It’s easy to judge when you don’t experience the same difficulties that others do. The classic scenario in medicine is an internist, who runs marathons and bikes to work, tells his morbidly obese patient to lose weight.  How would the scenario work if the doctor were mildly overweight, or has a body mass index of 30.5?

The same judgment is frequently seen in the online financial blogosphere.  Why does a doctor earning $200,000 have to moonlight to make ends meet? Or why does my hospitalist colleague pull in nearly twice the number of shifts as everyone else still need more money? You really don’t know what someone else goes through unless you live in their shoes.  They might need the money because they need to fund their excessive habits, or they might just be sending 60% of their income to their family in a third world country.

Financial mindset as a baseline for financial success

Doctors or other people with relatively high incomes can spend a high percentage of their incomes before feeling the hurt, but once the hurt begins, it is very difficult to reverse the damage.  Most people would agree that since you (and your family members) control your wallet, you have full reign over your financial destiny.  Your mindset, however, is only the beginning.

We all need to have some understanding of what is sustainable.  Most of us can make rational decisions most of the time, but the reality is that you can’t always control everything you’re faced with.

Children and dependents

Most people are going to have children at some point in their lives.  No matter how much you can control your expenses, the only time your kids will save you money is when you claim them as a dependent on your tax return.  Clothing and toys just cover the tip of the iceberg.  Think big expenses, like daycare, nannies, medical care, and schooling costs.  You could expect to drop at least $2,000 for infant formula for the first six months of life.  Daycare in metropolitan areas may run over ten thousand dollars a year, and a nanny will be at least two to three times more.

The problem with being a doctor is that our profession requires us to have relatively inflexible hours.  If you end up running late to pick up junior from daycare, you are looking at paying penalties by the minute.  If you want a nanny with a resume in the big cities, expect forking over $40-$50K a year.  Yes, that’s more than the private college tuition that you argued with your co-worker that wasn’t worth it.

There are exceptions in every case. Some doctors’ spouses opt to become stay-at-home parents. Financially this makes a lot of sense if your spouse’s income after taxes was similar to that of the cost of hired help.  Sometimes it still makes sense for the spouse to be working despite a wash on the financial end to keep one’s skills fresh.  The point is that everyone is in a different situation, and don’t think that you’re going to be the demographic who doesn’t end up paying for private tuition or a nanny that consumes your spouse’s entire salary.

Eldercare follows along the same line. I’ve seen some doctors renovate and expand their homes to bring in aging parents. Others have subscribed to long-term assisted living facilities for their elderly family members. Those of you who are familiar with these facilities know that they are expensive.  They are so expensive that I’ve considered looking into purchasing REIT funds for these entities. However, for those who are on the receiving end know that elder care can run into a six-figure annual expense easily.

Unexpected health expenses

There is seemingly little talk about what can go wrong with your health, and the younger financial crowd supporting early financial independence all leverage youth on their side. Sure, eating a ketogenic diet and biking to work is great to combat a sedentary lifestyle, fight obesity, and fend off hypertension, but everyone has different interests and time commitments.  We can all strive to become healthy, but you clearly have to be strongly motivated to put health at the top of your priorities to succeed. If you accidentally chose a profession that consumes 65 hours of your life a week, you have to be doubly motivated to put health as a priority.
Sometimes prioritizing health isn’t even enough.

Look at Dr. Paul Kalanithi, who passed away soon after finishing his neurosurgery residency from metastatic lung cancer.  There was little that he could have done to prevent getting such a devastating disease.

The health care conundrum is that your wallet will take a severe hit if anyone in your family develops a major medical condition. You can lower your annual income all you want to get a health subsidy for the marketplace health insurances and carry a $5,000+ deductible, but if you break a leg or develop a problem requiring recurrent care, your bills will rack up quickly.  As a doctor caring for many patients in these high deductible plans, I also see how insulting the reimbursements are for providing care on these plans.

The only winners are those who buy into these plans but never gets ill.  The statistics for being healthy are still on your side, but you might have less control over your health than you realize. Doctors, by virtue of working long hours, may even be more prone to developing health issues.

Herd susceptibility

Finally, there is the bucket of expenses that doctors mostly have control over but are tempted to buckle when compared to her peers.  Most of the expenses are within our control, but it’s not that difficult to want to buy more.  The most common issue is that many doctors’ incomes are in the six-figure range, but not necessarily significantly higher than that of many other professions.  Therein lies the problem — maybe doctors work too hard in residency for such low pay that by the time they get their first job, they mistakenly believe that a six-figure salary can purchase more than they realize.  Maybe the work to income ratio for doctors is skewed in that we expect to have a much more “luxurious” lifestyle than what our incomes would allow us to have.

There is something about our profession that leads us to set our financial mindset level higher than what it should be. When that happens, we lose our ability to control our expenses.

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

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