investing, for example, this often keeps people out of the market. And, as I just mentioned, by doing this… you are actually getting it wrong. You are already losing money to inflation.
It’s not mistake that one of the taglines for this show is “Start before you’re ready. Start by starting. Start now.” The same comes true when it comes to money. Get started on your personal finance education right now. If you can learn medicine, then you can learn money.
Money is a Tool, Not the Goal
I know WAYYY too many doctors who think that when they get to financial independence they will be happy, yet there is an entire self-help section in book stores about how to basically not suck at retirement.
The reason this happens is that they think money is the goal. They think – whether intentionally or unintentionally – that money is the end all be all. Yet, it’s not. Money is the means to an end, not the end itself.
If you get this part wrong, you’ll chase after a dream only to realize that when you get there… it was the journey that really made you happy. It was the process of being and doing what you love that made you feel productive, fulfilled, and happy.
So, take the time to answer some tough questions like The 3 Kinder Questions. Questions like:
- “What would I do with my life if I had more money than I could ever spend?”
- “If I had 5 to 10 years left to live, what would I spend my time doing?”
Remember, money is a means to an end. Not the end itself.
Editor’s Note: The Medical Degree Financial University is finally open for enrollment! To learn more about how to create the financial freedom you need to practice medicine because you want to and not because you have to… click here to learn more about MDFU.
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