“Money, get away.
Get a good job with more pay and you’re OK.
Money, it’s a gas.
Grab that cash with both hands and make a stash...”1
Is Roger Waters still alive? Maybe he’s in limbo with
Keith Richards.
In The Millionaire Next Door, Drs. Thomas Stanley
and William Danko comment on overspending doctors:
Doctors are expected to live in expensive homes, dress and
drive in a style congruent
with their ability to perform
their professional duties…
[Patients give] extra points
to those who wear expensive
clothes, drive luxury automobiles,
and live in exclusive
neighborhoods.2
Stanley and Danko
examine Dr. South, a real
doctor in his late 50s
earning $700,000 per year, who is an under-accumulator
of wealth. Many doctors have high income but
because of profligate spending, have low net worth.
Stanley and Danko provide a list of financial concerns,
fears and worries for doctors. A partial list from the book
is provided with comments from Jen Butler.
Not being wealthy enough to retire in comfort:
Butler: There is a difference between worry and
preparation. Worry occurs when we allow assumptions
and unchecked thoughts to fuel our emotional capacity to
deal with an event or situation. Preparation occurs when
we rationally and intentionally acknowledge an event or
situation with facts while asking difficult questions to
anticipate unexpected circumstances. Stress related to
worry about future retirement can be circumvented by
getting very clear on your retirement number, being realistic
on how much you can put away during the different
phases of your life, and being vigilant on using facts to dispel
wayward thoughts.
Not having high enough income to satisfy the
family’s purchasing habits:
Butler: There are two types of stress contributing to
these thoughts. First is the situational stress of school.
Most dentists, and their supportive spouses, are tired of
needing to watch their dollars and cents from the many
years of higher education. They already did the sacrificing
to get through school, so once they get into their career
they think they should be able to spend how they want.
Second is the psychological stress of not fulfilling
promises, which leads to guilt. The decision to continue
into dental school, with all of its requirements, time commitments
and price tags, is not easy. Often there are
promises made to loved ones of easy living, life of luxury
and early retirement. These promises linger in the back of
the dentist’s mind and create significant pressure.
Carlsen: I agree. Many a young doc writes me to ask
about purchasing a larger home, nicer car or having children
attend private schools because their spouse “deserves
it” due to the sacrifice of years of education or because of
promises made.
Butler: It’s vital to have a paradigm shift around the
idea of budgeting. Instead of making it a primary, independent
task of the official breadwinner, turn budgeting
into a family discussion where each member contributes
to the process of spending and saving.
Attach the saving to something tangible so it’s meaningful.
Saving just to save does not inspire or motivate someone
to pile mounds of money into an account. Picturing,
talking about sailing away to an exotic island does.
Having adult children move back home:
Butler: Let’s be honest, parents see their children
moving out as a sign of their own “I did it” moment.
You’ve raised responsible, independent humans that contribute
to society.
When adult children move home, the opposite
thoughts flood our minds and you now have regret from
all the “what ifs” and “should haves.” The reality is supporting
adult children isn’t in anyone’s financial plan, so
when it happens it takes a significant toll on a dentist’s
stress load. This is why it’s so important to get comfortable
with failure. When we allow our children to fail, they
build their own capability to be resilient. Resiliency builds strength, adaptability, problem solving and decisionmaking.
Children learn what they do and do not want in
their own lives and formulate plans on how to make it all
happen. Failure is a necessary part of success. Take one
away, the other falls off as well.
Experiencing a significant reduction in income:
Butler: Dentists measure their success based on their
monthly income statements. They attach who they are,
how good they are and what kind of person they are by
how much they bring in each year. When there is a drop
in income, whether due to the natural flow of business or
as they enter retirement, the dentist then loses his or her
identity and starts to think and feel the effects of “failure”
thinking. This builds significant stress.
Learning and mastering how to adapt to change is
critical to ward off the stress associated with income
reduction. Start by seeing how change is the catalyst for
growth, opportunity and adventure. Write down all the
positive results that occur when you change something in
your life. Being able to articulate the good will help you
through the uncomfortable.
Other dentist-specific topics:
Carlsen: Doctors find it easy to reflect over cocktails
or golf one’s practice production, crown fees, appreciation
of the value of one’s home and personal property taxes. We
complain about property taxes, stoke our egos about our
higher crown fees, talk of all the money our homes will
surely bring us some day, and are proud of the increases in
practice production since the debacle of 2008-2010.
But that’s about it.
Doctors fail miserably in talking of the following underlying and more sinister financial fears:
- Fear of insufficient practice net income and cash
flow to fund personal expenditures. The practice is
busy, yet you can’t fund the paycheck you need.
- Fear of unexpected mail: the Trump-sized credit card
statement, the medical bill that’s larger than a
CEREC purchase, a collection notice with JD on the
return address, the dreaded IRS letter or the State
Board inquiry.
- Fear of April 15: Is there enough to pay?
- Fear that your CPA or attorney needs your immediate
attention.
- Fear of hidden or non-discussed large purchases by a
partner or spouse.
Butler: Fears are irrational manifestations of our
thoughts. They can be so pervasive and intense that we
believe them to be true—the walls are caving in, there’s no
air in a room full of people, everyone hates the dentist, etc.
Somehow in society, being afraid has become an acceptable
reason for not moving forward.
The real truth is giving into fears keeps dentists small
and holds them back from taking risks. Interrogating reality
is what keeps fears in check. It’s the number and quality
of questions a dentist asks themselves that focuses on
facts, not feelings, that will calm their fears, reduce their
stress and have them manage their financial situations
with ease.
Carlsen: Thanks so much for sharing your expertise,
Jen! Many dentists think that they alone face these issues.
Your strategies for coping with the financial fears that doctors
face are a vital element of a busy doctor’s life.
References
- Can’t get the Pink Floyd song “Money” out of my head while writing this!
- Thomas Stanley, Ph.D. and William Danko, Ph.D., “The Millionaire Next Door”, 2010, 75-76.
|