Skip to content
  • About
  • Contact
  • Contribute
  • Book
  • Careers
  • Podcast
  • Recommended
  • Speaking
  • All
  • Physician
  • Practice
  • Policy
  • Finance
  • Conditions
  • .edu
  • Patient
  • Meds
  • Tech
  • Social
  • Video
    • All
    • Physician
    • Practice
    • Policy
    • Finance
    • Conditions
    • .edu
    • Patient
    • Meds
    • Tech
    • Social
    • Video
    • About
    • Contact
    • Contribute
    • Book
    • Careers
    • Podcast
    • Recommended
    • Speaking

Doctors vs. executives: the spending power of $1.5 million

Smart Money, MD
Finance
December 12, 2018
Share
Tweet
Share

The general consensus among physicians who have a solid grasp on their finances is that they are realistic about their earnings and expenses. Ins and outs. Just like in nephrology, except a net positive in your finances is considered a win.  One would expect that doctors ought to be generally conservative in their expenditures, since medicine is a generally conservative profession. But life is unpredictable, and that’s why there are so many physicians in their 50s who still have unpaid medical student loans.

One of my guilty pleasures includes consuming stories on Refinery29, an online media outlet. I came across an article that outlines the weekly expenses of a high-income non-physician (executive director) family in Los Angeles. That’s right, down to the monthly car leases that all of the FIRE crowd cringes at. Head over if you’d like to pour through the details.

In summary, this household earns pretax combined income of $1.5 million at the age that many doctors are still getting lowball offers on their second jobs.

Acknowledge credit when deserved

Bravo!

We should all be impressed by the earning power of this couple.  Some of us are secretly jealous of the relatively “normal” work hours compared to that of the average physician. You also have to realize that there are also far fewer high-income opportunities like this compared to hospitalist jobs, so not everyone can be a $1.5 million household living in the OC. There is undoubtedly blood, sweat, and tears that numbers simply cannot depict.

Big numbers make us uncomfortable

Big expenses tend to accompany big incomes.  When I started earning a salary as a resident, I felt simultaneously rich and poor. There was a bi-weekly deposit in my checking account, but all of my student loans went into repayment mode.  The ones I deferred started accruing interest, so I had expenses that did not exist previously.  I was no longer eligible for student subsidized housing, so my living expenses also increased.  I experienced the same transition as an attending.  Do I still want to live in distressed living quarters in the questionably safe neighborhood around the hospitals? Do I want an apartment or a condominium? How about a detached house that affords a yard to enjoy?  Now that I have a yard, I need a lawnmower and maybe a lawn guy.  It’s interesting to see how lifestyle inflation self-perpetuates.

That’s one aspect that the financially independent crowd has successfully detached itself from.  But big numbers may actually be less shocking that they appear.  One of the line items on this expense report is the holiday expense:

Christmas shopping: $7,500

Did they mean $750 or $7,500? To take it into perspective, one of the doctors at the local hospital once declared that he spent $2,000 for Christmas activities since he had relatives from abroad visiting that year.  As a hospitalist, his income was approximately $250,000. His holiday expenses were 0.08% of his pretax income.  In comparison, the $7,500 Christmas shopping expenses only constitute 0.05% of a $1.5 million income! The executive director family actually spent a smaller percentage of their pretax income than the doctor!

Time to get critical

What the author of this article doesn’t mention is how long they have enjoyed the earning power.  A neurosurgeon who earns $600,000 a year at age 34 is in a more precarious financial situation if he was only earning $60,000 a year ago as a resident.  Given the career trajectory of executive directors, it is safe to assume that they have enjoyed at least several years worth of high earnings at age 34.  Based on their numbers, it’s not clear how much total net worth they even have to their names.  Are they millionaires yet? How much are they actually saving each year, and is it enough?

Assuming that the healthy earning potential continues throughout their working careers, this executive director family will do just fine.  If they work until age 65, they will likely become multi-millionaires.  If they wanted to quit their jobs at age 40 and move to Belize, they would still be fine if their expenses are reduced significantly.

Is there a moral to the story?

It is human nature to judge.  As a physician who will unlikely ever experience the earning power of this executive director household, it is difficult to imagine how my life would be any happier with bigger numbers.  When I showed this article to several of my colleagues who do have incomes in this range, they laughed at the fact that they only wished that they had the time to even spend their earnings.

ADVERTISEMENT

Maybe it is better to strive to become an executive director with a C-suite rather than a neurosurgeon working 90 hour weeks.

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

Image credit: Shutterstock.com

Prev

Doctor’s orders: Follow these 6 tips to avoid holiday stress

December 12, 2018 Kevin 1
…
Next

How social media leads to a loss of creativity

December 12, 2018 Kevin 1
…

Tagged as: Practice Management

Post navigation

< Previous Post
Doctor’s orders: Follow these 6 tips to avoid holiday stress
Next Post >
How social media leads to a loss of creativity

ADVERTISEMENT

More by Smart Money, MD

  • Is passive income a lie?

    Smart Money, MD
  • What to do financially when you’re a doctor getting a divorce

    Smart Money, MD
  • Doctors in tech cities are losing the rat race

    Smart Money, MD

Related Posts

  • The power of advocacy: How doctors can be empowered physicians

    Amaryllis Sánchez Wohlever, MD
  • Why do doctors who hate being doctors still practice?

    Kristin Puhl, MD
  • Doctors: It’s time to unionize

    Thomas D. Guastavino, MD
  • When doctors are right

    Sophia Zilber
  • We’re doctors. We signed the book.

