The 7 Money Habits of Highly Successful Doctors

I have been reflecting a lot lately on the mission statement of The Motivated M.D.  I enjoy writing about any and all things personal finance and their application in my life.  However, I want to make sure those ‘leisure reads’ are routinely trailed by works that reach a broader audience.  As I continue to create content that offers value and is enjoyable to read, I wanted to write about the power of habit.  I have spent more than a decade filling various roles in the healthcare field.  From medical student to attending physician…I have lived it all.  I have had the fortune of discussing personal finance with hundreds of colleagues from all specialties.  Here is a synopsis of the habits I have found that correlate the strongest with future financial success.  Here are the 7 money habits of highly successful doctors.  I hope you enjoy it!

1. Make retirement contributions automatic

Ok, let us start with an easy one.  For a large portion of physicians, you will receive a salary that easily allows you to max out your retirement contribution.  Often, your contribution is met with an employer match if you are employed.  No matter what your retirement account offers, you should be maxing out your contributions. 

Sometimes we just need a little ‘nudge.’

There has been influential economic evidence over the past decade demonstrating that the average person is terrible at prioritizing savings.  Just ask Richard Thaler.  In his book ‘Nudge’ he discusses how creating a government program that defaulted employees into making automatic retirement contributions made them save significantly more.  Something as easy as making it ‘automatic’ to save a portion of your income increased individual savings significantly.  Now I am paraphrasing here, but the effects are measurable and powerful. 

We all have busy lives, busy work schedules, and are constantly compelled to spend money.  Automatically having your retirement contributions deducted from your paycheck means you are able to rest easy knowing you are prioritizing your future.  You will never see the money that is being deducted from your paycheck (until retirement).  As such, you cannot spend it, and therefore don’t have to worry about what you might have spent your savings on!  Its simple…just not easy.  We all fantasize about having a little extra cash.  But don’t place yourself in a position where you are spending now and not prioritizing your future.  If you don’t prioritize your retirement savings now…there may never be an enjoyable retirement on your horizon!  Number 1 on our list of the 7 money habits of highly successful doctors is all about letting automation remove you from the equation.

2. ‘Pay yourself first’ with each paycheck

The ‘pay yourself first’ approach to saving has been written in multiple iterations, many much more eloquently than mine.  The idea is simple however.  When you get paid, you should prioritize your savings and debt eliminations first!  You are ‘paying yourself’ the money that will benefit you the most before it is used to maintain your lifestyle. 

My wife and I are incredibly debt averse.  As such, we work to put approximately $100,000 towards our student loans annually.  That is roughly $8,333 a month.  That is a very large portion of our monthly budget.  However, this is also allowing us to drastically eliminate debt.  By doing so, (when we finally pay off our medical education debt…we get a $100,000 dollar pay raise!)

We also prioritize our investments.  We ‘pay ourselves first’ by putting a portion of each paycheck towards our Vanguard Index Funds every month.  In doing so we are creating a habit of prioritizing our savings and investments.  The benefit of this strategy is that no matter the market fluctuations, you always ‘pay yourself.’  This is especially true during a bear market (hint hint).   That means you are buying stocks at a discount! 

As you get paid, make it a habit to prioritize your money towards debt elimination and savings.  Make sure between maxing out your retirement accounts and your investments that you are saving at least 20% (more if you are pursuing FIRE).  If you make this habitual, you will be guaranteed to build a sizable nest egg (and provide decades for the miracles of compounding interest to work in your favor.)  Number 2 on our list of the 7 money habits of highly successful doctors is all about paying yourself first.

3. Make investing an expected expense

I alluded to this in the prior paragraph.  However, prioritizing investing is different than habitually putting money away in savings vehicles.  If you want to get rich, I mean truly break out of the wealth associated with your profession, then you need to invest.  There are very few financial tactics that statistically offer the ability to create generational wealth to all comers…one of those avenues is investing in the stock market. 

