The most common hurdle that doctors have is overspending. The notion that good income guarantees great buying power not only delays building financial worth but also confines doctors to lengthier careers than needed.  The solution, in a nutshell, is to make sure that we make prudent financial and career choices to complement our financial velocity. Easy, right?

The reality is not so simple.  Psychology is fascinating. Human behavior can function, at times, stochastically, yet can be very much predictable.  Most people entering the field of medicine know that they ought to end up with relatively high incomes.  Does a potentially high income actually harm our financial choices?  Is the promise of high income a financial Achilles heel for doctors?  If we can tackle this belief, we’d be able to secure a smoother path to financial success. Let’s look at two scenarios.

Wealth begets wealth

There is truth in the saying, “the rich get richer.”  The best way to have wealth is to be born into it. Your hand is loaded with face cards, and if you are prudent with your life choices you can bring home the entire pot. When I was in medical school, my net worth was a solid negative six figures.  Common financial choices I faced included whether to get the combo meal at Five Guys or just a burger so that I could cut the cost of my lunch down by half. Do I take the flight with two layovers in order to save $50?  I lived in the present, and that meant finding out ways to reduce my student loan burden. Even with an income as a resident, I had no desire to borrow from “future me” for a better lifestyle because that would mean having less to repay my student loans.

One of my classmates frequently bought real estate thousands of miles away. He played the stock market in residency, and ran apartment rentals he owned on the side. We live in America. A $50,000 resident salary can fortunately be leveraged for the right investment. But I am probably too conservative to risk my residency salary for greater riches especially if I’m going for the burger without the drink.  While I may never know his financial situation, I doubt that he solely relied upon his salary for his activities.

Likewise, one of the radiologists I know bought a $1,100 per square foot apartment in upper Manhattan straight out of residency. Six months later, he bought the adjacent unit and combined both units together. Radiology is a high-paying medical field, but this endeavor clearly had backers.

Those who began with greater financial firepower are generally more willing to take bigger chances. Sure they can stand to lose more, but they can gain a whole lot more with the appropriate risks.  In this scenario, the thought of becoming a doctor made no impact on a one’s financial decisions.

What about everyone else?

I have a coworker who has an uncanny ability to borrow from her future self. Mercedes in residency. House in residency. Nicer house with world-class vacationing as an attending. Vacation home on an island.  As far as I know, she doesn’t utilize balance transfer checks or credit card debt. But I cringe at the number of big-ticket expenditures she is able to make without much second thought.

The fascinating aspect about appearance is that no one else would have any idea how much net worth exists behind the facade. I asked her recently how she was able to manage a seemingly envious lifestyle, and she bluntly replied that it was because she knew that she doctors earned good money. The mindset was cemented long ago, and she knew to borrow from future self.

This mentality actually is quite common most of my coworkers, although all of them have certain degrees of financial compunction. Several of them proudly proclaim that they contribute the maximum amount to their 401k’s, and still have plenty to go around. The problem is that saving solely through a 401k is insufficient at the spending rate that most doctors are accustomed to.  Why don’t we realize it?

Are doctors delusional about their earning potential? Some of us truly are, but the majority of us are simply misinformed. You don’t know what you don’t know.  Until you sit back and do a few simple calculations, you won’t really know how much or how little your bank account has.  Only then will you be able to protect your financial Achilles heel.

“Smart Money, MD” is an ophthalmologist who blogs at the self-titled site, Smart Money MD.

Image credit: Shutterstock.com