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Best Ways To Create Family Wealth

wealth for family

There is a misconception in society that all doctors come from wealth. And while I can understand where that comes from, it also couldn’t be farther from the truth.

A lot of the doctors I know didn’t have generational wealth to back them up while they pursued their degree, including myself. It’s why so many of us aren’t always the best at managing money when it does start to come in.

But we need to start thinking about our future and families, now more than ever. And just because we didn’t have any way of growing family wealth before, doesn’t mean we can’t start now.

I don’t want my kids to go through the financial uncertainty that I did, nobody does. Which is why it’s even more important now to build wealth that will last longer than our salaries, for those we care about.

Physicians have the benefit of a nice income but there are issues that make that high paycheck feel like it isn’t enough. So today, let’s discuss family wealth, what stops us from growing it and how to counteract it all:

  • How do we define family wealth?
  • Why are doctors struggling to save up?
  • What ways can physicians approach investments?

Family Wealth: What Does It Mean To Have Wealth That Lasts?

For all this talk, what does it mean to even have family wealth? Like, how do you differ that from your other normal savings?

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Family wealth isn’t like a private savings fund. It’s assets that can last generations, being passed down from parent to child, and you can continue to add to it as time goes on. This wealth could be financial, in the form of cash and bonds, or assets such as real estate.

Another term for family wealth is generational wealth, kept in the family as human capital or intellectual capital. 

Family wealth is anything that helps the family advance forward, making sure they have enough to cover their needs and more. It’s why some people count education as part of family wealth alongside material goods. A good education builds a future where more capital can be gained and kept for generations to come, after all.

But ultimately, family wealth isn’t personal wealth. It’s the savings and gathering of assets that will go on to sustain your family for years to come.

Do Most Physicians Have It All Figured Out?

See, the honest truth of the matter is that us physicians? We might be earning good, but we aren’t saving smart. And with the amount of work being unloaded on to us, that’s not surprising.

1 out of 4 family physicians have admitted that they are not having a good time, which makes sense with how the healthcare sector has become much more taxing, both figuratively and literally. (1) The new 3% pay cut recently proposed by the CMS certainly comes to mind, but a lot of doctors have been suffering heavy taxes for years now.

And there is the actual debt of becoming a doctor. Medicine has the highest cost of education in the country, and because of that? The student loan interest is just as high. Meaning even if you’ve earned enough to pay off your loan in theory, the interest alone is an entirely separate figure that sets you back years.

Of course, no one wants to talk about our financial illiteracy. I’m not going to sugarcoat it, us doctors? We’re terrible at managing the money we suddenly start to earn.

God knows I’ve made some bad investments in my time, and so have many other physicians out there. For every successful family physician out there, there is a real estate investment they have fumbled.

Also, let’s address the elephant in the room: Family physicians and specialists do not make the same money. 

Specialists are paid according to their specialty, which can easily range from $400k to a whopping $800k and more. When you compare that to a family physician, who often has to also manage expenses at their practice on their $200k average salary, well.

It’s not hard to see why it’s easier for a specialist to grow their wealth.

Family physicians have been struggling for a while now, but some of them do make it work. However, the curve of where their profits can turn into losses is significantly higher.

Overall, physicians are in that middle ground of both being pretty well off but most of us just don’t make instant generational wealth money.

How To Start Growing Family Wealth As A Medical Professional

So, what do you do when you’re a family physician trying to earn enough to create family wealth for generations to come?

Honestly, despite all the negative talk above, there are still plenty of ways you can grow family wealth. It is a process which requires a number of requirements on your behalf but they are tried and true methods that have helped many doctors manage their finances more responsibly.

The key to growing family wealth isn’t earning lots of money, it’s learning how to save and invest properly. 

Budget it step-by-step

If you’re reading this, chances are you didn’t start off with money and all of this? It’s got to be overwhelming.

But the truth is that you can start a family fund even if you don’t have the strongest financial background.

Take budgeting, for example. A good budget outline can change everything about how you’re spending the money you earn. Try to make lifestyle changes that help you meet your financial goals, one step at a time.

However, keep in mind that your budgeting needs to be realistic and tailored to your goals and capacity, unlike most stuff you see online.

Start talking money

I know this one is the scariest because all this talk about money and wealth can be uncomfortable. But it is important to get out of your comfort zone.

Start discussing your finances with your family, even if it feels strange. Talking about the value of money helps your family understand why you might be making certain lifestyle decisions, and they will also try to help in their own way.

It helps to have a healthier relationship with wealth, rather than one fueled by fear of losing it.

Prioritize being debt free

This is easier said than done, but that doesn’t mean it’s impossible. Trying to avoid debts or taking out unnecessary loans is one of the best financial tips I ever got.

And for good reason. Part of why most of America is going through a financial crisis is because we are forced to take on more and more loans that we just can’t pay off.

So, trying to live within our means is the safest bet to gaining financial independence. It might not be fun, but it helps.

Discuss Investments

Investments are a physician’s Achilles Heel, in my opinion. But that doesn’t mean we shouldn’t be looking into them more.

Sure, plenty of doctors have taken real estate as an easy investment option and been sorely mistaken. But smart investments are one of the fastest ways to grow your family wealth. Think stock market options, assets and, yes, real estate.

Just learn to manage them better.

Education Counts As Investment Too

There is nothing that builds lasting wealth better than higher education. Get your children invested in their studies by saving up for them.

Help them pursue their educational goals, because that would end up helping future generations in the long run.

Seriously Save Up

This is the most important thing when trying to build generational wealth. Maybe you can’t earn as fast as some specialties, but you can learn how to save properly.

And that is even better because the richest people in the world fall faster specifically because they never really gave thought to saving up and managing their finances.

While it’s fun to just get all the nice things as soon as possible, saving up and being frugal pays off in a huge way. And don’t just let your income sit there gathering dust. Put it in the bank, compound it!

Make The Tax Laws Work For You

Remember how I said that taxes were one of the biggest reasons physicians weren’t able to build financial wealth? Well, you can uno reverse them to favor you.

There are so many states in the U.S. that have tax laws that can benefit you and your savings. There are states that don’t have an income tax, that don’t take money for Social Security or impose heirship taxes. 

Read up on the tax laws in your resident state and see how they can end up working for you, instead.

Final Thoughts

I said it before and I’ll say it again: It isn’t easy to grow generational wealth but we, as physicians, do have an advantage thanks to our higher salaries.

After all, there is a lot more to family wealth than just money.

It isn’t about being the richest person around, but rather saving up so your future generations don’t have to go through the things you went through. We work towards a better future for our children, after all!

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