How to Gain Autonomy before Financial Independence
Key Points:
- Financial Independence (FI) is a continuum, not a binary variable.
- Before FI, you reach a financial Sweet Spot, a point where you still need earned income, but you have the autonomy to prioritize what truly matters.
- Objectively assess where you are relative to that Sweet Spot, and use that knowledge to create the life and career you deserve.
Many physicians believe they can’t escape burnout or an unsustainable career until they’ve become financially independent. Thankfully, it’s not true.
The idea of financial independence (FI) is simple: build enough wealth such that earned income becomes optional. For financial planners, financial independence is a mathematical problem to solve — I might be able to run your numbers in a Monte Carlo analysis and demonstrate you have, say an 84% chance of achieving financial independence in 21.3 years.
But our lives as physicians cannot be boiled down to a simple math problem. Too often, physicians take that to mean they either must maintain the status quo for another 21.3 years or earn more or spend less to achieve freedom prior to that. Thankfully, financial independence is a continuum, not a binary variable.
One of the best aspects about investing is that your portfolio contributes more to itself the larger it grows, and the amount you contribute each year becomes relatively less important.
Examples (using simplified assumptions for purposes of illustration):
- Physician A has $300k in retirement savings that generate 5% in a year. She contributes $30k at the end of the year. The portfolio grows by $45k; $30k from her contributions and $15k from the portfolio itself.
- Physician B has $600k with the same investments and annual contribution amount. The portfolio grows by $60k; $30k from his contributions, and $30k from the portfolio itself.
- Physician C has $1.2M with the same investments and annual contribution amount. The portfolio grows by $90k; $30k from her contributions, and $60k from the portfolio itself.
Physician C may not be financially independent, but all else being equal, she has far more ability to stop taking weekend call compared to Physician A or B. This example highlights one of the core points of this post:
As your investments grow, there is a financial Sweet Spot where you still must hustle, yet you have the agency to prioritize what really matters.
It’s not easy to get there, but it’s a lot closer than most doctors think.
There’s no secret hack to getting there. It takes years of consistent financial planning fundamentals. Things like positive cash flow, protection from financial catastrophes, and the steady conversion of earned income into income-generating assets. These are as essential to your financial health as good nutrition, sleep, and exercise are to your physical health.
It takes years. But it doesn’t take decades. If you set up the fundamentals now, the sweet spot may be closer than you think. On more than one occasion, I’ve encountered a physician who was there already and had no idea.
I’ll present myself as a case study: financial independence is over a decade away for me, and my family depends on my wife and me both earning income. I care for some of the most vulnerable patients in my community as a cardiologist, and I give my all to my financial planning clients who have entrusted me with their financial wellness. Like you, I work very hard.
But my health and marriage are in great shape. I eat breakfast and dinner with my kids every day. I take weeks off without pay every year to build memories with my family — no permission needed from anyone. I give my time and money to the people and causes I care about most. Because without all that, the pursuit of money is pointless to me personally.
Recognizing that I’d reached the Sweet Spot gave me the power to drastically change my career and life for the better, even though I’m not yet financially independent. Where are you on the FI continuum? Are you still years away from the Sweet Spot? Or have you unknowingly surpassed it already?
If you don’t know, you are not alone. Many physicians at all wealth levels have no idea where they stand. A good financial planner can help by providing an objective assessment of your financial situation. A great financial planner can take it a step further by helping you answer an even more important question: What would your career and life look like with more autonomy, and when could vision that become reality? No matter where you stand, remember that you are incrementally gaining more agency with each step you take forward on your FI journey. Use that agency to build the career and life you deserve, long before you become financially independent.
If you would like to have a conversation about what pre-FI autonomy could look like for you and your family, I’d love to chat. Schedule a free discovery call with me here.
DocEmpowered blog posts are never AI-generated.
Stanley Liu, MD, FACC is the Founder and Principal Financial Planner of DocEmpowered, LLC. He is also an independent practicing cardiologist, an award-winning medical educator, and the Advocacy Chair of Maryland’s American College of Cardiology Chapter.
Do you want the power to serve your patients, family, and community on your own terms? If you need an evidence-based financial plan to help make that power a reality, book a free discovery call here.
Get more insights by exploring the DocEmpowered Blog.
Blog Feature Photo Credit: Budka Damdinsuren on Unsplash