Financial Freedom for Physicians

In the real estate space, the term “financial freedom” gets thrown around alot. 

You may have heard of catchy phrases like: “Achieve financial freedom through real estate” or “Create passive income to live the life you’ve always dreamed of.”

But what exactly does financial freedom mean and how can you get there? In this article, we’ll go over what financial freedom is, five practical steps to help you achieve financial freedom, and why financially free physicians make better doctors.

What is Financial Freedom?

First, let’s define financial freedom.  What is it? 

Financial freedom means having enough money to afford the kind of life you want.  Or put another way: financial freedom means your choices are not dictated by money. 

Financial freedom means you have choices.  You can choose to travel abroad for a year, spend time with aging parents, or take your kids to the park in the middle of the day, without having to worry about making money.  You are financially free when you can support your lifestyle you want without going into the clinic or hospital to trade your time for money.

How do you achieve financial freedom?  You generate enough passive income to cover your expenses.  What you’re trying to do is create revenue streams that bring in money whether you go to work or not.

5 Steps to Financial Freedom

Here are 5 practical steps to help you get started on your financial freedom journey:

Step #1: Find Your Why

The key to sustaining any goal is to find your reason for wanting to do it.  Think of when you were going through the grueling training as a med student and resident.  You probably had a strong “why” that kept you going during those tough times.

Similarly, you should find your motivating force for wanting to achieve financial freedom.  Perhaps it’s to spend more time with family, or to travel more.  Or to pursue other passions outside of medicine without the pressure of bringing in money. 

Step #2.  Know How Much You Spend

The next step is to understand your expenses.  Know where you’re spending your money.  Make sure you’re not spending more than you make.  Simple and basic, but it’s surprising how many physicians I talk to who are barely scraping by, living paycheck to paycheck, despite earning multiple six-figure incomes.

There’s no judgment here.  The key here is to understand where your money is going and whether you can (or need) to change anything to optimize your expenses.

Step #3: Define Your Financial Freedom Number

Remember, you reach financial freedom when you generate enough passive income to cover your living expenses.  In order to know when you are financially free, you need to know that number.  If you don’t know where you’re going, you’ll be wandering aimlessly.

So the question you need to answer is: “How much money do I need to cover my expenses?”  If you don’t know, then you need to keep track of what you’re spending so you do know that number (refer to step #2).

As a side note, how you define your basic living expenses is up to you.  Include what’s important and non-negotiable to you.  Some say private school for their kids is a must, while others say that living in a five-bedroom house is non-negotiable.  What you include here isn’t important.  What you’re trying to do here is establish a target.

Step #4: Make & Keep Money

In order to generate passive income, you need money to invest with.  Fortunately, one advantage we have as physicians is that we’re high-income earners.  If we’re diligent about not spending every dollar we make, we should have capital to work with.

The goal here is to earn more, keep more, and direct those savings towards investments to make money for you.

Step #5.  Generate Passive Income Streams

Again, the key to achieving financial freedom is to have passive income sources to offset your expenses.  So you need to start putting your money in places to generate passive income streams.   Once your passive income exceeds your living expenses, you’ve achieved financial freedom.

There are various ways to generate passive income. This could be through investing in real estate, dividend-paying stocks, or cashflowing businesses.  Ideally you want to invest in something you understand and that works for your lifestyle.  I particularly like real estate because it provides cashflow, overall stable returns, unique tax advantages, and leverage that can be used to increase potential returns.

Financial Freedom = Better Physicians

It’s no secret that physicians are burned out and disillusioned with the current medical system.  We’re a fragile workforce at its brink.  Some physicians want to get out completely, while others want to cut back and practice without the demands of insurance companies, healthcare administrators and bureaucrats.

But most physicians feel trapped and need to continue to work to maintain a certain income and lifestyle they’ve become accustomed to.

But imagine if money was not an issue.  That your passive income streams met all your expenses.  That if you didn’t step foot into the clinic or hospital again, you’ll be fine financially. 

How would you feel?  How would you live your life?  What would you do?  Would you still practice medicine?  Would you still be practicing the way you currently are?

My thesis is simple: financial freedom makes better doctors.  It’s why I’m so passionate about educating other physicians about finances and investing.  When the pressure to work to earn money is eliminated, physicians often have a new-found energy and enthusiasm for medicine.  And for those that don’t, financial freedom allows them to leave medicine altogether.

What financial freedom really provides can be summed up by one word: choice.  When you stop worrying about having to work to make money, you get to say “I choose to go to work” rather than “I have to work.”  This simple shift allows physicians to practice the way they see fit, whether that means practicing full-time, part-time, or no-time. 

Financial freedom makes it easier to do the right thing for patients.  Financial freedom makes it easier to say no to schedules that don’t allow time for us to even eat lunch or go to the bathroom.  Financial freedom makes better doctors.

Interested in learning more about how real estate investing can take you one step closer to financial freedom?  Join our Clear Vision Investor Club to get started.