21 May 2019

3 Financial Rules for Physicians and other High-Income Professionals

Written by Barry J. Swaim, CFP®, Posted in Blog

Intelligent high-income professionals tend to make the same mistakes when it comes to making a decision about their finances.
3 Financial Rules for Physicians and other High-Income Professionals

Here are 3 rules that all physicians can live by in order to make sure they avoid these mistakes and reach financial utopia.

Rule # 1 Focus on Saving a 20% Percent of Your Income

If you learn to live on 80% of your pre-tax income, then you will be in a good position for financial security for the long-term.  A big trap that many high-income professionals fall into is that they establish their standard of living on 100% of their income, leaving little to save or invest. Remember, this is paying yourself first and protecting your financial security. If you pay yourself first, the likelihood of getting into financial trouble is low.

It can be especially common for high-income professionals to fall into a debt trap. After years of schooling, you are behind the eightball starting your career sometimes, well into your thirties. On top of that, you have likely acquired a substantial amount of debt to achieve the education that you have. When you know that you are earning a lot and that you can pay those monthly installments on your student loan debt, and perhaps, on huge mortgages, or boat financing it can be easy to rack up big debt, paying interest that should be going into your pocket and into investments that will serve to grow your wealth rather than watching it diminish and depreciate. While financing a home or a car or even a boat is something you may choose to do, make the choice about what you can afford based on 80% of your pre-tax income, not 100%.

Rule #2 Invest for the Long Term and don't Chase Returns.

Many people make investment decisions based on a tip from a friend or co-worker or something they hear or read about.  Some take too much risk and invest too heavily in equities while others err in the other direction investing too much in bonds and insurance products that will never have the chance to outgrow inflation let alone fund your retirement. By including different asset classes in your portfolio and diversifying the money you put in across those asset classes in a manner that is aligned with your risk profile, you will create a sustainable portfolio with growth potential.

An approach to investing based on evidence and not on speculation allows investors to manage their portfolios strategically no matter what the market is doing. Drawing information from expected returns and watching the collective of the millions who invest in our domestic and global markets set the security prices can help establish a clear path by which to design and manage your portfolio. This approach is less subjective and more systematic and, based on past results which can in no way predict future results, has seen more stable long-term growth than the strategies of more active counterparts.

Rule #3 Be Clear About Your Purpose

Many people never seem to reach their full potential in life because they don't or won't take the time to think through and prioritize what is important. Frankly, most people simply don’t know how or where to begin. Physicians are in a unique position because they can make a very high income and work as much or as little as they like. This gives them a tremendous amount of options regarding their families, their careers and their financial well-being.

When your options are seemingly endless and you don’t know where to start the process, it may be a good time to consider consulting with a fee-only, fiduciary, CFP® who has your interests at the forefront of their philosophy and approach.

To consult a financial advisor from Accruent to help you with your financial plan as a practicing physician, please call (336) 760-4829 or email us at This email address is being protected from spambots. You need JavaScript enabled to view it.

About the Author

Barry J. Swaim, CFP®

Barry J. Swaim, CFP®

Barry J. Swaim, CFP is the founder and president of Wealth Management Group, Inc. He received his BA degree from the University of North Carolina at Greensboro. Barry has also earned the professional certification of CERTIFIED FINANCIAL PLANNER practitioner from the Certified Financial Planner Board of Standards. 

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