[Editor's Note: As a doctor, you might have little time in your life to think about the best way to pay for your purchases. Credit cards make it easy—and these days, it’s so very simple to earn cash back or travel points by using the one that best suits your everyday needs. Check out WCI’s recommended list for the best credit cards that help high earners gather rewards. After all, if you’re spending money, you should also be making it profitable for yourself.]
By Dr. James M. Dahle, WCI Founder
One of my financial regrets is that we never got around to going out for a really fancy dinner when we became millionaires. I don't know why, but I just wish we had done it. I resolved afterward to make sure we celebrated our financial milestones better after that. However, thanks to the success of this whole White Coat Investor enterprise, we basically blew through all of our other relevant financial milestones within a year or two and now really have none left to celebrate. Kind of a letdown, really.
It's like you spent months training for a marathon and busted your butt for the first 13 miles and then found out that you would be running the last 13 on one of those moving sidewalks at the airport. And the sidewalk is moving at 15 mph. You're grateful, but it does feel a little bit like you didn't really earn that Boston Marathon qualifying time.
14 Financial Milestones Worth Working Toward
At any rate, I thought it would be fun to write a post about the typical financial milestones that physicians and other high-income professionals reach. I have placed them into a specific order, but some people will hit them in a different order. That's perfectly fine. Some may not share some of these goals, or they might have others. I hope the list provides you with some intermediate goals in the financial aspect of your life, and I hope you celebrate each of them as they are reached.
#1 Becoming Worthless
The vast majority of physicians and most other high-income professionals leave training with a negative net worth. I encourage them to live like a resident for the first 2-5 years of their career. I remind medical students and residents all the time that they are the poorest people in the world. A net worth of -$300,000 is far worse than zero. Getting back to broke—through a combination of saving, investing, paying down debt, and perhaps even having your home appreciate—should be one of your first financial goals, and it's definitely one that should be celebrated. Plus, it's one of the few on this list that you can openly brag about in real life without looking like a punk.
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#2 Buy a Home
One of our financial goals was to buy a home. It turned out not to be a great financial move—at least the first couple of times we did it—because we were not in a stable, long-term social or professional situation. Buying our dream/doctor house was a big goal for us and one we worked toward for over four years, primarily saving up the 20% down payment. I think if your home-buying experience was like ours (at least on our third attempt), you should celebrate it.
#3 Reach a Net Worth of $100,000
That $100,000 figure is a nice round number. I think nice round numbers should be celebrated. There aren't very many of them.
#4 Student Loans Paid Off
Here's another big one. It was really fun to be with one of my partners at work as he paid off his student loans online. Due to some miscalculation, his last payment was something like 27 cents. Paying off the mortgage on your brain is an awesome financial milestone. Celebrate it!
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#5 Retirement Portfolio of $100,000
When it comes to saving and investing, the first $1,000, the first $10,000, the first $100,000, and the first $1 million are the hardest. The second one DEFINITELY comes a lot faster. After a while, another $100,000 isn't a big deal to you, but that first one should be celebrated. As a physician, I don't know that you need to celebrate your first $1,000 and your first $10,000, but that $100,000 mark requires some work. My records show we hit it just before the 2008 meltdown. No wonder we didn't celebrate it! That was back when 401(k)s were becoming 201(k)s.
#6 $500,000 Net Worth
Half a million is a big deal, and it's more than the average net worth of Americans of any age group. It should be celebrated.
#7 Buying Your First New Car with Cash
This may or may not be on your list, but it was on ours. There is something cool about walking into a dealership and knowing you can buy whatever you want in there, right now, with the money in your checking account. When the salesperson starts talking about financing, you can give them a look that says, “Finance a car? Do I really look that poor?” You can celebrate this one by going on a road trip.
#8 $1 Million Net Worth
This is another big one. While being a millionaire today is nothing like being a millionaire in 1930—or even 1980—it is still a number that means something in our culture. Besides, the greatest reward of becoming a millionaire is not the amount of money you have. It is the kind of person you have to become. Don't make the same mistake we did. Figure out which restaurant in your city costs the most and go eat there. We did eventually go and eat at that fancy restaurant—and it was really good.
More information here:
#9 Retirement Portfolio of $1 Million
Most readers of this blog will hit this one within a year or three of #8. Just in case you need another excuse for a celebration.
#10 Be Done Saving for Retirement If You Work to Age 65
This one is a little bit subtle, but as I have written in the past, you can be done saving. Basically, if your retirement portfolio, with no new contributions but with additional compound interest at a reasonable rate, will support you from 65 until death, it's worth a celebration. If your number is $3 million and you assume 5% real returns, that's $886,000 if you're 40, $1.4 million if you're 50, and $2.4 million if you're 60. That's a pretty good feeling to know your retirement is already taken care of and that now you're only saving for an earlier or more lavish retirement.
#11 Pay Off the Mortgage
#12 Have Enough to Retire Now and Be Able to Cover Your Basic Needs
This is probably the first milestone that could be called financial independence. If you never work again, you can maintain your basic standard of living. You can keep a roof over your head, the lights on, clothes on your back, shoes on your feet, and food on the table.
More information here:
#13 Financial Independence at Current Rate of Spending
This definition of financial independence is probably more relevant to you, unless you're really a Frugal Freddie. This is when you can continue to spend exactly as you spend now without ever working again. That seems worth a celebration—like a trip to Europe or at least to the Caribbean. And if you want . . . don't bother coming back. Or you can celebrate by flipping off the boss and walking out the door.
#14 Financial Independence at Desired Rate of Spending/”Enough”
Some of us would like to spend a little more on something we think would make us happier. Maybe it's another international trip every year. Maybe it's a cabin up in the mountains or a lake house. Who knows? But when you get to this milestone, there is literally nothing you can spend your money on that will make you any happier. You understand the concept of “enough,” and you have achieved it.
For more stories on white coat investors who have reason to celebrate and who can help inspire you, check out the Milestones to Millionaire podcast. A new episode is released every Monday!
What do you think? Which of these milestones have you passed, and which ones are you still looking forward to achieving? What other milestones would you add to the list? How have you celebrated your milestones? Comment below!
[This updated post was originally published in 2017.]