A Common Financial Advice that Makes No Sense for Physicians

There is no shortage of financial advice out there. You are undoubtedly exposed to a wide range of money headlines and adages that may or may not be helpful.

If you’re more of an audiovisual person, television, podcasts, and Youtube will also tell you what you should be doing with your money.

Some of these recommendations are excellent and more or less universal. “Spend less than you earn.” Other advice is generally good, but may not apply to everyone.

Common Financial Advice that Makes No Sense for Physicians

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1. At 25 years old — you should have 1/2 of your yearly salary saved 2. At 30 years old — you should have 1x your yearly salary saved 3. At 35 years old — you should have 2x your yearly salary saved

Net Worth Targets by Age

If you’re setting aside a small amount for retirement and spending the rest, living more or less paycheck-to-paycheck after paying yourself first, then you will need to replace most of your salary to maintain that standard of living.

Retirement Calculators Based on Salary

Setting aside 10% to 15% of your income may be adequate for a person who can work for 40 years and still retire in her early 60s, but that’s not you. You should be saving more.

Save 10% to 15% for Retirement

Now, there’s nothing wrong with thrift, and we’ve developed plenty of frugal habits that helped contribute to our early financial freedom. 

Live Frugally

That said, when you earn multiple six figures per year, saving $5 here and $10 there isn’t going to make a meaningful difference in your financial well-being. The Latte Factor was written for people with a lot less disposable income than you.

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Financial and Retirement Planning for Physicians

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