In Financial Planning
Helping physicians take control of their household finances.

It’s incredibly important for physicians to avoid lifestyle inflation after residency. Essentially, lifestyle inflation is when you’re so excited to finally get a physician’s paycheck that you go overboard with your spending.

This might include buying a larger home or a fancy car without stopping to make a game plan of how you should use your newfound wealth.

I know that taking a step back from spending might not seem like much fun, but here are a few reasons you should avoid lifestyle inflation:

1. You’re Late to the Retirement Game

If you’re like most physicians finishing training, you know you have some catching up to do in terms of your retirement savings.

While it might be tempting to finally get the Mercedes you’ve always wanted, it’s time to think about what will happen at the end of your career, even though you’re only at the beginning.

This is why it’s beneficial to work with a fee only financial advisor. We can sit down, look at your retirement goals, and decide how you can best achieve them. More importantly, we can discuss some of your other goals, like travel plans or buying a new house.

Remember, it is possible to achieve the goals you’ve worked so hard for, but deciding the order you do that and how quickly you’ll achieve them is important.

2. Those Student Loans Won’t Pay for Themselves

Because I’m married to a physician, I know how stressful having six figures of student loans can be. However, it’s something that you should tackle sooner rather than later.

Depending on the type of student loans you have and what your goals are for the future, I can help you develop a student loan repayment plan that works for you.

Remember, jumping into lifestyle inflation right after residency can prevent you from paying down your student loans faster. And, the longer you drag out your student loan payments, the more interest you’ll pay over time.

3. Your Children’s Future

If you have children, it’s important to think about their financial future too. While your own retirement savings come first, wouldn’t it be nice to also send your children to college debt free?

The future of college tuition is uncertain. College costs could rise at an exorbitant rate over the next decade, but it’s still important to try to plan for it.

I recently wrote about 529 college savings plans since that’s what many of my clients use to save for their children’s future. However, if you have too much lifestyle inflation, you won’t have extra money to invest in a 529 plan.

I’m not saying you can’t enjoy some of your hard earned money because you definitely should. However, you might not be able to upgrade every single aspect of your life, especially if you have children.

4. Experiences are Better Than Things

At the end of the day, experiences are better than things. Yes, having a nice, new car is great, but what’s better is finally having some time to spend with your family.

During your years of training, the hours are long, and you miss so many milestones along the way. While your life post training will still be busy and full of responsibility, you’ll hopefully have more time to enjoy it than you did in residency.

So, instead of focusing on buying nice things, choose to invest in experiences. Take your kids apple picking. Enjoy a road trip to the nearest National Park. Use your extra funds to finally invite your friends and family over to a nice dinner. (You can probably afford nicer wine now!)

Ultimately, medicine is an amazing calling, but the pressure that comes with life as a doctor often means you don’t get the time to enjoy the little things. So, keep your focus on enjoying the experiences in your life.

5. Your Time Will Come Eventually

I know it seems like you’ve been waiting forever, but the nice upgrades to your lifestyle will come. You will likely get to have a home you love someday. You will likely get to drive a car of your choosing if you plan for it. And, your kids will likely be well taken care of.

However, if you rush the process and improve everything at once, you could be putting your financial future at risk.

So, make sure you take care of your financial planning steps first by catching up on retirement savings, developing a plan for your student loans, and taking care of your kids along the way. Then, you can think about improving some of the material things in your life.

If you want to talk more about this, I offer free consultation calls, and I’d love to help you find a way to reward yourself for your hard work but also plan for your future at the same time.

Did you inflate your lifestyle after residency, or if you’re still in residency, is there something you’re looking forward to buying when you finally get out? Reach out and let’s connect!

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