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Live Within Your Means


How to make and keep a promise to live within your means

It's easy to talk about what's new and hot in the financial industry, about the great opportunities that are out there. What's not so easy to talk about -- because it's not as much fun and not at all sexy -- is the failure of most people to take one of the most basic steps to secure their financial security. 

Put simply: People are not willing to apply discipline to their financial lives. They are not willing to do this one simple thing that can make a significant difference in their economic security. This is really the biggest, most serious, and most consistently frustrating problem that I have seen in 32 years of practice, serving multiple generations of clients.

So this month I'm climbing back on my soapbox to preach about the importance of living within your means. If you make no other resolutions for 2005, I urge you to make -- and keep -- this promise to yourself and your family.

Take responsibility

Self-denial is easy for everyone, but Americans are among the best at it. You see examples of this in your practice every day. A patient who has not taken care of herself -- someone who has smoked, never exercised, and carried an extra 40 pounds for the last 20 years -- comes to you after she barely survives a heart attack. You may be sympathetic and put on your best bedside manner, but part of you is thinking, "Well, what did you expect?" 

The analogies to your own financial health are easy to make. You can lead a disciplined economic life -- paying yourself first by saving and investing, living within your means, and sacrificing some short-term gratification for long-term security. Or you can spend whatever you want, get deeper into debt, and just keep your fingers crossed that you won't experience some kind of financial breakdown. 

Don't misunderstand me -- I realize it's different for physicians than it is for people in many other professions, not least because of the level of debt most of you have when you start your careers. But that's all the more reason to develop fiscal discipline, and the big problem I see is that for all the academic discipline and work ethic one develops during medical school and in residency, many never develop the same type of rigor when it comes to their finances -- even when they are earning much more.

If you're saving on one side of your life -- in a qualified plan, for example -- but on the other side you're leasing autos, carrying credit card balances, and taking second mortgages on your home, you're not really saving. You're creating liabilities.

A better doctor

Being a self-disciplined person helps you acquire wealth -- but it also provides other advantages. I believe that people who exercise self-discipline are happier and more fulfilled.  They work because they want to, not because they have to.

I also believe -- and this is really stepping out on a limb -- that a physician who is financially sound, solvent, and prudent actually practices better medicine than one who is preoccupied because he is financially strung out, because the financially secure physician can concentrate on his patients instead of worrying about his next financial obligation.

I apply the same standard to financial advisers, by the way. In my opinion, you're better off going to advisers who actually follow the advice that they give their clients.

I don't choose my physicians based on their financial success, but all things being equal, I would rather not go to someone who is operating in crisis mode because of increasing rent, increasing expenses, and flattening or decreasing reimbursements.

These physicians have every right to be angry about the problems being inflicted on them by our medical system. But at the same time, their anxiety is made worse by the fact that they have been living on 100 percent or more of their income. 

The physicians who have practiced financial self-discipline, on the other hand, have some staying power. They have a sound financial basis so that they can outlast the immediate financial crisis. They have bought themselves time to come up with alternatives so that they won't be forced to sell their practices. They won't be forced into taking on some fringe healthcare medical procedures to supplement their incomes.

Get help

I'm a great believer in setting goals and in making resolutions. That's why I urge you to make living within your means your resolution for 2005. Set yourself some goals, such as finding ways to increase revenues and making some tough financial decisions like eliminating the long-time but underperforming employee.

Start saving money out of every single paycheck and put it aside in a place where you won't be tempted to spend it.

And don't keep these resolutions and goals to yourself -- share them with your spouse, other family members, your advisers, accountants, attorneys, and other important people in your life. Ask them to help you by holding you accountable for following through.
This group of supporters can be your "financial Weight Watchers," cheering your successes and helping you get back on track when you've gone off your plan.

There's no doubt that physicians today face many financial challenges, and that you are being wronged economically in many ways. I believe that in the long term we will come up with solutions to solve some of the more pressing problems. In the meantime, however, putting yourself in a good financial position by living within your means will help you and your practice survive the present crisis intact.

Trevor C. Lewis is a certified financial planner and can be contacted at

This article originally appeared in the January 2005 issue of Physicians Practice.


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