I often reflect back on how different my life would be if I had not begun building the simple habits for financial well-being. In thinking about this recently, I researched some interesting financial facts and demographics.
As you can imagine they were all really interesting. But also kind of scary and a pretty good sign that we, as a country and world overall, need to do better when it comes to preparing ourselves and financial literacy.
Now, mind you, these financial facts are for our overall U.S. population, not just physicians. That data is harder to come across and only exists in poorly responded to surveys on social media.
But I think you’ll agree with me that they still pretty much all apply.
5 interesting financial facts
1. 58.1% of millennials have less than $10,000 in savings
Now, some of these facts talk about millennials. And you may be like me and think, “Well, I’m not a millennial” or “Millennials are so young. Of course, they don’t have savings.”
Well, then I did some Googling and turns out that I am a millennial by definition. So this includes a lot of early to even mid career doctors!
Further, until recently, I was part of this 58.1%. As little as two years ago.
But let’s make this even more doctor specific. If we increase to $100,000 in savings, I bet this number would be pretty similar…
The fixes to this problem include:
- Intentional spending
- Paying yourself first
- Budgeting, and
- Saving at least 20% of your gross income
2. Only 30% of U.S. households have a long-term financial plan
Those of you reading this are self-selected and I bet would have a higher percentage.
But overall physicians in the U.S., I’d wager that the percent without a written financial plan is similar.
In my mind, the reasons for this are multifold.
- Doctors don’t think we need a financial plan because we make good money
- The process seems intimidating
- We think we can hire people to reliably do it for us. This is because we are used to acting, by oath, in others’ best interests…something that not all financial advisors are required to do…
If you do fall into this group, you can review my written financial plan here and even use it as template to create your own.
3. On average, Americans spend 10.5% of their income on food
This number was probably about right when I was a resident. However, now food comprises about 6.6% of our monthly spending (you can see all of my monthly expenses here).
This is probably still a bit high, especially considered how big of an issue that food waste is. Even in our house where we really try to limit it.
The bigger concept to grasp here is that we need to understand where our money is flowing to. Without grasping our expenses, it’s hard to manage or control out finances.
Remember, the formula to build wealth is simple at its core. You build wealth by increasing and investing your margin
And what is your margin?
It is: What you make – What you spend
And what your spend is always 100% in your control.
So look at your expenses and see which may need some adjustment. That is how you create savings that you can invest to build wealth.
4. 39% of Americans would have a hard time covering an unexpected cash expense of $400
The cost limit here would probably need to be higher for physicians. But a shocking amount of physicians still do not have an emergency fund and would have to liquidate investments or delay addressing an emergency event.
There is just simply no reason for that as a high income earner.
Keep 3-6 months of expenses as an emergency fund and don’t get cute with it…keep it in a boring savings or money market account.
5. Only 24% of millennials show signs of basic financial literacy
Seems accurate for physicians as well. And again, this is not surprising.
- Lack of education
- Perceived taboo of money in medicine
- Bad or misleading advice
That’s why Financial Education Needs To Be Tied Into Medical Education!
But to go even further, shouldn’t personal finance be taught in high school and college. Critics will always site a time crunch with not enough hours to teach the necessary curriculum already.
But this doesn’t jive in my mind.
We learn way too much functionally useless stuff to not be able to find some time to teach the basics of financial literacy.
Thing like The Simple Habits That Will Make You Financially Successful and the 5 Step Retirement Calculator…
You can also check out my free Masterclass Webinar on The 12 Steps to Financial Freedom for Physicians here!
The bottom line
We, as physicians and just as people in general, do not do well with personal finance. And unfortunately, financial well-being is a huge component of overall well-being.
Ignoring it can very much lead to burnout like I experienced.
Also unfortunately, financial well-being is probably the most overlooked aspect of overall well-being…
As these interesting and scary financial facts indicate, we need to do better. The good news is that we can!
Too often I hear people tell me, “I wish I knew this when I was younger.” I do too! But there is never a “too late.”
Start your financial education, start increasing your savings rate by 1% each month, start investing in index funds….
Crawling leads to walking leads to running. In that order only. We all can do it!
What do you think? Do you know any other interesting financial facts? Why are we not doing better in terms of personal finance? Where should basic financial education be taught? Let me know in the comments below.