Irreducible Minimums to Generating Financial Security and Wealth
I am asked dozens of financial questions a month by doctors, with a large uptick recently. As doctors focus their time saving lives, it limits their time spent on investigating financial data and developing economic skills.
Many of the recent questions I’ve received set off an alarm and precipitated this article. There are more than 7 rules of properly managing your money, but felt compelled to send these 7 out this week to turn off the alarm.
I was fortunate in that I was practically forced by my mentors when I graduated school to go into a financial training program for doctors. The good news is that this training worked and I could have retired by 40. The bad news is that I’ve also gotten sucked into various financial machinations brought on by those that prey on both doctor’s and the public’s rapacious desire for financial security – so I could be even more affluent.
Having now consulted for 5000 doctors and students, here are 7 of the top rules and landmines to help set you up for a prosperous life.
Here are 7 rules you just can’t break:
- Start as early as possible!
The numbers are in. An hourly wage earner can become a millionaire by properly investing just $300/month over 30 years. Do the math!! Putting away $500 a month for 30 years and getting 5%, is more money than investing $500 a month for 10 years and getting 12%
As always, the best time to plant a tree was 10 years ago, but the second-best time is RIGHT NOW. You will never be younger than you are today.
- Discipline – put away a minimum of 10% a month, a set amount, or a number above a baseline of X every single solitary month
I’ve often felt like I was fighting everyone and anyone around me to invest -including myself. My own random desires, family members, staff, bookkeepers, and all those that sell things have wanted to take it all and limit what I could put awy. Stay disciplined – it pays off.
- Bad debt
Bad debt is defined as debt that has no ROI. It’s just interest on things you’ve purchased or services you’ve used that erode your net-worth every second of every minute of every day while it exists. Eliminating bad debt is your best, first investment.
“Investing is important, but get debt-free first. That’s what frees up your income so you can win.” -Dave Ramsey
- Focus on increasing your income.
THIS IS WHERE THE MONEY COMES FROM. Your investible capital and your future wealth doesn’t come from the lottery pay-off kind of money you may be envisioning from your returns.
Doctors get stuck inside of their practice dogmas at the risk of their financial future. Alternatively, doctors are willing to do anything for money and that merely distracts from their core competency, they lack the infrastructure to support it, it causes brand confusion, higher overhead, and overwhelms the team. The shear opportunity costs are enormous!
By adding one or two businesses within your business that are convergent programs, going along congruently with your philosophy and care, you can add 100s, 1000s, or 10s of 1000s to your investment portfolio each month.
As an example, we have a DNA testing program through Well Aligned that adds profit when people are tested, requires a series of lifestyle protocols and products the doctor can sell, and is congruent with the clinic’s goals of a personalized and natural approach. It’s vital to a patient’s health, a necessary and ethical process, cutting edge, improves patient outcomes, enhances the clinic’s reputation, and is mutually beneficial to the patient and clinic.
If you are a doctor whose purpose is to optimize the function of an individual’s body and its ability to heal and sustain itself; find those additional businesses rather than a bowling alley or some service that is a radical leap away from your core. Then, take those extra earning and put a set amount right into that investment account mentioned above.
- AVOID Get Rich Quick Schemes
The fact that some people have gotten rich with the latest crypto, pot stock, or start-up has cost the other 99.9% of people to go broke. As or more importantly, you miss out on the opportunity to being worth 8 figures because you lost focus on other rules like increasing your income and filling that coffer with discipline every month. (I’d like to get back some of my time, money, and mental health I wasted here when I was younger and dumber).
Any wise, rich person will tell you: “Be an investor, not a speculator.” This ultimately means you avoid the seduction of the latest schemes to get rich, move away from off the shelf solutions sold by financial salesmen, and stop trying to “pick winners” or time the market. Instead, look at building long term holdings to build your total assets.
Your mentors in life are important, so choose them wisely”
– Robert Kyosaki, Rich Dad, Poor Dad
- Keep learning, self-investment
I participate with my financial advisors thanks to having paid coaches, gone to seminars, and read many books from trusted authorities. Real estate is a great and popular part of an investment portfolio. I’ve done dozens of real estate deals, but not without really great council from those that have made millions or 100s of millions in the industry.
“Risk comes from not knowing what you’re doing” – Warren Buffet
- Limit Consumption.
This one is simple. The only way the Walmart worker becomes a millionaire is they don’t drive a BMW and live in a 6000 ft. square house. Affording it has turned into being able to make the payments. Yet, when you can easily buy it for cash that you’ve intelligently saved for a particular purchase, that’s when you can afford it.
What you’re spending matters more than what you’re making.
“If you buy things you don’t need, soon you’ll have to sell things you need.”
– Warren Buffet
There are so many more rules. These were just in response to the recent mistakes I’ve witnessed in evaluating doctor’s financial decision making. There are fairly clear and evident guidelines as to the best courses of action to take in arriving at a place where you have security, affluence, and the freedom to make choices in your life.
Just let us know how we can help!
Have fun saving the world
Dr. Ben
