Playing Financial catch-up if you are a Doctor
?We teach children to save their money. As an attempt to counteract thoughtless and selfish expenditure, that has value. But it is not positive; it does not lead the child into the safe and useful avenues of self-expression or self-expenditure. To teach a child to invest and use is better than to teach him to save.? Henry Ford
Imagine you are 30 years old and join a general practice as the most junior doctor. The pay is not bad - $100,000 a year, and the owner-partners really believe in you. So much so that they make you an unusual offer:
They want you to work for the practice for the next 35 years and have offered to pay you your entire 35 years salary on day one as a show of good faith. So they hand you a cheque for $3.5 million? you think about it for three seconds and you decide to accept.
The deal is done. This is all you are ever going to earn, not a penny more and not a penny less. So what do you do now? You would probably start by thinking about how to make sure that the $3.5 million actually does last you for the rest of your life, even if you live to be 80 or 90. And how you're going to pay for all life's essentials along the way, including somewhere to live, and maybe raising a family, and still have some left over for your old age.
And then, as you are an intelligent person, you realise that if you invest a proportion of the money sensibly, it could be earning you more money, helping you to afford more of the things you want out of life, with enough left over to support yourself when you retire. It all makes sense so far doesn't it?
But here's the catch: As a doctor, you will probably earn more than $3.5 million over your lifetime. The difference is that it will be paid to you in dribs and drabs every month instead of as a lump sum.
The big question is the same whether you are working for a salary or in private practice: How do you make sure that the money you earn in your lifetime will stretch to cover all the things you need and want over the years and still finance your life when you stop working? And the answer is to make the right financial decisions as part of a larger, well thought-out plan that is regularly reviewed to suit changing circumstances. The easiest way to achieve this is by finding an experienced financial adviser - early on in your career - who you can see yourself working with over the long term.
(comments need to be approved before they will be displayed)