Now there are a few caveats.  One is you need to have time on your side.  The longer you hold onto an investment, the more time you have for interest to put your money to work.  Second, you have to be willing to ‘stay the course.’  No pulling your money out when the going gets tough.  You have to make it a habit to invest money with regularity.  Another caveat is you need to understand that you cannot beat the market.  There are always a few exceptions to the rule, but overwhelming studies support that ‘time in the market is better than timing the market.’  Number 3 on our list of the 7 money habits of highly successful doctors prioritizing savings.

‘Time in the market is better than timing the market’

Being a physician is a busy career choice.  Thinking you have the time to research and review individual stocks with regularity is time you must take from elsewhere.  Then you must know enough to feel confident you will make an investment that has a higher ROI than by just indexing the market.  Finally, you must still actually beat the market too.  This is a tall order.  

I understand that having a side hustle is becoming commonplace for physicians.  We look to diversify our streams of revenue (more on that later).  But day-trading should really be discouraged.  Don’t gamble with your money.  Find a mutual fund that indexes the market (total market or the S&P 500) and then prioritize investing.  Even if you are maxing out your retirement contributions through your employer…as a high-income earner you will still have some money left over to invest.  Index the market and move on.  It won’t make you ‘filthy rich’ but it will drastically increase your odds of solidifying a financially secure future. 

4. Always keep a balanced budget

You need to know where your money is going.  Plain and simple.  I am always blown away at how many physician colleagues live paycheck to paycheck.  The everyday expenses add up.  All the streaming services, the utilities, the mortgage(s), memberships, children’s activities, private school(s), gasoline…the list goes on and on.  If you are not on top of your finances, money will find a way to disappear.  You need to understand where your money is going and why.  If there are charges on your credit card that you don’t immediately recognize, question it.  Why are we paying for this?  How is it impacting my life?  If it is an unnecessary expense, get rid of it.  If you find later you need that expense in your life, you can always buy it back. 

Maybe you are the type who doesn’t feel compelled to understand the intricacies of your finances. My concern is that others will take advantage of you, intentionally or unintentionally.  You (and only you) will be the best advocate for yourself.  Don’t leave your finances up to the goodwill of others.  Keep a monthly budget, update it every day.  At the end of the month, review your budget and see where you are overspending.  Finding solutions to these problems will not only free up your money, but they will teach you to tackle similar financial problems in other aspects of your life.  This is worth its weight in gold. Number 4 on our list of the 7 money habits of highly successful doctors focuses on a balanced budget.

5. Cultivate multiple streams of revenue

I wrote an article previously on the importance of generating multiple streams of income.  If you have the time, I recommend that article as well.  Similar to the importance of diversifying our investments (stocks, bonds, real estate, etc.) it is equally important to diversify our income. 

Diversification is crucial to defending against fluctuations in economic pressures.  When there is market volatility, bonds and real estate can guard against losses.  If you are unexpectedly injured, or are laid off, having multiple streams of revenue can minimize the sudden shifts in your income.  In my initial post on this subject, I discussed a few reasons why generating multiple revenue streams is important.  These included:

• Guarding against unexpected changes
• Depending less on your day job
• Expediting financial independence
• Helping to avoid burnout
• Freedom

I also used this prior post to discuss methods for generating multiple streams of income.  Here are a few I mentioned:

• Your primary income
• Spousal income
• Investments
• Real estate
• Blogging
• Being an Influencer (having a large social media following)
• Creating and selling electronic products
• Taking medical surveys

These are just a few examples of how to create multiple opportunities to increase your cash flow.  There are countless ways to boost your income, but diversifying your revenue also offers the benefit of a ‘good defense’ from the unexpected.  Number 5 on our list of the 7 money habits of highly successful doctors focuses on the important of diversifying your cash flow.

6. Work smarter, not harder

This habit is an important one that all too often is quoted, but not well understood.  As a physician, I think I speak for most when I say that ‘we understand the meaning of hard work.’  However, as your life evolves, you are wise to focus on streamlining and efficiency instead of working more. 