    Jonathan Peters, MD
  • Why doctors-in-training need better nutritional education

    Abeer Arain, MD, MPH

More in Finance

  • Decoding your medical bill: What those charges really mean

    Cheryl Spang
  • 5 blind spots that stall physician wealth

    Johnny Medina, MSc
  • The most overlooked skill in medicine: contract negotiation

    Cynthia Chen-Joea, DO, MPH and Peter Baum, DO
  • The business lesson new doctors must unlearn

    Stanley Liu, MD
  • The hidden impact of denials on health care systems

    Diana Ortiz, JD
  • Why physicians are unlike the “average” investor

    David B. Mandell, JD, MBA
  • Most Popular

  • Past Week

    • Forced voicemail and diagnosis codes are endangering patient access to medications

      Arthur Lazarus, MD, MBA | Meds
    • How President Biden’s cognitive health shapes political and legal trust

      Muhamad Aly Rifai, MD | Conditions
    • The One Big Beautiful Bill and the fragile heart of rural health care

      Holland Haynie, MD | Policy
    • America’s ER crisis: Why the system is collapsing from within

      Kristen Cline, BSN, RN | Conditions
    • Why timing, not surgery, determines patient survival

      Michael Karch, MD | Conditions
    • How early meetings and after-hours events penalize physician-mothers

      Samira Jeimy, MD, PhD and Menaka Pai, MD | Physician
  • Past 6 Months

    • Forced voicemail and diagnosis codes are endangering patient access to medications

      Arthur Lazarus, MD, MBA | Meds
    • How President Biden’s cognitive health shapes political and legal trust

      Muhamad Aly Rifai, MD | Conditions
    • Why are medical students turning away from primary care? [PODCAST]

      The Podcast by KevinMD | Podcast
    • The One Big Beautiful Bill and the fragile heart of rural health care

      Holland Haynie, MD | Policy
    • Why “do no harm” might be harming modern medicine

      Sabooh S. Mubbashar, MD | Physician
    • The hidden health risks in the One Big Beautiful Bill Act

      Trevor Lyford, MPH | Policy
  • Recent Posts

    • Beyond burnout: Understanding the triangle of exhaustion [PODCAST]

      The Podcast by KevinMD | Podcast
    • Facing terminal cancer as a doctor and mother

      Kelly Curtin-Hallinan, DO | Conditions
    • Online eye exams spark legal battle over health care access

      Joshua Windham, JD and Daryl James | Policy
    • FDA delays could end vital treatment for rare disease patients

      G. van Londen, MD | Meds
    • Pharmacists are key to expanding Medicaid access to digital therapeutics

      Amanda Matter | Meds
    • Why ADHD in women requires a new approach [PODCAST]

      The Podcast by KevinMD | Podcast

Subscribe to KevinMD and never miss a story!

Get free updates delivered free to your inbox.


Find jobs at
Careers by KevinMD.com

Search thousands of physician, PA, NP, and CRNA jobs now.

Learn more

Leave a Comment

Founded in 2004 by Kevin Pho, MD, KevinMD.com is the web’s leading platform where physicians, advanced practitioners, nurses, medical students, and patients share their insight and tell their stories.

Social

  • Like on Facebook
  • Follow on Twitter
  • Connect on Linkedin
  • Subscribe on Youtube
  • Instagram

ADVERTISEMENT

  • Most Popular

  • Past Week

    • Forced voicemail and diagnosis codes are endangering patient access to medications

      Arthur Lazarus, MD, MBA | Meds
    • How President Biden’s cognitive health shapes political and legal trust

      Muhamad Aly Rifai, MD | Conditions
    • The One Big Beautiful Bill and the fragile heart of rural health care

      Holland Haynie, MD | Policy
    • America’s ER crisis: Why the system is collapsing from within

      Kristen Cline, BSN, RN | Conditions
    • Why timing, not surgery, determines patient survival

      Michael Karch, MD | Conditions
    • How early meetings and after-hours events penalize physician-mothers

      Samira Jeimy, MD, PhD and Menaka Pai, MD | Physician
  • Past 6 Months

    • Forced voicemail and diagnosis codes are endangering patient access to medications

      Arthur Lazarus, MD, MBA | Meds
    • How President Biden’s cognitive health shapes political and legal trust

      Muhamad Aly Rifai, MD | Conditions
    • Why are medical students turning away from primary care? [PODCAST]

      The Podcast by KevinMD | Podcast
    • The One Big Beautiful Bill and the fragile heart of rural health care

      Holland Haynie, MD | Policy
    • Why “do no harm” might be harming modern medicine

      Sabooh S. Mubbashar, MD | Physician
    • The hidden health risks in the One Big Beautiful Bill Act

      Trevor Lyford, MPH | Policy
  • Recent Posts

    • Beyond burnout: Understanding the triangle of exhaustion [PODCAST]

      The Podcast by KevinMD | Podcast
    • Facing terminal cancer as a doctor and mother

      Kelly Curtin-Hallinan, DO | Conditions
    • Online eye exams spark legal battle over health care access

      Joshua Windham, JD and Daryl James | Policy
    • FDA delays could end vital treatment for rare disease patients

      G. van Londen, MD | Meds
    • Pharmacists are key to expanding Medicaid access to digital therapeutics

      Amanda Matter | Meds
    • Why ADHD in women requires a new approach [PODCAST]

      The Podcast by KevinMD | Podcast

MedPage Today Professional

An Everyday Health Property Medpage Today
  • Terms of Use | Disclaimer
  • Privacy Policy
  • DMCA Policy
All Content © KevinMD, LLC
Site by Outthink Group

Leave a Comment

Comments are moderated before they are published. Please read the comment policy.

Loading Comments...