Financeology - Penniless Doctor Syndrome: The SAVE Framework with Sanjay Sharma, MD

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Financeology - Penniless Doctor Syndrome
with Sanjay Sharma, MD
medskl.com/module/penniless-d...
Transcript
So you just got into medical school and you are feeling like a king or queen. You finally have fulfilled your lifelong ambition. You are going to be a doctor. Let me repeat that: you are going to be a doctor! You will get to help people in their time of need. Diagnose complicated problems. Operate on life threatening issues.
And your efforts you are going to be handsomely rewarded: Gross $350,000; net $250,000 on average, the guaranteed ticket to join the 1%ers. What could be better right? Well - not so fast.
Did you know that a significant number of doctors are HEFAY’s? Ever hear of that? They are High Earners, Few Assets Yet. And the sad fact is that many not only are HEFAYs - they are what I like to call HENGAs… High Earners Never Gonna Have Assets.
And just to bring this concept home here are 3 fast facts:
• Number 1: A number of physicians over the age of 60 feel they cannot retire and have to live paycheque to paycheque.1
• Number 2: Doctors are not in the top 3 professions who become a millionaire. Know which are? Teachers, accountants and engineers. 2
• Number 3: A study of 10,000 millionaires showed that 69% had an income of less than $100,000.2 So how is it that physicians with an annual income over $250,000 aren’t on the list?
Well, it all boils down to a lack of understanding of finance. And, sadly, a few bad habits. Like:
• Spending all your money - because you are going to make lots of it down the road.
• Or worse - taking out loans to fund your luxe IG lifestyle - you know the one with the fancy cars, the bottles of expensive Champagne, or the beautiful handbag.
If this sounds like you, don’t worry, there is hope. I wanted to introduce you to the SAVE framework for making sure that you meet your financial target. This is all aimed at you reaching your number - which I define as the number you need in your bank account - invested at 5% - that is going to allow you to enjoy the lifestyle that you want to live when you retire - and never have to touch the principle.
The SAVE framework is what I teach all of my medical students when we have some downtime in the clinic. And it is what I have personally used to build my financial habits.
S - Spend less
The key is to spend less than you make. I have a friend who is well into a credit line even though they make over $500,000 per year.
A - Advice
Speak to financial advisors who understand the specific needs of physicians so you can get highly personalized service
V - Value
What I mean by this is to collect assets that will appreciate in value over time. This doesn’t include most fancy cars and luxury items. As a rule, debt that helps finance your education is good, but your lifestyle is bad.
And the E - Exercise
As in, exercise daily wealth habits. Because it is the sum of micro choices that is going to get you there - things like forgoing the expensive daily latte or the weekly truffle pasta that will do wonders for the health of your savings account (and your coronaries and liver).
One quick caveat about this framework: the reality is that the sooner you master these skills, the faster you will start to accumulate wealth. And the earlier in, the more your nest egg will grow because of the effect of compounding interest.
So start to use the SAVE model and begin your journey to financial mastery. By doing so, you will say goodbye to the world of the HENRY, and instead will choose the road to financial freedom.
 
Disclaimer
All expressions of opinion reflect the judgment of Dr. Sanjay Sharma as of the date of publication and not Royal Bank of Canada.
The strategies, advice and technical content in this presentation are provided for only general guidance and is not intended to provide specific financial, investment, tax, legal, accounting or other advice, and should not be relied upon in that regard. You should consult your own professional advisor when planning to implement a strategy to ensure that individual circumstances have been considered properly and it is based on the latest available information.
References
1. Dahle, Jim. “Are Doctors Millionaires? The Truth About The Average Doctor Net Worth.“ The White Coat Investor, July 17 2021, www.whitecoatinvestor.com/phy...
2. Ramsey Solutions. "The National Study of Millionaires." September 27 2021, www.ramseysolutions.com/retir...