To continue with my reflections on "The Millionaire Next Door"...
One thing that really surprised me was its report on doctors. Apparently, despite the fact that their average income is four times the average American household's income, two-thirds of them are Under Accumulators of Wealth (UAWs)--they don't have as much wealth as expected (p. 74).
Why? Some of the reasons I've already discussed in the preceding post--namely that they have more educational debt and a late start in generating income for saving and investing.
The other reasons were more unexpected. Doctors hold a higher societal status, and thus must maintain higher domestic overhead in order to keep up appearances and respectability, by living in nice neighborhoods, driving nice cars, wearing nice clothes, etc. (pp. 75-76).
Another reason is that they are generous, both with their time and their money. They're so busy tending patients that they don't have the time or mental energy to do financial planning. And they give away larger portions of their incomes to "noble causes". And because everything assumes that doctors are rich and don't need money, doctors don't receive as much in inheritances (p. 77).
The reason why I thought this was interesting and relevant is because I've been told, and sometimes repeatedly, that:
- I should go to medical school and become a (rich) doctor.
And/or:
- I should marry a rich doctor.
Was this the wrong advice all along? When parents want their kids to pursue high income, high status careers, thinking that it will help their kids get by comfortably, will it backfire unless they also teach their kids the drawbacks of such careers?
Personally, I have no interest in med school (I hate dealing with patients, I much prefer lab animals--animals bite, patients sue ). The fact that I hate keeping up high-maintenance appearances will probably doom my practice to failure, anyway.
Anyway, I found this tidbit interesting, and thought I'd share for posterity's sake.
Most doctors aren't wealthy
September 4th, 2006 at 09:14 am
September 4th, 2006 at 12:40 pm 1157370037
In any case, yes, they do have to maintain some kind of social appearance. I don't know why that is, but that is what my mother told me one time. My mother, however, is also very frugal, and I know that whatever it is that they don't overdo it. Probably it's mostly just for social functions and for the sake of networking.
However, as you have mentioned, there are two things that are going on here: Wealth (which again, to me is net worth), and status.
I've addressed status, but in terms of net worth, I think things aren't as bad for my parents as the book makes them out to be, due to their fairly frugal nature. But yes, I would agree that, when it comes down to it, it's not how much you make that matters, but how well you manage what you have.
Of course, the ideal scenario is to having both fiscal discipline AND a high income, but I'm certainly not going to become a doctor just to do so.... Sorry, mom!
September 5th, 2006 at 02:57 am 1157421436
March 11th, 2008 at 02:09 am 1205201364
Doctors for the most part do a grueling residency program that pays them about $30,000 per year for about 6-8 years depending on their program. They work crazy hours truly their whole career, deal with suing patience etc.. what you didn't write is this - the most important. Most people for some odd reason will say their salary or are looked at upon their salary but not their profit.. I don't get it. Example - a used cars salesman who gets paid a salary and commission - of let's say $85,000 per year is way ahead of a Doctor's salary (when you include debt/expenses etc) he is way ahead of A doctor until the Doc reaches about 50 years old.. and I say.. who cares - I'd like the money now! Reason being - listen up hoochies... Doctors work horrible hours, the average Doctor makes $195,000 per year but not til the age of 35 or so. Than what many told realize or want to admit - A Doctor certainly has to pay taxes on earnings like everyone else, plus, they owe about $200,000 in schooling, and they pay about $85,000 per year on insurance including malpractice insurance etc. The only way Doctors who are younger that you see parading in a nice car, a nice neighborhood is because banks will offer someone with a degree that has a job outlook of never losing - easy to get loans. So if a younger Doctor in his 40's says he owns in great car and his great house.. WRONG! Doctors make when it's all said and done - about $8,000 per month - almost the same as the used car salesman who never paid a time for schooling, nor does he pay a dime for malpractice insurance etc.... a sad commentary but true! So woman, the next time someone says what they do for a living.. if you are going to be a loser and ask.. regardless, ask them what their profit is after expenses - you'll be shocked! But than again, most will lie.. but now you know. Read it, live it, understand it!
