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Matthew Broom Jan 14, 2022 11:32:17 AM 9 min read

Propel Your Wealth: What Got You Here, Can Get You There

You spent at least two decades (maybe even three) investing in your intellectual assets. You prioritized your life, planned the route, and continually progressed to finally become an MD, JD, or Ph.D. 

After that achievement, you successfully converted your intellectual assets into a high income. A high income is satisfying—for now. Most of your colleagues will stop here.

But, if you want financial independence, you’ve got to focus on converting your income into assets that earn and grow.

How can you start doing this? Just keep doing what you’ve been doing—prioritizing, planning, and progressing. The habits that got you here can and will get you there.

Set Your Priorities

When did you decide to pursue a doctoral degree? The definitive decision was probably made during your undergrad or maybe after working a couple of years. But the unspoken decision was likely early on.

You decided by prioritizing your education. You prioritized achieving stellar grades. You prioritized attending good schools. And these priorities that you pursued over the years gave you the knowledge, skills, and ability to be accepted to an advanced school.

I watched my brother-in-law go through medical school. I’ve never seen someone so focused. He spent so much time in the library that the librarian was invited to his wedding. 

Spending hours with your nose in a book learning nephrology, cardiology, and all the other “ologies” doesn’t just happen. You miss outings with friends and family. You trade caffeine for sleep. That level of training and education demands extreme prioritization. So, getting on the path to building wealth should be a walk in the park. Right? 

When facing the overwhelming goal of building wealth and achieving financial independence, getting lost in the details is easy. But you build wealth by owning assets (stocks, bonds, real estate, etc.) that earn and grow while you focus on other priorities. How do you purchase these assets?

You must spend less than you earn. That’s priority number one.

Your excess cash flow is the fuel that powers your wealth-building engine. Without regular maintenance (i.e., budgeting) lifestyle creep will have you running on empty.

But budgeting, for some, can be a real pain. If spreadsheets aren’t your thing, then save or pay off your debt first and then spend what’s left. The key is to live below your means. Then decide what it is that you want to accomplish.

Do you want to be debt-free? Do you want to max out your retirement accounts? Do you want to buy your dream home?

Prioritize and execute. With clear priorities and excess cash flow, you can really start to propel your wealth.

Create a Plan

If you knew you wanted to be a medical doctor, you probably wouldn’t study literature as an undergraduate. You would plan to study biochemistry or molecular biology. Almost half of the undergraduate majors at the top ten medical schools were in the biological sciences.

These individuals understood their goal (e.g., get into medical school) and determined a specific course of action that would likely lead to success (e.g., studying the biological sciences).

The same goes for building wealth. Create a long-term financial plan that moves you from a high-income earning professional toward a financially independent professional. Every financial plan is different, but certain financial guidelines are helpful.

  • Avoid high-interest debt and create a plan to deal with existing debt (i.e., student loans, credit cards, etc.). For many advanced degree holders, the weight of student loans can be burdensome. Whether you want to pay them off as quickly as feasible or utilize another strategy, face them head-on.
  • Build an emergency fund. Take it from a former firefighter. Emergencies are always happening. Keep at least three to six months of expenses saved up. It’s a bit paradoxical, but folks with rainy day funds tend to not need their umbrella as often.
  • Max out tax-advantaged accounts (i.e., 401(k), HSAs, IRAs, etc.) and then save into a taxable brokerage account. Follow a diversified and disciplined investment strategy that focuses on long-term returns. Rome wasn’t built in a day, and you won’t be financially independent overnight. Compound interest is a beautiful thing, but it takes time.
  • Lastly, avoid undue risk. Maintain all necessary insurance (e.g., life, disability, umbrella, etc.). And when it comes to investing, don’t risk what you have and need for what you don’t have and don’t need.

Bright high school and college-aged kids who want to obtain a doctoral degree know to plan ahead to make their dreams a reality. Becoming wealthy may not be as complicated as molecular biology or organic chemistry, but it does take purposeful long-term planning and discipline to be successful. 

Evaluate Your Progress

You were constantly evaluated from elementary school language arts to passing licensing exams. If you were a superb student, you probably looked forward to getting progress reports and taking tests. You prioritized your education, planned for success, and progressed from one challenge to the next.

Once you create a financial plan and put it into action, you need to regularly check your financial progress. The best way to do this is by building your balance sheet. Your balance sheet is a financial statement that provides a snapshot of your wealth at a point in time. You add up all your assets, subtract any liabilities, and the difference is your net worth.

Your balance sheet is your financial vital signs. When you first check your vitals, you probably won’t be as financially healthy as you desire. You might not have enough cash saved or have too much debt. But that’s okay. It’s better to step on the scale and establish a baseline. Once you know how financially flabby you are, you can get to work on improvement.

Like implementing a workout program, you’ll probably check your progress more early on in your journey. As your financial plan begins to fire on all cylinders, that won’t be as necessary. But, at a minimum, recalculate your net worth annually and check-in to make sure you are on track to accomplish your long-term wealth goals. 

Find Balance

Building wealth is a balancing act. 

The dichotomy of enjoying today versus saving for tomorrow is an ever-present one. The reality is every decision is a financial decision, and we all make trade-offs. 

Will the $100,000 car bring you more joy than the $50,000 car? Maybe. With a reasonable rate of return and enough time, $50,000 could easily become $500,000. Was that more expensive car worth working a few more years?

You don’t need to live like a grad student forever to become wealthy. Still, there are always Joneses to keep up with at every income level. Be clear about what is important to you. Set your priorities. Create a plan and put it into action. In time, you will see progress.

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Matthew Broom

Matthew's passion for helping others and his interest in all things personal finance led him to the profession of financial planning.