Not many laypeople think of physicians as lazy. Most people have at least a vague idea of what we have to go through to become doctors. We excel academically in high school and college. We run the gauntlet of volunteer work, recommendation letters, and standardized tests to get accepted into med school. And that’s just the beginning. Four years of medical school follow, then residency, then a busy career. Who would call us unmotivated or lazy? But is this the truth, especially after residency?
Do you possess an above-average work ethic? How about above-average intelligence? Are you better than average with money? If you answered yes to these questions, would accepting that you are average or (gasp) below average actually make your life better?
What is Average?
An NIH study from 2018 showed that 65% of Americans considered themselves to possess above-average intelligence. A majority of people also consider themselves to be above average when it comes to driving an automobile (73-93%) and physical attractiveness (60-70%).
If you took a statistics course, you probably know that if we are discussing the mean (the mathematical average), this could be true, but it would require some seriously high outliers. However, by definition, when considering the median, 50% of people must be below it.
This overestimation is a typical human characteristic. But have you ever thought about yourself in this context? Do you overestimate your own abilities? As medical professionals, I’m sure we all consider ourselves hard-working – above average, in fact. But, compared to our physician peers, half of us are below the median. I’m not suggesting this as a character flaw; I’m hoping it can be liberating because you can still have a successful medical career and become financially independent despite being below average in motivation, work ethic, and investing prowess. In fact, it might be a benefit.
The Benefits of Being Average
Being below average can be liberating. It takes the pressure off you to constantly perform. What do you call the guy who graduates last in his class? Doctor. Embrace your averageness.
I thought I was pretty smart until I reached medical school. No matter how much I studied the first year, I couldn’t crack the top ten. So, I quit trying. P=MD, baby. Then, in residency, I realized that I was probably below average in intelligence. I worked hard, but not noticeably harder than anyone else. Despite being average at best, I have managed to have a good career, get rich by age 50, and be a pretty happy guy.
I’m living proof that you succeed as a medical professional as long as you do the bare minimum: take one specific action, make one broad choice, and then let inertia do its thing.
Embrace Inertia
The Law of Inertia is Newton’s first law of motion: an object in motion tends to stay in motion, and an object at rest tends to stay at rest unless acted upon by an outside force. When it comes to your daily life, I think of it as people just not liking change. When the administration wants to make a change in the ER, everyone complains. Loudly. Change some process, and everyone will hate it. Give it six months and try to change it back to the old way, and the same people will complain just as loudly.
There is a famous FI urban legend about a Fidelity internal review that showed the best-performing investors were those who had died with an unclaimed portfolio. Several studies (UC Berkeley, Fidelity, and Warwick Business School) conclude that women are better investors than men because they trade less and are less prone to overconfidence. These two examples suggest that investing is one area where doing less really pays off.
Set It and Forget It
To take full advantage of your average inattention and laziness, you have to do ONE thing first. You must automate your investing life.
If you have a workplace 401 (k), you must enroll in it. Invest at least enough each month to get the match. Because you are a high-income medical professional, you should invest more, either in your retirement account or in a taxable brokerage account. You should set this up automatically as well. Finally, you must automate the investments inside those accounts. You can take the simple path to wealth by investing in a broad-based, low-fee index fund (like VTSAX or the ETF equivalent, VTI) and a total market bond fund (like VBTLX) in an 80-20 ratio. Done.
If you follow the this path, you will get the average returns of the market. Fortunately, being average will make you rich over time. The US market has returned roughly 10% per year over the past 100 years. If you just “settle” for the average, you will come out far ahead.
For example, I get paid monthly from my ER job. Each month, my bank account transfers money to my E-Trade account, where it is automatically invested weekly into the broad-based indexes of my choice.
Once you automate your life, you can go back to actively doing nothing, knowing your wealth will quietly multiply in the background.
Buy Less
I know you’re tired from all that activity. It may have taken an hour to set up automatic investing, and you deserve a break, but I need you to make ONE decision before you go back to the world of indolence. This decision must be concrete in your mind and follow you for the rest of your life. It sounds like a lot, but once you make the choice, it will help you in your quest to do less.
Make up your mind now to always do the following: Repeat after me. “I hereby swear that I will purchase only quality goods that I actually need, at reasonable prices that are less than I can afford, and I will hold them as long as they last.” That’s it. Now take a few minutes for yourself to recover.
Don’t buy cheap crap that you have to replace quickly. In our disposable, fast-fashion world, purchase quality items that will last, but don’t fall for branding by buying the “best,” or you’ll pay way too much. Accept the average. Why does everything you own need to be above average anyway?
The most important application of this philosophy is to buy a house that is less expensive than you can afford, and that you plan to stay in for many years. In My First Real Estate Transaction, I explained how I used my first mortgage preapproval amount to purchase two homes instead of one. I lived in one with a roommate and rented out the other. Even now, my family lives in a house that is comfortable and safe, but is well below what we could afford. We plan to live there at least until our last child graduates high school, or 9 more years.
I drive a Honda Civic to commute across the giant landmass of Texas, which is a considerably less expensive car than I can afford. However, it is reliable and efficient, and it should last a long time. It meets all my criteria, yet every time I see an Ineos Grenadier, I want one. I could easily afford the SUV, but I know that I don’t need it and that it wouldn’t make me any happier. Besides, it would be a lot of work to sell my car, find the Grenadier I want, go to the dealer for a test drive, go to the bank to get a certified check, and spend three hours doing paperwork. So, I do nothing and keep driving my Honda.
The list goes on and on, so let’s keep it simple. Buy what you need but realize you don’t need the best. Who are you trying to impress?
Less Becomes More
What lies “below your means” is relative. My houses have gotten more expensive over the years. As my means have grown, what’s below those means improves.
I’m leaving in a few hours to join my family at our vacation house in Hawaii. You guessed it, it’s not the most expensive house we could afford. But we love it. We’re then going on vacation to South Korea and Thailand, although we’re not flying business class or staying in expensive hotels. I’m fine with that.
If you do the bare minimum by investing automatically and always buying less than you can afford, your means will substantially grow, too.
Conclusion
If you’re like me, you’re below average compared to your doctor colleagues. I’m not that smart, not that talented, and not that motivated anymore. But I did the bare minimum and automatically invested throughout my career. I decided a long time ago to spend way less than I could afford on houses, cars, clothes, and almost every other item or experience. Now I can relax in my average house, drive my average car, and know that my finances are anything but.
Even if you can look around at your colleagues, look at yourself in the mirror, and honestly say you are above average, my advice would be the same. Do less when it comes to investing. Buy less in your life. Do these two things, and you’ll wake up one day and realize that your net worth has broken the curve, and that you have single-handedly moved the mean.
Are you average? Are you willing to do the bare minimum to get ahead financially? Let us know in the comments. Thanks for reading Business is the Best Medicine. Please consider subscribing to our blog.