May 30th, 2008 at 05:17 am 1212121051
June 10th, 2008 at 02:46 am 1213062406
July 12th, 2008 at 05:37 am 1215837424
July 12th, 2008 at 05:42 am 1215837741
July 12th, 2008 at 01:04 pm 1215864246
Commenters are misunderstanding the point of the post.
Here's the deal. No one is saying that doctors don't make money. No one is saying that doctors don't have nice lifestyles. No one is jealous of them (at least, I'm certainly not -- I made the decision to drop pre-med, but the option to do it is certainly still open, especially the MD/PhD route).
However -- and THIS is the point -- when one analyzes doctors based on whether they are UAWs or PAWs, they tend to be UAWs.
This means that when you perform the calculation of how much wealth you would expect them to have compared to how much money they make, they fall below the expected threshold.
This finding is based on HARD DATA. The interpretation and rationalization of the data can be argued -- I can think of many right now, the most prominent of which is, "Who cares about whether you're an UAW when you're making seven figures? Better to be a UAW doctor than a PAW cashier at McDonalds!", which, if anyone made that argument, would be point well taken.
But you cannot argue with the data itself, which found that two-thirds of doctors are UAWs (unless you want to contest the methodology or something). And *that* is the point.
~mimi
December 10th, 2008 at 03:33 am 1228880004
January 3rd, 2009 at 04:35 pm 1231000521
March 5th, 2009 at 08:40 am 1236242452
May 14th, 2009 at 10:50 pm 1242337830
June 20th, 2009 at 04:40 pm 1245512439
July 9th, 2009 at 03:53 pm 1247151199
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November 11th, 2009 at 06:05 am 1257919541
December 15th, 2009 at 10:47 pm 1260917260
And to the poster above me, no your parents are surgeons... I am pretty sure they wouldn't raise an idiot like you to go around bragging about that wealth. Nice try to all the liars on this post. The truth remains that medicine is NOT the gold mine most people think it is.
December 15th, 2009 at 10:48 pm 1260917330
December 25th, 2009 at 07:45 pm 1261770340
January 3rd, 2010 at 12:46 am 1262479567
January 4th, 2010 at 08:07 pm 1262635676
October 14th, 2010 at 02:35 pm 1287063349
I'm fine with healthy discussion, but the comments have been bothering me -- flaming/trolling and generally non-productive. I've even deleted a few of them, and I'm considering disabling comments (if that's possible). I think the reason for this is because many posters fundamentally miss the point behind this post.
The point is not to say that doctors don't make money. The point is that doctors, despite being well-educated and generally highly compensated, are generally not Prodigious Accumulators of Wealth due to non-frugal lifestyles.
The definition of "wealth" here is specifically NOT tied to salary itself.
November 23rd, 2010 at 10:14 pm 1290550465
Second of all, Dr. Xavier is an impersonator stupid nigger who you can find on facebook, there is no doctor under that name listed anywhere on the web.
I must say that doctors live comfortably, depending on what they do and where they work. It also depends on expertise and amount of work/books they have.
Your average doctor makes $200-500k year after taxes are paid, I am family doctor in 7300 sq. ft. home (build my illegal mexicans), i have old ass cars, my other cars stores in 5 car garage they don't work at all, and I don't have money or incentive to buy a new fucking car because I have to pay bills. Overall my kids are spoiled little brats who are now grown up and fucking up their lives in spite of all care we give them...it sucks to be a doctor or anyone else if you have problems within your family, but then again you isolate yourself, as a possessional, to keep helping people and not let your personal life interact with your patients'.
Yes there are doctors with Bentley and Ferraris on their driveways, they are single, egoistic, and dumb. I know doctor who made 12 million in one year in Houston, but then I know 23 year old real estate professional who made $500k in commercial real estate, after he dropped out of college. People with most pressure, who can handle it, will do best in life. You can have all money in the world if you want it.
