Data continues to show that doctors are among the highest earners in the country. But I know plenty of doctors, and almost none of them are living lavish lifestyles. If that’s the case, then what do doctors do with their money?
Doctors are traditionally high earning professionals. However, they also have a number of obligations including repayment of large amounts of student loans, taxes, and other life expenses. In addition, because doctors earn their money later in life, their net worth does not often reflect what one would expect, given their earnings.
What Expenses Do Doctors Have?
We’ve all heard the story of the rich doctor. The one who went to medical school because he know it would make him rich. The doctor who spends all of their money on luxury cars, massive homes in upscale neighborhoods, and expensive travel.
Of course, some doctors are like that. You don’t even have to look to hard to meet one. Maybe they’re more spend-thrifty. Or they could be one of the higher earning types of physician. But they’re not the average doctor.
The average doctor is more likely to initially be excited by their first paycheck, then feel a sense of shock at the amount of tax taken out. Usually at that point, they realize how different their take home pay is compared to what they expected.
Contrary to the stereotype of the rich doctor, the average doctor doesn’t feel rich. I asked a group of physicians what their biggest expenses were, and none of them said private planes or designer clothes. The three most common answers? Childcare, student loans, and mortgage payments.
It turns out the average doctor just spends money on regular things.
Do Doctors Really Make That Much Money
Chances are if you’re reading article that you’ve looked up how much money doctors make. If you haven’t, here’s the most commonly cited data from the Medscape Annual Physician Compensation Survey.
It looks like a lot, right? As a medical student, that chart was enough to change some people’s minds on what type of doctor they wanted to be. And as a resident, I couldn’t wait to get my first paycheck. But now I make that salary, and I don’t feel rich. Why is that?
Becoming a doctor is a long process. It’s at least 7 years between medical school and residency. Sometimes even longer for those becoming more specialized doctors. And while you’re in training, you don’t have a lot of time or money.
As a result, two things happen. First, your student loans, which average $200,000 upon graduating medical school, gain interest and get bigger. Seven years of 6.8% interest turns that $200,000 into $295,200 by the time you start working.
Secondly, your don’t get your first “real paycheck” until you’re most likely into your 30s, even later for some doctors. Since you didn’t have time or money to travel, buy a house, or get a new car in training, you quickly realize you have a lot of catching up to do.
