How many income streams do you have? I’ve got six — the five passive streams mentioned here and the active income stream that is this blog — and I’ve got 3 more coming to me, eventually.
When I was a young attending physician, I didn’t think much about non-clinical income streams. I had a secure job, or so I thought, as the only anesthesiologist practicing in the county. I was let go as the hospital spiraled into bankruptcy. Yup, that happened.
I was able to find more work, of course, initially on the locums circuit, but that meant being away and eventually moving away, a major disruption in our lives with a toddler and baby at home. I now have a stronger appreciation for the importance of non-clinical income, as does Dr. Peter Kim, the author of today’s Saturday Selection.
This Saturday selection was originally published on Passive Income MD.
It’s becoming more and more common to see people, regardless of their careers, lifestyles, or situations, working towards creating streams of income outside of their day job. I’m here to tell you why it’s no longer a fun hobby. Now, it’s a necessity.
More Income Streams = More Security
Pre-Y2K, an M.D. pretty much guaranteed prosperity. You’d pretty much always be able to find a job and that job would pay well enough that you didn’t have to worry about much, financially speaking.
Those student loans? No big deal! You’re all but guaranteed an income that means those payments are no problem at all. As long as you didn’t throw your money around carelessly, you’d be just fine.
Now? That job security and income security aren’t so much a guarantee.
Due to a projected physician shortage, medical schools across the country bumped up first-year enrollment by more than 30% between 2002 and 2019. That sounds like a fantastic way to make sure there are enough doctors in the country until you consider that residencies didn’t increase at the same rate.
Because of this, even finding a spot in a graduate medical education program is difficult, creating a new form of job insecurity in medicine.
There is some legislation recently passed that increased Medicare funding to create 1,000 more residency spots, which is great news for new med school grads. For experienced physicians? It’s going to create competition that makes getting and keeping jobs harder. More new doctors mean more doctors who are willing to work for less.
The medical field itself is changing, too. Automation, algorithms, and other types of service providers are taking over many of the duties once only performed by physicians, reducing demand and turning many doctors’ days into a list of transactions that allow doctors to improve their health system’s cash flow through increased productivity.
As far as income security goes, physicians are seeing more and more that their ability to earn a stable income doesn’t necessarily depend on them. A job well done doesn’t mean a reliable salary these days.
A physician’s salary is dependent on so many things that they have no control over. How much health systems can save by cutting back or contracting out services, how much insurance companies are willing to pay out, legislation that often doesn’t even take into account the opinions of the medical community, the economy overall, all of those things can affect our salaries far more than our performance.
I’ve heard stories from several of my colleagues in recent years about how they’ve been told their contract won’t be renewed unless they take a pay cut. My experiences have led me to believe that this isn’t an uncommon practice, so even staying in the same position, income isn’t guaranteed. Doctors are often treated as commodities, and like all commodities, there is a lot of wiggle room and negotiation that goes on to determine the value of the commodity that is the modern physician.
Despite the fact that a career in medicine is often viewed as one of the steadiest career paths one could choose (people will always need a doctor, right?), it’s not always the case. Passive income, especially multiple streams of passive income, gives physicians financial breathing room, despite that their jobs and their income aren’t guaranteed.
Industry Disruption is Commonplace, and Medicine isn’t Immune
We love technology, right? We can learn from it, earn from it, and it makes our lives so much easier.
Anyone over 30 can look back and see how much everyday life has changed due to advancements in technology. These advancements have majorly changed business, too.
Just think of how much things have changed in retail in the past year or so. The pandemic created an enormous surge in online shopping, pushing business out of brick-and-mortar businesses and forcing companies to get on board with increasing their online order fulfillment capabilities much faster than trends predicted.
Industry disruption has been happening in medicine right along with every other industry out there, and it will continue to happen. The rise of telemedicine in the pandemic serves as one example of this.
We’re not quite there yet, technologically speaking, wouldn’t it be nice to know that you’d still be earning money if robots replaced half the doctors in America tomorrow? Passive income streams help protect your financial future if industry disruption causes major changes to how you earn money in your field.
Life is Uncertain.
Whether you’re a doctor or a banker, an artist or an accountant, nothing in this life is certain. We’re all bound to see some curveballs in our lifetime. We’ve covered several ways that medical careers and salaries are uncertain, but there are more uncertainties in life than our careers.
What if your significant other becomes disabled and needs a caregiver. What would the loss of their income, increased medical expenses, and time lost caring for them do to you financially? How about a surprise baby a decade after you thought you were done having kids? A medical license that falls under review after a case gone wrong even though you definitely weren’t at fault?
Change is inevitable. Multiple streams of income help insulate you from the negative consequences of changes, whether they’re changes that you can control and are seeking out or changes that have been forced upon you.
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The Freedom to Choose is Priority One
Additional income streams are a way to give you options.
I started all this, not because I didn’t want to work in medicine anymore, but because I wanted to have more control over how I spend my time. I wanted to have the luxury to choose. I want to practice on my terms, to live on my terms.
The massive amount of training and the debt that comes with it leaves a lot of physicians trapped. They have invested so much time and money, and a different career that will allow them to pay their current debts would likely lead to even more debt. They’re stuck. It doesn’t have to be that way if you don’t rely solely on a paycheck for your income, though.
When you’re earning enough from additional income streams to keep you afloat, you get to choose to practice medicine. I got into this field because I wanted to help people, and I get to do that, but I don’t have to do it like I did once.
I’m able to work less and spend more time with my family, and passive income from real estate has afforded me that opportunity.
Do you believe additional income streams are necessary? What have you done to ensure your income? Do you believe an MD is as valuable as 30 years ago? Comment below!
4 thoughts on “Why Creating Additional Income Streams is No Longer Optional”
Some physicians have enormous band width and can excel in medicine and have time and energy for side hustles. These are very driven people, and for them, even medicine alone is not challenge enough.
Did not know things had gotten that bad. But a warning. When i was working (anesthesia/pain) i was working too hard and long to manage different income streams. Just keeping up with an ever changing specialty took a lot of time. Maybe i spent too much time devoted to medicine – but i really think my practice would have suffered (as in really suffered) if i didn’t. Had my attention been diverted from my profession i suspect my practice would have become as bad as the idiot who was taking care of my mother recently. Attention to detail and long hours are what is needed in the medical profession. Good luck dividing up your time. My two cents.
Interesting point on doctors with a “side hustle,” depending on how time consuming the secondary source of income is. Ideally it’s a passive income stream that requires little time and energy. Medical professionals have such an important job that almost requires all of your working attention. Hopefully you are being compensated appropriately for the role you play in society and don’t necessarily need to look to other income streams, but having all your eggs in one basket is also a big risk.
I couldn’t agree more – additional income streams vastly increase the robustness of financial planning. To add to your excellent points: Lots of us are worried that 4% isn’t really a “safe” withdrawal rate. But if you add alternative income streams to the picture, especially one or two that you could increase with a little effort, suddenly longevity risk goes way down.
I love woodworking and started selling this year. It doesn’t make much right now, but I know that if I needed it to, there are things I could do to increase that income. In the meantime, it’s tons of fun 🙂