Here is an example.  It has become somewhat commonplace for physicians to approach contract negotiation looking for the largest paycheck they can get.  That’s what it’s about right?  We trained for all these years, now it is time to make the big bucks?  True, but that is a simplistic way of approaching reimbursement.  As I have argued in the past, once your attending paycheck begins, money will (likely) no longer be your rate limiting resource…it will be time.  Those who have embraced the ‘work smarter, not harder’ mentality will learn to factor in time in their interpretation of reimbursement.  Yes you can work hard and make an extra $100,000 moonlighting or increase your RVUs.  ‘Eat what you kill’ after all.  But for those looking to follow the other habits mentioned here…you will also need time. 

View your career through a ‘per hour’ lens

If you view your professional reimbursement through a per hour lens, then you begin to understand what your time is worth.  To speak personally, there are plenty of intensivist job postings advertising $400,000 annually.  But this generally comes with 60–80-hour work weeks.  The fine print often includes frequent call, and multiple nights and weekends too.  I would rather work a job that pays me $275,000 but only requires 40 hours a week.  Give me a career where I get the vast majority of my weekends off with little to no night call.  That choice is a ‘no brainer’ in my opinion.

If I am making $400,000 a year working 80 hours a week, I am making approximately $96 an hour ($400,000 / (80 hours x 52 weeks)).  However, if I am making $275,000 annually working 40 hours a week (with substantially less call, nights and weekends) then I am getting paid approximately $132 an hour ($275,000 / (40 hours x 52 weeks)). 

Now I am way over simplifying the math here, but you get the picture.  Take the job that pays more per hour.  Sure, it may seem like you are accepting less, but you have to factor in the opportunity costs too.  You can argue the opportunity cost is $125,000 ($400,000 – $275,000 = $125,000).  I would add that there is a huge opportunity cost working almost 40 hours more a week!  With that time, instead you could be pursuing a side hustle, growing a business, spending time with family, travelling, etc.  Before you make any decisions, think about it from all aspects, not just the amount you see on paper.  Number 6 on our list of the 7 money habits of highly successful doctors discusses ways to work smarter…not harder.

7. Employ honest people who are smarter than you

This may show my age, but I always thought the smartest musician in show business was Dave Matthews.  He is an incredible singer, songwriter, and guitarist.  But even more than that, I think he is the greatest collector of musical talent.  If you are ever lucky enough to see Dave Matthews perform you will quickly realize the show is stolen by bandmates like Carter Beauford whose natural rhythm and drum solos are unmatched.  You may find yourself brought to tears by the angelic sounds emanating from Boyd Tinsley’s violin…or perhaps have your face melted by a fifteen-minute guitar solo by Tim Reynolds himself.  Yes, Dave Matthews is one of the most talented live performers in a century…but he achieved this by knowing the benefit of surrounding yourself with superior talent.

Surround yourself with honest, transparent, and intelligent people

You should expect nothing less when it comes to who you employ to help manage your finances.  There may come a time where your finances get complicated.  As an individual who will be inching closer to the highest tax brackets in the country, it is important that you employ those who are fiduciaries and experts in finance.  I am working diligently to build a team of trusted individuals I can advertise on this website.  I am not doing this because I want to make a buck, but because there is value in sharing services from individuals who love their jobs and wish to share their talent.  That is one of the many joys in life. 

As you build your nest egg, get promoted, grow your family, and make financial plans, there will likely come a time where you need help.  When you do, make sure you take the time to interview quality candidates.  You owe it to yourself (and all your years of hard work) to save that privilege for someone worthy.  The final habit on our list of the 7 money habits of highly successful doctors highlights the importance of surrounding yourself with hardworking and intelligent individuals.

Take home points

There are many habits physicians have to develop to be successful in their careers.  The road of medical education is paved with blood, sweat, and tears.  It requires determination, grit, perseverance, intelligence, resilience, confidence, introspection, and motivation.  Given the duration of our educational journey, by training’s end these traits are ingrained into the fiber of our being.  The application of these skills into your finances can prove to be more difficult than expected.  Money remains a somewhat taboo aspect of American life.  Therefore, it can be difficult to understand why some succeed and some do not.  I don’t claim to have all the answers, but my list of habits above is the next best thing!  As always…

Stay Motivated!

The Motivated M.D.

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What habits have you found important to your success? We would love to hear from you in the comments down below!

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