December 18th, 2010 at 08:33 pm 1292704391
January 13th, 2011 at 12:10 am 1294877433
I know that med school is very hard to get in but surely there are other fields that you can get into that might quench your grudge for doctors. On second thought, they might satisfy you financially, but you will always remain as second class to others in the present of Mr/Miss MD.
Yes, doctors might not save a lot of money, but why store up water when there is a very large reservoir above you with numerous pipes running from it to your property. Surely that reservoir is no where near to be destroyed and there is surely no indication that there will be a possible natural disaster.
March 4th, 2011 at 06:29 am 1299220185
In no other country in the world, will you find doctors, on average, making as much as American doctors. Why do you think they all come to the US to find work?
In some other countries, doctors work very long, grueling hours, in poor conditions and are payed peanuts, well maybe a bit more compared to some other people in the same country. Statistics don't lie. Look it up. Even doctors in the UK make considerably less money than American doctors.
Why is that?
Healthcare.
USA is one of the few countries in the world with very privatized healthcare. And it takes little example to show that a lot of money can be made off of it. But many other countries either have state-funded healthcare, or very poor healthcare. But it is easy to see how medicine becomes a burden on the state, and everyone gets their cuts, even the salaries of doctors.
Although there are odd cases, such as plastic surgeons in Thailand or Brazil who are making loads of money.
Canada seems to feel the effects of public health-care less than European nations, but give them time, more people and less money and you've got a healthcare crisis.
The truth is, medicine in most other countries is just not a prestigious job. But someone's got to do it. In the USA, people don't seem to have this mentality. In fact, it is seen as something exclusive and honorable. Yet, it always seems as if there are never enough doctors. Why?
That's because the shortage of doctors is created on purpose. You may think it's silly, but it's all in the money. If med schools were so easy to get into, and people were getting their MDs by the second, why create such a high salary for such a would-be common profession? The AMA sets standards that deter many people from the idea of med school. Only a select, enthusiastic few get in, and while the fees for med school are expensive, the doctor graduates will get all their money back in the future, multiple-fold.
I don't think I need to explain any further. There are more shocking details about the medical system in the US I could say, but I've said enough on the course of the topic.
The point is, you're wrong. Doctors make A LOT of money. But only in the USA. Everywhere else, it's a low-yielding job. Why do you think in the USA, MD degrees from other countries (besides Canada) are not allowed? Like I said, it's to keep the exclusivity. And a doctor who graduated in the US is not going to a poor country if they want to make money. They'll stay in the US, where all the money is.
I love America, but facts are still facts. This could change with Obamacare, but I hope not. I hope America remains the place where doctors can become the richest, so that there may be a socioeconomic gradient across the world to fuel dreams about medicine.
March 23rd, 2011 at 05:28 pm 1300901306
July 21st, 2011 at 04:38 pm 1311262738
I think the salaries in the USA are extremely high, especially compared to other job groups, wonder how you guys will be able to keep it up.
July 31st, 2011 at 10:39 pm 1312148393
August 19th, 2011 at 11:24 pm 1313792669
August 22nd, 2011 at 04:35 pm 1314027303
It wouldn't bother me so much if the vast majority of them don't completely miss the point of my original entry, which is that doctors tend to be UAWs rather than PAWs. I never claim that doctors don't earn money, nor that the medical profession is not a worthy one -- in fact, quite the opposite.
If I could disable further commenting, I would. I no longer blog publicly about my personal finances, but this is the topic that will never die. I'm sorely tempted to delete this post/blog entirely, but I won't for the time being.
However, I will be deleting any comments that I find irrelevant to the discussion. I don't really want rant-y flame wars going on in even a retired blog.
August 23rd, 2011 at 01:49 am 1314060589
October 25th, 2011 at 12:18 am 1319498289