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What’s The Hardest Thing About Becoming Financially Independent?


Financial Independence = Life and Job Satisfaction

I write about financial independence (FI) on this site because I believe that we can become better clinicians if we no longer need the income from our jobs in order to live our lives. Many of us will still continue to work but we will likely work at jobs that we are more passionate about. Those of us who will continue on in medicine may take on administrative roles or see patients in settings where we can make bigger differences. Those of us who have had our fill of medicine or just want to pursue something else will maybe learn a new trade online or at a community college.

Give Away Your Unneeded Income

Even if you don’t change anything about your job you perhaps will give more of your money away. Have you ever had that sweet old couple who are well into their 60’s who just don’t have enough money to live off comfortable? Well, imagine what a difference you could make in their lives if you donated some of your income to their household. You could perhaps help a friend’s kid through college. Or you could invest in your kid’s business idea. You could send a friend off to see their family overseas. And if you don’t have your own kids maybe you can help your favorite niece/nephew achieve their financial goals.

The Biggest Hurdle - You’ve Already Overcome It 

Achieving FI requires the following 4 criteria. 

  • saving money,
  • decreasing spending,
  • investing wisely and
  • making a high enough income

The latter point is probably the most important. Even though with low income one can still achieve FI, it will require more budget trimming, more aggressive saving and a longer time to that point of walking away from one’s job. As a doctor your income is already quite high… don’t even start with that doctors don’t get paid enough business! We get paid plenty. The problem is that we try to live a rich lifestyle which you just can’t do on a couple hundred thousand dollars a year. 

How Much Do You Need To Be Financially Independent

If you can live off of $1,500 per month then you only need around $400,000 invested in order to generate that income. With more aggressive investments you could probably get away with $350k. So if you have no student loan payments, no mortgage payments and just need to pay for groceries and some entertainment money then this is a fairly realistic budget

If you need/want to live off of $5,000 per month then you should have around $1.5 million invested. With the current economic system (2015) these are still very conservative numbers which means they are easily achievable. Wall street wants your money so that they can feed businesses with capital because capital generates more income. With $1.5 mill invested you can expect to make $5k a month and still have plenty of the principal (the $1.5 mill) left after decades of investment. 

A High Income Isn't Guaranteed

As physicians in this early part of the 21st century we have the luxury of high income. Will it always be like this? Shit no. The one thing that is certain in medicine is that our incomes go up and then come down. That’s why I encourage you to pay off your debt early and save and invest early in your career. The less money you need to live on the less dependent you will be on the economy. Even if we go through another economic depression you likely will do just fine because you have money saved up.

The health industry hasn’t always enjoyed high paying salaries. It’s probably one of the best performing industries of the US economy… anecdotally we know what that means.

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