A Financial Bucket List
Sep 16, 2011 |
Since the Jack Nicholson movie of a few years ago, this title phrase has become part of the culture. So much so, that USA Today printed a survey last week revealing that only 6% of those queried didn't have a list.
We at PMD have two financial bucket lists, if you will, that I want to share; the basics that we all need to have and then a few suggestions for the more discretionary (isn't that a great euphemism?) part of our financial lives. We're not just about business here y'know.
But business before pleasure, usually, said the ant to the grasshopper. Number one on our must list is that most of us need a job to support ourselves, and we know that as of last year most new doctors take jobs rather than opening a practice. Once we have an income then we must start learning how to live with it. Reading, watching, asking and hiring a CPA, a lawyer and an independent financial advisor to be your financial team is the second thing you need to do.
You will need these kinds of experts for the rest of your life to provide you with objective information and advice. We can't even keep up with the rapid changes in medicine, so how could we possibly stay abreast of these other professional areas? We can't. It’s similar to the need to go to another specialty when you get off familiar turf.
And let us never forget my weekly drumbeat that we have a compounded problem because we get no exposure to any of this in our training. And worse, if you think about it, we are not exposed even to the kind of thinking in the medical academic establishment that would lead to the right financial.
Number three on the list is to have some kind of rough budget that allows you to plan to cover the necessities so you can then enjoy the second bucket list — the discretionary or the more fun side. We first have to provide for taxes, debt repayment, an emergency fund, insurances, housing, living expenses and savings for retirement. Notice that I didn't immediately add savings for college for the kids because there are no scholarships or financial aid for retirement and first things first. Hopefully, most doctors will be able to add college savings later on as well.
In 2011, the average doctor in the U.S. in 2011 earns 6 figures. So all of this is within our reasonable grasp, but it still surprises me how many physicians don't do many of these things. Excuses abound: "too busy," "don't understand," "leave it to others," etc. But each represents a potentially expensive lapse that will rise up to bite you in a painful place — your wallet. And ultimately, diminish the quality of your personal and professional life.
Number four is the related web of legal documents that must be established and routinely reviewed; a will, yes, even if you are just starting out, a health directive, employment contract, retirement plan and other pertinent trusts and so on. And some of us might be blessed/cursed with a prenup.
Contrary to some popular notions, the 750,000 doctors in the U.S. lead widely disparate lives, so the discretionary bucket list will be as varied as can be imagined. But we live in a consumer driven society so there are commonalities. Many will want upgrades in homes, cars and the daily luxuries that some find grace their lives.
I knew a guy who used to wryly say that "life is like a manure sandwich; the more bread you have the less manure you eat." Cynical yes, but most of us can certainly cite examples where having extra discretionary income and a willingness to spend some of it to grease the skids of life helped and was appreciated.
Travel is another almost universal desire, which can range from the merely budget-impacting to the sky-is-the-limit. And it is a truism that few regret the occasional splurges that can illumine our hard-working, disciplined lives. Uh, does that sound like a rationalization?
Rationalization and available discretionary money are a dangerous combination; we all eventually know that from personal experience. That's why we plan and have designated times, like birthdays and holidays, for indulgent gift giving. If we are fortunate, and many doctors are, we graduate to a level where we don't bother to wait. Something about the difference between men and boys being only the expense of their toys come to mind. Gals too. Be reminded, we husbands know you take a backseat to no one in discretionary spending.
Rounding out our daydream list could be sought-after experiences and legacies for family and causes. Only our imaginations and will limit what we can do with the margins of our lives, time and money.
So sit and think. Do you have all your bases covered on the first Bucket List, the "Musts?" If not, you have to do it. If you've eaten your vegetables only then should you go to the dessert side. Yeah, I know, mea culpa too. I've sometimes eaten dessert first and boy, did it taste good! Didn't I mention rationalization?