My wife and I (Mr. and Mrs. Financially Free MD or FFMD for short) are both thirty-something doctors with 3 lovely children living in Vancouver who enjoy feeling financially free. We LOVE the freedom to know we can quit work anytime we like and still enjoy a lifestyle similar to what we currently have without any ongoing earned income. Often the grind of endless expenses and demanding work hours can make many professionals treat work as just a means to the next paycheck. We feel this financial freedom actually makes it much easier to enjoy the best parts of being a doctor and therefore plan to continue medical work in some form or another for many years to come.
We achieved this financially free goal by combining a number of key personal finance tenets which are easily accessible to most professionals. We will explore these core concepts and many others in greater detail with dedicated posts in the future:
Paying Yourself First
Classic personal finance will talk about paying yourself first at least 10% of gross earnings to create your nest egg. As professionals with excellent earning potential, this target is far too low. Achieving a range of 30-50% will put your financial freedom journey into hyper drive. Our significant savings has been while living in a city with high living expenses and significant childcare costs. We have enjoyed travelling throughout our financial journey but chose to reduce other materialistic pursuits as much as possible to facilitate this luxury.
Tracking Spending and Creating Budgets
To obtain financial freedom, you must become the master of your money and not the slave to your possessions. Once you begin following your spending trends, you can begin to decide which type of spending truly improves your current quality of life or is just holding you back from enjoying your future.
Setting Financial Goals – Both Short and Long Term
Becoming a professional didn’t happen overnight and becoming financially free won’t either. To become a professional, you had numerous hoops to jump through in the form of exams, interviews and apprenticeship. These hoops often become progressively harder along the way as you built up fortitude to manage it. It helped to chunk them into small goals to eventually complete the long term goal.
Financial planning is really no different. By setting short and long term financial goals, you will gain a sense of pride in small accomplishments and strengthen your resolve to continue the quest for financial independence.
Cutting out the Middle Man
Finding ways to reduce “fee-drag” on your wealth building is essential over time. The financial industry lives off the financially ignorant and will reduce your portfolio value over time if required to rely upon them.
There is an inherent problem here: A financial plan is essential to avoid behavioral mistakes and planning pitfalls. As a financial newbie, you likely wouldn’t have the skill set to plan your financial future on your own. Hence, you currently DO require a financial planner and would likely be financially worse off without one.
The best options are to consider:
a) a fee based financial planner – This will be a comprehensive plan and investment recommendations that are ETF/index fund based without any commission fees related to the size of your investments. This aligns incentives and creates pay for work done similar to your accountant or lawyer.
b) a commission based financial planner – I would only recommend this approach if you plan to quickly become financially self sufficient and can’t find a good fee based planner in your region. As professionals that will have larger portfolio sizes, these commissions with likely cost you 7 figures of net worth by the time you retire!
You can begin to think of reducing fees significantly without financial planners once you have built the foundation of key financial knowledge to determine your own destiny. I personally have not used a planner for about 7 years now. Developing your core financial acumen is one of the primary goals of this blog.
Let Compound Interest Perform Its Magic
A few extra years and early savings makes a nest egg swell compared to starting late and trying to save a ton at the end. Letting the magic of compound interest work uninterrupted with regular monthly contributions is far superior to market timing strategies.
A Few Final Thoughts
I had no formal financial experience and am mostly self-taught. I have spent countless hours over the last decade reading and studying both personal finance and investing. I genuinely love this stuff and have always been a nerd for efficiency and optimization. I spent many hours wading through the useless information to get to the real gems that have shaped our financial success. These gems will allow you to quickly access what has taken me years to learn.
You might be wondering why on earth I’m going to spend countless hours sharing all this information that took years to learn. The main impetus for starting this blog was frequent questions from colleagues and friends around what led to our financial freedom at such a young age and how they could also do it. This isn’t a 15 minute conversation. It is impossible to expound all the tenets of what led to financial success in one sitting. Now I can just say go read the blog!
Writing the blog will also help solidify my expertise as I respond to critiques and questions. As they say in medicine; the best way to learn is to see one, do one, then teach one!