The Dream Bigger Financial Flow for Physicians

Overview

Navigating financial planning can be overwhelming, especially as an early-career physician with so many competing priorities.

That’s where the Dream Bigger Financial Flow comes in. This simple yet powerful guide will help you focus on what truly matters, so you can make confident decisions about your money.

Let’s break it down step by step, prioritizing your financial objectives to set a strong foundation for your future.

Overview

Navigating financial planning can be overwhelming, especially as an early-career physician with so many competing priorities.

That’s where the Dream Bigger Financial Flow comes in. This simple yet powerful guide will help you focus on what truly matters, so you can make confident decisions about your money.

​Let’s break it down step by step, prioritizing your financial objectives to set a strong foundation for your future.

Subscribe to The Dream Bigger – Physician Edition Newsetter

A weekly newsletter designed for early-career physicians and anyone looking to enhance their financial well-being.

Discover helpful tips, strategies, and insights to dream bigger and take control of your financial future. 🥼

Get student loan updates, money-saving tips, and financial strategies – all delivered to your inbox.

Subscribe to The Dream Bigger – Physician Edition Newsetter

A weekly newsletter designed for early-career physicians and anyone looking to enhance their financial well-being.

Discover helpful tips, strategies, and insights to dream bigger and take control of your financial future. 🥼

Get student loan updates, money-saving tips, and financial strategies – all delivered to your inbox.

The Dream Bigger Financial Flow

☁️ As an early-career physician, the financial decisions you make today will shape your future.

​

☁️ Whether you’re deciding where to invest your next dollar, tackling debt, or saving for your first home, the Dream Bigger Financial Flow is your roadmap to financial success.

​

☁️ This ten-step system is designed to help you prioritize important choices, ensuring you build a solid foundation and start your financial journey stress-free.

Dream Bigger Financial Flow Snapshot

☁️ Step 1: Safety Net

☁️ Step 2: Employer Match (403b/401k)

☁️ Step 3a: Own-Occupation Disability Insurance (DI)

☁️ Step 3b: Consider Level Term Life Insurance (LI)

☁️ Step 4: High Interest Debt ( > 6%)

☁️ Step 5: Emergency Fund

☁️ Step 6a: Health Savings Account (HSA)

☁️ Step 6b: Individual Retirement Account (IRA)

☁️ Step 7: Max Work Retirement (401k/403b)

☁️ Step 8: Taxable Brokerage Account

☁️ Step 9: Prepaid Expenses

☁️ Step 10: Low Interest Debt ( < 6%)

​

Now lets dive into each step in more detail.

Step 1: Safety Net

☁️ Purpose: Establish a financial cushion for uncertain times.

​

☁️ Goal: Save enough to cover one month of expenses.

​

☁️ Why It Matters: Having a safety net ensures you can handle unexpected expenses or income disruptions without financial stress.

​

☁️ Example: If your monthly expenses are $3,000, aim to save at least $3,000 in a readily accessible checking account.

Step 2: Employer Match (403b/401k) – If Available

☁️ Purpose: Encourage retirement savings through company benefits.

​

☁️ How it Works: Your employer matches a percentage of your salary that you contribute to your retirement account.

​

☁️ Why It Matters: Taking advantage of employer matching is essentially free money towards your retirement.

​

☁️ Example: If you contribute 3% ($3,000) of your $100,000 salary to your 403b/401k, and your employer also matches 3% ($3,000), you’re adding a total of $6,000 to your retirement savings. Essentially, you’re getting an additional $3,000 from your employer for your retirement by just contributing 3% of your salary.

Step 3a: Own-Occupation Disability Insurance (DI)

☁️ Purpose: Protect your income if you are sick, injured or ill and unable to work in your current medical specialty.

​

☁️ Benefit: This insurance covers you even if you can work in other fields, ensuring your specialty income is protected.

​

☁️ Why It Matters: As a physician, your ability to work in your specific field is important. This insurance ensures financial stability if you can’t perform your medical duties.

​

☁️ Example: If you are a surgeon and suffer an injury that prevents you from performing surgeries but allows you to work in a non-surgical role, this insurance will cover your lost surgical income. Additionally, if you are a family medicine physician and become disabled, but can work in a new career, this policy will provide your full monthly benefit while allowing you to pursue a different career.

Step 3b: Consider Level Term Life Insurance (LI)

☁️ Purpose: Provide financial security for your dependents in case of your untimely death.

​ 

☁️ Benefit: Offers a death benefit payout for a specific period, ensuring your family is financially protected.

​ 

☁️ Why It Matters: Life insurance helps cover expenses like mortgage, education, and daily living costs for your dependents.

​ 

☁️ Example: A 30-year term life insurance policy with a $2,000,000 death benefit can ensure your family is financially secure if you pass away within the term.

Step 4: High Interest Debt ( > 6%)

☁️ Purpose: Prioritize paying off high-interest debt quickly.

​

☁️ Benefit: Reduces financial strain and interest costs, freeing up money for other financial goals.

​

☁️ Why It Matters: High-interest debt can quickly accumulate and become a financial burden. Paying it off early saves money in the long run.

​

☁️ Example: If you have a credit card debt of $5,000 with an interest rate of 18%, focus on paying this off as soon as possible to avoid high interest charges.

