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

For newer doctors, avoid lifestyle inflation

Amarish Dave, DO
Finance
September 15, 2023
Share
Tweet
Share

Let me share a story about Dr. Sarah Mitchell.

Dr. Mitchell, like many of us, started her career with a resident’s salary, which was around $40,000 per year. After completing her residency, she received an enticing offer as an oncologist with an annual salary of $350,000.

However, instead of succumbing to lifestyle inflation, Dr. Mitchell made a financially savvy decision.

She committed to living on an annual budget of $60,000 for the first two years after completing her residency, which included her initial resident’s salary of $40,000 and an additional $20,000 raise from her new oncologist position. She saved and invested the remaining $290,000 each year.

After accounting for taxes, this amounted to approximately $188,500 annually.

But there’s more to the story. Dr. Mitchell was fortunate to have an employer who provided her with an annual match of $35,000 in tax-deferred investments. So, factoring in taxes and her employer’s match, she effectively saved and invested $223,500 per year, which equates to roughly $18,625 per month.

So, did this two-year decision pay off?

During the first two years, Dr. Mitchell saved and invested the difference between her new annual living expenses of $60,000 and her oncologist’s income. This added up to a total of $447,000 over the two-year period. While this sum alone is impressive, the real magic happened when she allowed her investments to grow over time through compounding.

Dr. Mitchell invested in a diversified portfolio that yielded an average annual return of 7 percent. With the power of compound interest working in her favor, her initial savings of $447,000 grew substantially. Here’s how her wealth evolved over the next 15 years:

Year 2: $447,000
Year 3: $488,470
Year 4: $534,228
Year 5: $584,670
Year 6: $640,230
Year 7: $701,379
Year 8: $768,627
Year 9: $842,537
Year 10: $923,734
Year 11: $1,012,905
Year 12: $1,110,805
Year 13: $1,218,278
Year 14: $1,336,272
Year 15: $1,465,853

By year 15, Dr. Mitchell’s financial decision had transformed her initial $447,000 savings into an impressive $1,465,853 without any additional savings!

While this may not appear as astronomical, especially considering her high earning potential as an oncologist, it’s essential to remember that this is money she didn’t have to actively work for during those 15 years. Instead, her investments were doing the heavy lifting.

This financial cushion gave Dr. Mitchell tremendous peace of mind and the freedom to make choices aligned with her passions and values. She no longer felt the financial pressure that many doctors experience.

ADVERTISEMENT

So, what can we learn from Dr. Sarah’s journey?

It’s not about earning the most money possible; it’s about making smart choices with the money you do earn. By living below your means, saving, and investing wisely, you can create a financial foundation that allows you to live life on your terms.

To achieve financial freedom, avoid lifestyle inflation!

Amarish Dave is a board-certified neurologist with over 20 years of experience in both neurology and active stock investing. In addition to his medical career, he holds a background in business from the University of Michigan and has successfully passed the SIE exam administered by FINRA. Dr. Dave is founder, FiscalhealthMD.com, a website dedicated to educating doctors at all stages of their careers, ranging from residents to retirement, about financial planning.

Prev

Pushed to the limit: Battling heat in hard labor

September 15, 2023 Kevin 0
…
Next

Balancing tension and kindness in medical education

September 15, 2023 Kevin 0
…

Tagged as: Practice Management

Post navigation

< Previous Post
Pushed to the limit: Battling heat in hard labor
Next Post >
Balancing tension and kindness in medical education

ADVERTISEMENT

More by Amarish Dave, DO

  • The doctor’s guide to dividend wealth: Building a resilient portfolio with smart investments

    Amarish Dave, DO
  • What to put in Roth vs. traditional IRAs: It can make big differences

    Amarish Dave, DO
  • How to select the right mutual funds for your goals

    Amarish Dave, DO

Related Posts

  • 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
  • Who says doctors don’t care?

    Cindy Thompson
  • Should doctors take more responsibility for quality metrics?

    Sarah Gebauer, MD
  • Doctors, do you really understand?

    Michele Luckenbaugh

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

    • Who gets to be well in America: Immigrant health is on the line

      Joshua Vasquez, MD | Policy
    • Why specialist pain clinics and addiction treatment services require strong primary care

      Olumuyiwa Bamgbade, MD | Conditions
    • Harassment and overreach are driving physicians to quit

      Olumuyiwa Bamgbade, MD | Physician
    • Why peer support can save lives in high-pressure medical careers

      Maire Daugharty, MD | Conditions
    • When a medical office sublease turns into a legal nightmare

      Ralph Messo, DO | Physician
    • Addressing menstrual health inequities in adolescents

      Callia Georgoulis | Conditions
  • 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
    • Who gets to be well in America: Immigrant health is on the line

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

      Sabooh S. Mubbashar, MD | Physician
  • Recent Posts

    • The shocking risk every smart student faces when applying to medical school

      Curtis G. Graham, MD | Physician
    • Clinical ghosts and why they haunt our exam rooms

      Kara Wada, MD | Conditions
    • High blood pressure’s hidden impact on kidney health in older adults

      Edmond Kubi Appiah, MPH | Conditions
    • Deep transcranial magnetic stimulation for depression [PODCAST]

      The Podcast by KevinMD | Podcast
    • How declining MMR vaccination rates put future generations at risk

      Ambika Sharma, Onyi Oligbo, and Katrina Green, MD | Conditions
    • The physician who turned burnout into a mission for change

      Jessie Mahoney, MD | Physician

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

View 1 Comments >

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

    • Who gets to be well in America: Immigrant health is on the line

      Joshua Vasquez, MD | Policy
    • Why specialist pain clinics and addiction treatment services require strong primary care

      Olumuyiwa Bamgbade, MD | Conditions
    • Harassment and overreach are driving physicians to quit

      Olumuyiwa Bamgbade, MD | Physician
    • Why peer support can save lives in high-pressure medical careers

      Maire Daugharty, MD | Conditions
    • When a medical office sublease turns into a legal nightmare

      Ralph Messo, DO | Physician
    • Addressing menstrual health inequities in adolescents

      Callia Georgoulis | Conditions
  • 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
    • Who gets to be well in America: Immigrant health is on the line

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

      Sabooh S. Mubbashar, MD | Physician
  • Recent Posts

    • The shocking risk every smart student faces when applying to medical school

      Curtis G. Graham, MD | Physician
    • Clinical ghosts and why they haunt our exam rooms

      Kara Wada, MD | Conditions
    • High blood pressure’s hidden impact on kidney health in older adults

      Edmond Kubi Appiah, MPH | Conditions
    • Deep transcranial magnetic stimulation for depression [PODCAST]

      The Podcast by KevinMD | Podcast
    • How declining MMR vaccination rates put future generations at risk

      Ambika Sharma, Onyi Oligbo, and Katrina Green, MD | Conditions
    • The physician who turned burnout into a mission for change

      Jessie Mahoney, MD | Physician

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

For newer doctors, avoid lifestyle inflation
1 comments

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

Loading Comments...