Steps to Building Wealth - A Guide for Newbies
By: Saima Ali, MD
Published: Feb 7, 2023
📂 Physician Perspectives
✅ Early Career Physicians
✅ Mid Career Physicians
Do you want to become financially independent and build wealth? It's not as hard as it sounds! In this blog post, I'll break down the initial steps that you need to take in order to build lasting wealth.
It’s important to realize that high income does not automatically equal wealth. The media is full of stories of lottery winners and celebrities who are now broke. Unfortunately, many physicians also get stuck in the game of “finally living” their lives or competing with friends to buy expensive cars or houses with their hard earned income. Although everyone has different priorities and desires in life, and while there is nothing wrong with purchasing big ticket items, we must remind ourselves that it all comes at a cost. According to Brendon Burchard, a high performance coach, the ultimate human motive in this life is to be free. He details this in his new book “Motivational Manifesto.”
What does being free actually mean? For many people it means not having to worry about their financial future. A great place to start is to develop a solid financial plan that enables you to sleep well at night regardless of the variables outside of your control; such as the threat of a job loss or a looming stock market crash. The good news is that learning about personal finance has become easier than ever before and there are some concrete steps you can take to build wealth.
Here are my recommendations on basic steps you should take on building wealth:
Pay Yourself First
You must become disciplined and pay yourself first. This means that you should save a portion of your income before taxes are taken out. Remember, Uncle Sam does not trust us with our money, our taxes are deducted before we even see our check. Similarly, Uncle Sam does give us the means of saving for our retirement BEFORE our taxes are taken out in the form of retirement accounts like 401(k)s and 403(b)s at work. You can contribute up to $22,500 per year in 2023 (amounts change slightly each year for inflation). By contributing the maximum amount every year to tax-deferred retirement accounts for 30 years, starting at age 30, you could accumulate over $3.5 million by age 60, with average returns of 10% on investments.
Live Within Your Means
Live within Your Means simply means spending less than what you earn each month after allocating funds into an emergency fund and your retirement plan(s). This will ensure that you have to opportunity to build your wealth by investing your money and avoiding living paycheck to paycheck.
Inflation, the rise of prices over time, is a unavoidable factor of life. We’ve seen some of the worst inflation in history recently, from the price of eggs to gas, it seems everything is more expensive. Inflation means you have less spending power, and to keep ahead of this you must invest your money in things that grow in value over time. There are many ways to invest outside of just your retirement account. First and foremost, investing in yourself is one of the most important investments you can make. This includes not only prioritizing your own physical wellbeing such as going to the gym or eating healthy but also mental wellbeing through meditation or yoga classes. When we take care of ourselves, our potential to capitalize on future opportunities increases. Other examples to grow your investment portfolio include investing in stocks, real estate, established business partnerships or startup ventures.
Protect Your Income
Protect, protect, protect! This cannot be emphasized enough. As a physician, we all understand that all of us can face healthcare uncertainties. Life is unpredictable, and it’s important to protect yourself and your family from potential financial disasters. That’s why taking out an own occupation disability policy as early as possible is so important. It can help you protect your future earning ability in case of an unforeseen event. But that’s not all—you should also be sure to have good insurance on your car, house, and other objects of value along with an extra umbrella insurance policy for added protection. Finally, if you have dependents you should strongly consider having a term-life insurance policy – so that your dependents receive a payout in the event of your death. Obviously nothing can replace your guidance and companionship but you can ensure they have money to make up for your lost future income that can help support them.
Develop Multiple Streams Of Income
Many physicians discovered during the Covid-19 pandemic that unfortunately their clinical income isn’t guaranteed. Diversifying your revenue streams is key for financial stability; your job probably shouldn't be the only source of reliable income. There are countless ways for physicians to create additional sources of income through writing books and articles, starting podcasts and YouTube channels, blogging about their medical specialty, etcetera. Investing time into creating multiple streams of income now can become a valuable asset down the road as it provides another layer of protection against.
Financial freedom comes down to having a smart strategy for personal finance- from paying yourself first each month to investing wisely and living within one’s means - all while still enjoying life! Building wealth takes patience and discipline but with the right tools and knowledge anyone can create their own path towards financial independence over time! As physicians we need to be aware of our finances and manage them responsibly if we want long term security; following these simple steps can help us reach our goals sooner rather than later!
Saima Ali, MD is a board-certified Neurologist and CEO of Wealthy Muslim Women. She completed her undergraduate studies with Honors degree in Economics. Saima is aiming to erase any stigmas associated with creating monetary wealth. During her quest, she has utilized multiple platforms such as a podcast (Wealthy Muslim Women), public speaking engagements at conferences, and more recently joining the Medical Advisory Board of Andwise. Using her experience and knowledge base, Saima strives to empower more people to reach their own financial goals.
Saima Ali, MD ⇨
Member, Andwise Medical Advisory Board
Dr. Saima Ali is board certified in neurology and in epilepsy. Dr. Ali is the founder of Wealthy Muslim Women, an initiative aimed at empowering Muslim women towards financial independence through smart investment in the stock market, budgeting, and wealth management in a halal way. Growing up in a humble household in Pakistan and facing significant med school debt, Dr. Ali transformed her financial situation through education and strategic planning. She now shares her journey and insights as a certified life coach, podcaster, blogger, and digital course creator, helping Muslim women achieve financial freedom.
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