Step 5: Emergency Fund

☁️ Purpose: Create a safety net for unexpected expenses.

​

☁️ Goal: Aim to save 3 to 6 months of living expenses.

​

☁️ Why It Matters: An emergency fund provides peace of mind and financial stability during unforeseen events like medical emergencies or job loss.

​

☁️ Example: If your monthly expenses are $3,000, aim to save between $9,000 and $18,000 in an easily accessible high-yield savings account.

Step 6a: Health Savings Account (HSA)

☁️ Purpose: Tax-advantaged account for medical expenses.

​

☁️Benefits:

• • • Contributions: Tax-deductible.

    • Withdrawals: Tax-free for qualified medical expenses.

    • Investment: Funds can be invested and grow tax-deferred.

    • Ideal For: Those with high-deductible health plans.

​

☁️ Contribution Limits:

• • • Single: $4,150 (2024)

    • Family: $8,300 (2024)

​

☁️ Why It Matters: HSAs provide a triple tax advantage and can be a powerful tool for lowering taxable income and managing healthcare costs.

​

☁️ Example: Contributing the max annually to an HSA can cover medical expenses tax-free and grow as an investment for future healthcare needs.

Step 6b: Individual Retirement Account (IRA)

Types: Roth or Traditional IRA

​

☁️ Roth IRA:

• • • Contributions: Made with after-tax dollars.

    • Withdrawals: Tax-free in retirement.

    • Ideal For: Those who expect to be in a higher tax bracket in retirement.

​

☁️ Traditional IRA:

• • • Contributions: Made with pre-tax dollars.

    • Withdrawals: Taxed as ordinary income in retirement.

    • Ideal For: Those who expect to be in a lower tax bracket in retirement.

​

☁️ Contribution Limits:

• • • Under 50: $7,000 (2024)

    • 50 and over: $8,000 (2024)

​

☁️ Note: If your income exceeds certain limits, consider a backdoor Roth IRA.

• • • Backdoor Roth IRA Limits:

      • • Single: MAGI greater than $146,000 (2024)

        • Married Filing Jointly (MFJ): MAGI greater than $230,000 (2024)

        • Married Filing Separately (MFS): MAGI greater than $0 (2024)

​

☁️ As an early-career physician, you may want to utilize the Roth IRA and when your income is too high, the Backdoor Roth IRA.

Step 7: Max Work Retirement (401k/403b)

☁️ Goal: Contribute the maximum allowable amount from your income.

​

☁️ Contribution Limits:

• • • Under 50: $23,000 (2024)

    • 50 and over: $30,500 (2024)

​

☁️ Why It Matters: Maximizing contributions to your work retirement plan can significantly enhance your retirement savings and take advantage of tax benefits.

Step 8: Taxable Brokerage Account

☁️ Purpose: Invest outside retirement accounts.

​

☁️ Benefits:

• • • Flexibility: No contribution limits.

    • Liquidity: Access funds at any time.

    • Considerations: Be mindful of tax implications on gains and dividends.

​

☁️ Why It Matters: A taxable brokerage account allows you to invest additional funds and diversify your investment portfolio.

​ 

☁️ Example: Investing $1,000/month in a diversified portfolio can provide growth opportunities and liquidity for future financial goals.

Step 9: Prepaid Expenses

☁️ Purpose: Save for specific future expenses (e.g., weddings, tuition).

​ 

☁️ Strategy:

• • • Short-Term Goals (< 5 years): Save in a high-yield savings account.

    • Long-Term Goals (> 5 years): Invest in a diversified portfolio.

​ 

☁️ Why It Matters: Planning and saving for future expenses ensures you are financially prepared for significant life events.

​ 

☁️ Example: If you’re saving $20,000 for a wedding in two years, putting it in a high-yield savings account ensures the funds will be available when needed. Investing this money in the stock market could risk it being worth less than what you need when the time comes.

Step 10: Low Interest Debt ( < 6%)

☁️ Purpose: Pay off debt with lower interest rates.

​ 

☁️ Benefit: Reduce financial burden and overall costs.

​ 

☁️ Why It Matters: While low-interest debt isn’t as urgent to pay off, reducing it early saves money in the long run and improves your financial flexibility.

​ 

☁️ Example: Paying off a student loan with a 4% interest rate can reduce your monthly financial obligations and save on interest costs over time. And if you are pursuing forgiveness on an Income-Driven Repayment (IDR) plan, you should pay the required amount. There is no benefit paying extra on your student loans.

Conclusion

☁️ The Dream Bigger Financial Flow is your guide to prioritizing the most impactful financial decisions early in your career. By following this ten-step system, you’ll establish a strong financial foundation, paving the way for a secure and successful future.

​ 

☁️ Keep in mind: Steps 5-10 can be tackled simultaneously. The key is to develop a savings strategy that aligns with your family’s unique short and long-term goals, ensuring you’re on the right path toward financial well-being.

​ 

☁️ Stay tuned! In future newsletters, we’ll dive deeper into each of these steps, offering detailed insights and actionable tips to help you implement them effectively. Your financial journey is a continuous process, and we’re here to support you every step of the way.