Physicians have an unusual relationship to money. We’re the highest paid profession, but we have lower than expected wealth. (Physicians on average make nearly twice as much on average than attorneys according to the Bureau of Labor Statistics.) This physician wealth deficit is due to our late start in achieving a high income, shorter careers, frequent large college and medical school debt, and, perhaps, our lower money management focus and skill.

My topic for today is how your earnings and proportion for saving / investment can and should be planned for across your career. This article’s goal is to provide an impetus to start thinking and start talking to your significant other about a plan.

Every type of professionals’ income varies across their career, but ours does so along a different trajectory. For example, if you graduate with a degree in technology, law, or business, you may make a pretty good income as soon as you graduate in your early to mid-20s, depending on your degree. Then, as you gain on-the-job skill and seniority, your income gradually rises from your 20s into your early 50s before starting to dip in your late 50s and 60s.

However, as a doctor, you spend your 20s not only not making money but adding to your debt. Once you – agonizingly late in life – complete your training, you can make a very high salary immediately. From this high level it may increase further if you start a practice on your own or with others. But for many physicians across many specialties, income is based on a percentage of collections which, in turn, are based on how hard or how many hours you work. And your effort may be greatest during the first 5- or 10-years following training. Thus, for many physicians their income across their careers may be high but flat.

So, consider your earnings and savings/investing trajectory from today going forward through major life milestones and ending in retirement. Money management for many doctors is not a very interesting topic and, thus, becomes an undermanaged part of life. Especially overlooked is taking a long-term longitudinal view. Here are some scenarios to consider.

One positive aspect of a sudden rather than gradual increase in income, as occurs as we start to practice after completing our training, is that a sudden large increase can be more easily set aside for savings and investment. If you’re a computer engineer, you start early and realize gradual income increases. It’s easy in this scenario to expand one’s lifestyle indefinitely as one’s income gradually increases. Those big houses and nice vacations can suck every available dollar and more. It takes greater discipline to set aside a portion of earnings. However, as a physician your income can increase from $50,000 to three, four, or five times that much from one month to the next. In this scenario it is easier to both increase one’s lifestyle spending AND to set aside a substantial percent for paying off debt and adding to one’s savings / investments.

Next, consider the milestones you wish to realize in your life. Perhaps you want to have kids 3-5 years from now and plan on spending time at home with them and working less or not at all. In this case, you know your income at that point will become constrained or will stop. You can take steps now to prepare. If you’re in a long-term relationship, discuss a plan with your spouse / partner now. Decide on what you can do now to optimize your savings and investments, and what income you’ll need as one or both of you work less.

Here’s another scenario: I’ve spoken to several doctors (a dozen, perhaps), who decided to take a job in a geographic area or setting where the need was great and earnings high.

They made a conscious decision to work their butts off for about 5 years (that’s the most common duration I’ve heard) and then slow down and / or move to their preferred part of the country. Not coincidently this is the group of doctors who consistently talked about their investment plans. After all, their explicit plan was to suffer adversity (in their view) for a manageable part of their life span now to make excess money for the future.

Another scenario is to start considering how to slow down in the latter part of one’s career. As psychiatrists we are blessed that our work is not physically demanding, although certainly can be stressful and emotionally / mentally draining. We often can work into our 60s, 70s and 80s. Surgeons, on the other hand, with more physically demanding work, are more dependent on the continued good function of their bodies. An acquaintance of mine is a surgeon who, because of degenerative joint disease, could no longer operate past his mid-50s. Thus, as a psychiatrist, one who may work in a high-volume high-stress environment, it is an option to switch gears and work at the VA for a few years before retirement. The VA has set hours, improved compensation, and often manageable work-loads.

These scenarios I’ve described may be relevant to you or not. Asking yourself (and your significant other) these questions and pondering your future is important for everyone.

One parting thought: one of the best things I’ve done is getting life insurance and having an estate plan. I’m married and have three children. Knowing I won’t leave them in financial straits gives me great comfort. It is a gift that keeps on giving in terms of my peace of mind. For anyone with dependents, I highly recommend taking these steps. This is but another aspect of considering one’s financial health.