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Do You Have More Money Smarts Than a Doctor?

Paul Townsend

Many of the really smart people I knew in high school or college are now doctors. I can’t think of any single profession filled with more exceptionally bright individuals.

And yet, what if I told you doctors do no better with their money that the average Joe?

You be the judge.

A wide-ranging survey of 25,000 Americans by the Financial Industry Regulatory Authority Investor Education Foundation revealed that only 41% of Americans say they spend less than they make (rule #1 for a healthy financial life). The other 59% either save no money or go into debt outspending their income.

Compare that to a survey of doctors taken by the American Medical Association. Their number one key finding is that half of the physicians who responded believe they are behind where they would like to be in retirement preparedness; only 6% feel they are ahead of schedule. A look at the real numbers (and not just how they feel about it) shows that only about one out of five physicians are on track to be ready for retirement.

It is not uncommon for a doctor to make over $200,000 per year. Some make multiples of that. Good work if you can get it. My point is not to say they don’t have more money that you (they probably do). But one might conclude that by making so much more than the average Joe, doctors would be closer to being able to retire at something close to their current lifestyle.

The facts show they aren’t. Why? Because they are just human and they act like…well, humans.

So if some of the smartest and most affluent people you know aren’t necessarily doing better (relatively speaking, remember) than you, what does that say?

It says that wealth is not created by brains or income alone. Wealth is created by behavior and instincts, too.

By behavior I mean a willingness to save first, then spend what’s left over. If there is one determinant I have seen in my career that separates the financially secure from the perpetually financially insecure, it is that one single behavior – a willingness to spend less than you make and save that difference.

By instinct I mean a core understanding that one’s value is not derived by the trinkets one accumulates to display for others. Before you injure your shoulder by patting yourself on the back, understand that the desire to display one’s wealth comes in all shapes and sizes. One man’s 10,000 square foot house with a black Mercedes parked out front is another man’s tricked out pick-up truck with a camo-painted four wheeler loaded in the bed.

It’s all relative.

Being highly intelligent and well paid beats the heck out of being dumb and broke. But those don’t happen to be the only two options.

My bet will always be with man or woman who knows how to save first and isn’t trying to impress anyone with what he’s got.

Byron is a Certified Financial Planner and Managing Director of the Planning Group at Argent Advisors, Inc.
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