Why does $6,000 matter?⠀⠀
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All over the residency lounge you can hear different discussions on personal finance. Sadly, most of it revolves around speculative stocks/options such as GME, Bitcoin, Ethereum, Dogecoin.. and the list goes on.⠀⠀
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You get to hear interesting comments like:⠀⠀
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“This is just my fun money”⠀⠀
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“I’m only putting in money I’m okay with losing”⠀⠀
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“Its just a few thousand – I will have a lot more when I’m an attending”⠀⠀
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But here are a few reminders – and hopefully inspiration to keep the course during these wild times.⠀⠀
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1. Compound interest matters – $6,000 a year is not nothing⠀⠀
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Braden and I both started residency at 27 years old, and we will use Braden’s residency of five years duration for this example. If you contributed $6,000 a year during all five of those years (totaling $30,000) with a return of 7% a year, then you would have $400,000 at the time of retirement.⠀⠀
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2. Money discipline matters⠀⠀
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I hear residents saying “its so hard to save in residency” or “I’m just finding ways to make myself feel happier, I will be happier when I’m an attending and then I’ll save more”. Well, regardless of your happiness level, if you can’t find money to save now then you will likely have a hard time when you have more money. Money discipline is a state of mind – you need to practice it to actually have success.⠀⠀
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3. People only tell you their success stories⠀⠀
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The loudest conversations in the lounge are the ones who put in some money and it paid off. Well, if everyone actually was good at it we could all retire now and stop working 80 hour weeks. Just because they are talking about their one success story does not mean they are net positive. Furthermore, there is a good chance you have more net gain then they do if you were simply putting it in the S&P 500. Its not to say we won’t see a bear market soon – but if you look at data over and over again, index funds win.⠀⠀
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I could go on, because I have a lot of retained passion that I keep to myself during these conversations. But we will start there.⠀⠀
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What are your thoughts? What are other things you hear in the lounge? ⠀
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