Financial Prosperity is Easier Than You Think

This past weekend I spent time with my extended family.  I was delighted to have my weekend surrounded by loved ones.  We caught up on world events, shared recent stories, and celebrated family achievements.  It was beautiful to see my kids interacting with their cousins.  We are blessed to be at a stage in life where our family size is growing, not declining.  As we slowly exhausted our talking points, eventually our conversation divulged into personal finance and economics.  I found it staggering that we were sitting in a family member’s multimillion dollar home, in one of the richest areas in town, surrounded by expensive cars, and yet still fielding complaints about finances.  The same family member who advertised their expensive lifestyle, simultaneously drove to 3 consecutive stores because 10lb bags of ice were too expensive… Give me a break!  I am here to tell you, my friends, financial prosperity is easier than you think. 

Accept that you will not be filthy rich

Honestly, one of the first obstacles that comes to mind when I think about financial prosperity is mentality.  Yes, it is very much the American dream to want more.  We want more money, a bigger home, a nicer car…but success places most individuals on a treadmill.  This treadmill will force that very same individual to run harder and faster to ‘keep up with the Joneses.’

Though I initially expected a much different lifestyle when I started my medical education, the reality has proven to be substantially different.  True, I make a great income compared to the U.S. median household.  However, it is also true that we remain laser focused on our finances given that we are working to rid ourselves of debt.  Most of our financial pressures are self-induced.  We are placing an abundance of stress on our budget so that we can pay $100,000 dollars towards our debt annually.  Further we are maxing out our retirements, employing a nanny, and helping family.  All our financial pains we created.

It is through this lens that we have realized that we are unlikely to retire soon and maintain our current quality of life.  We are also not in a position where we can purchase a new car or own the nicest home in our neighborhood.  Honestly, as time passes, I think we no longer want those things as they do not align with our current goals.   I accepted that we will not be ‘filthy rich’ anytime soon, and honestly it has changed my perspective of the rat race that so many of us run.  Accept that you will not be filthy rich right now, that is OK and will allow you to make intelligent decisions now so you can reach financial prosperity well before your peers (even if it does not seem like it)!

Live below your means

I have harped on the importance of living below your means previously, but darn it if I won’t do it again.   One of the most sure-fire ways to expedite financial prosperity is to spend less than you make.  Look, this always seems like such a simple concept…and it is!  However, that concept may be simple, but it is in no way easy.

Financial prosperity is not about ‘looking rich.’  Honestly, there are plenty of individuals who ‘look the part’ and stand on unstable financial footing.  Personally, I have found that individuals who work to advertise their wealth are commonly insecure in their life and ill-prepared regarding their finances. 

It is difficult to provide a blanket statement on how much you should save when it comes to ‘living on less.’  I have commonly stated roughly 20%.  If you can spend less than you make, and save 1/5^th of your annual income in safe investment vehicles, you will do fine.

Keep an emergency fund

Another aspect of financial prosperity I often see others overlook is maintaining an emergency fund.  I often see individuals talk about their ‘rainy day fund.’  In these situations, individuals either underappreciated the importance of this fund or they have yet to experience a real emergency. 

An emergency fund is crucial to one’s financial prosperity and future success.  If we are not prepared for the unexpected, we could potentially be setting ourselves up for financial ruin.  Nobody wakes up and expects to be fired.  No one assumes their HVAC unit will fail in the middle of the summer, that a storm will wreck their home, or that they may suffer a long-term disability.  Statistically, these things happen… quite commonly actually.  For this reason, I frequently advocate the importance of a strong emergency fund.

What do I define as a strong emergency fund?  I define it as 3 to 6 months’ worth of your entire living expenses.  Every. Single. Dollar.  This is because, if the unexpected happens, you should have a fund available to prevent any sudden change in your monthly budget.  If you total your car and need to purchase another, this should not come out of your living expenses.  Do yourself a favor and make an honest and transparent budget, determine how many months’ worth of living expenses provides you a sense of comfort, and house it in a liquid account. 

If you want to know more, check out Emergency Fund: Your First Financial Goal!

Do not overthink your investments

Another topic that commonly comes up in conversations regarding personal finance are investments.  God, it sometimes feels like everyone works on Wall Street, doesn’t it?!  Despite very few of my friends or family actively working in the financial sector, everyone thinks they are an expert.  Further, with the proper connotation, they can convince others they know what to do with your money!  Honestly it is a scary thing. 

For me, I think most individuals overthink their investments.  Let’s be honest with ourselves for a moment and admit that most everyone reading this article will spend exponentially less time on their investments than they will at their current job.  If this is the case, then do not micromanage your savings.  Put it in a low-cost index fund with low expense ratios, and then leave it alone. 

Personally, I use Vanguard, but there are many other platforms that offer similarly priced index funds.  Appropriately diversify between domestic and international stocks and bonds.  There is a great article on Physician on Fire about the Three Fund Portfolio.  For those looking to house their money with little effort, I recommend starting here.  Please, do not overthink your investments, and further, do not convince yourself you are a day-trader.  That is how you gamble away your hard-earned dollar. 

Practice stealth wealth

This concept has grown over the past few years as our society continues to struggle with wealth shaming.  I do not begin to claim that there are not real problems in our society regarding race, gender, socioeconomic status, and their effect on wealth accumulation.  Those problems absolutely exist.  But there also appears to be a belittling of work ethic and success.  If you work hard, get up early, stay up late, pursue a side gig or start a business…good on you!  If it turns out you can supplement your income because of this, even better!

However, unfortunately, I understand the realities of the world.  Those who flaunt their successes often paint a target on their back.  Physicians and doctors alike, by the very nature of their professions and society expectations, have a target on theirs.  As such, I think part of reaching financial prosperity is learning to shield your successes.  Yes, you should feel empowered to revel in your achievements, but you do not necessarily need a $100,000 new vehicle to prove this. 

As you move forward in life, exercise ways to protect your wealth from the world.  Drive a used car, do not disclose your actual income, do not readily advertise the number of vacations you take, or how much you spend on said trips.  Avoid discussing how you pay for everything in cash, or what your bonus was last year.  True these are vital to your personal finances…but by their nature they are ‘personal.’  Keep these things to yourself. 

Fiercely protect your happiness

As I have transitioned out of medical training and into my early career as a physician, one thing has become abundantly clear.  No one will work to protect what brings you joy more than yourself.  Ample discussions are occurring in many professional sectors and around the globe regarding burnout and work-life balance.  I am pleased to see our society working to address these very real concerns.  Like many things in life, change happens slowly though.  If you wish to find balance in your life, you have to actively work to realize what these things are, and protect them. 

The accolades of being a physician are great, and the drastic rise in income is even better!  Yet, the joy that comes from this quickly fades, and what remains is abundantly clear.  I extract much of my joy from time with my children, my wife, my family, outdoors, experiences, and travelling.  My job affords me the ability to pursue these things, but it does not protect them directly.  Only I can best advocate to find a balance between my work and life obligations that is sustainable. 

Part of financial prosperity is not actually about money.  You can be the richest person in the world, and if you do not know what brings your joy, or how to protect what brings you joy, then your money is useless. 

Tend to your relationships daily

The final topic I will discuss regarding financial prosperity regards maintenance.  As I recently alluded to, finding what brings you joy in life is critical to happiness and sustainability.  For me, it just so happens to be that my happiness is tied to time with my family.  However, I would argue that regardless of what brings you joy, your personal relationships will play a critical role in your life.  As such, you should work to tend to these relationships daily. 

It is somewhat obvious that your significant other and your children will take priority.  These will overwhelmingly be beacons of hope, happiness and love in your life. However, let us not forget that the majority of us will spend large swaths of time at our workplace.  We will be surrounded by our peers.  These relationships require maintenance too.  My heart breaks for individuals who loathe their drive into work, fearing interactions with colleagues.  Who wants to spend their working years like that?  As fiercely as you protect your happiness, prioritize your relationships too.  Let those around you know you care for them, are interested in their lives and their successes.  Revel in their celebrations and care for them during their difficulties.  There are countless studies that support the idea that on our deathbed, you will overwhelmingly fixate on your relationships, not on your income. 

Take home points

Financial prosperity is easier than you think.  I have mentioned above, there are a handful of key financial habits you need to adopt.  For starters you need to find comfort in your income.  There are ways to modify this income through Geo-arbitrage, promotions, and bonuses.  These will often be gradual changes, not overnight events.  Secondly, you need to live below your means and house what you save in stable investment vehicles.  Live your life in a way that you don’t advertise your success.  Revel in these achievements with those you love, but do not flaunt it.  You need to utilize your money to best support your goals, so that it can be a shield to protect what is even more important than wealth accumulation.  Your happiness, your relationships, your joy need to be what you actively pursue…not the numbers in your bank account.  Hopefully your career affords you this ability…because not everyone has this opportunity.  Be grateful.  Financial prosperity is easier than you think.   As always…

Stay motivated!

The Motivated M.D.

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