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Financial Independence is a Process

Financial independence can be tricky to define for many people despite being a major goal for most of the population.  Part of the difficulty is that it’s a relatively vague goal without specific parameters and part of it is that it’s different for every person.  When asked to get into the specifics of what financial independence looks like, many will simply pick a large number that they hope will be obtained eventually or many years from now.  Shockingly, this may not be the best way to think about financial independence as it isn’t about working as hard as possible until you hit that magic number and then never working again.

The Process

Reaching financial independence is better thought of as a process instead of a number to hit, although it is important to have a goal in mind that will allow you to live comfortably when it’s time to retire.  However, a good way to think about financial independence is as a scale from 0-100%. When you’re at 0% financially independent you could have just graduated from medical school or finished your residency and have a negative net worth with several hundred thousand in student loans.  As you progress in your career that number goes up as you hit milestones until you’re at that goal number for maintaining a comfortable lifestyle and can consider yourself 100% financially independent.

By adopting this view of the journey to financial independence you can see it less as an all or nothing scenario and build in goals along the way to celebrate hitting certain milestones.  Hitting these milestones will allow you to make lifestyle changes that reflect a greater sense of comfort and financial security. These positive changes can be instituted as you progress through the process and helps maintain motivation by providing rewards for hitting those smaller goals.  It is far less daunting to have a goal of increasing your net worth by $500k than it is to try to get to $10 million or whatever number you set as the goal for financial independence.

Everyone’s view of financial independence is different, as some people may want to fully retire and enjoy the life they’ve earned, and some want to work at least part time for as long as they desire.  Because everyone’s vision of a life well lived is different, it can be incredibly helpful to start thinking of what that process to financial independence looks like to you personally. By mapping out a timeline from negative net worth all the way to financial independence, we can create goals and rewards to keep you on track throughout the process.  Please do keep in mind that these should not be considered solid numbers as goals can change as well as circumstances, so nothing is written in stone. Perhaps you’ll hit that number much sooner than you thought or you may never hit that number, but having a concrete sense of where you are on the path to financial independence can help inform financial decisions throughout your life.  With that being said, let’s take a look a sample timeline and some goals that correlate with milestones. For this purpose, I’m going to use very broad goals and very round numbers, obviously everyone’s will be different.


  • Negative Net Worth- Most people will be starting here given the prevalence of student loan debt in this country, and everyone goes through this period at some point in time.  This is not the time to reward yourself with freedoms or nice things unfortunately, instead you’ll need to buckle down and live below your means. You’ll have to do a lot of the grunt work required to build your skills and reduce money spent on luxury items or experiences (less or no vacations).  

  • Net Worth of $0- This is, despite what it may seem, a big step.  You can start enjoying a bit more freedoms, maybe not take call so often or try to get off the night shift.  Depending on your financial situation a small vacation is on the table.

  • Net Worth of $500k- Reaching this milestone may allow you to upgrade your lifestyle a bit while still living below your means.  Perhaps you could add some more vacation time to your year and plan some nicer vacations. This opens the door to additional financial decisions such as investing in order to have your money work for you.  

  • Net Worth of $1 Million- $1 million is still an impressive number, and when you hit this milestone you can begin to shape your work life into something that you enjoy.  Build out your practice a bit more and hone your skills by attending more conferences if you’re a doctor. If you’re a nurse, perhaps look at becoming a nurse practitioner if that’s been your goal.  You can also take more vacation time and spend more time with family, or put a down payment on a home.

  • Net Worth of $2 Million- Depending on your expenses, this level of net worth could support you assuming a modest 3% withdrawal rate in retirement.  Hitting this milestone can allow you to start thinking about things you’ve always wanted to do or experience, so create a bucket list and start checking a few items off.  At this level you’ll start to be able to do a lot more of the things people associate with financial freedom, so enjoy your success a bit at this stage.

  • Net Worth of $5 Million- This could be you financial independence number, in which case congratulations on hitting your goal!  When you reach this point you may be ready to relax and drop more and more work related responsibilities. At this level of net worth and with an assumed 3% withdrawal rate, you should be able to support expenses of around $150k per year.  You could also get here and think “This is nice...but what about a little bit more?”. You may never hit this point and that’s fine too. Hopefully your career is exactly what you want it to be at this point, and if not, why not? You should have a sense of how you want your best life to be led, so take advantage of the time and ability to follow that path.

Obviously this is a sample timeline and large, round numbers to make it easy but the point is that financial independence is a bit more fluid that you may think.  It is a process to get to the final goal, but that doesn’t mean that there aren’t worthwhile stops in that journey. It is very unlikely that you’ll wake up one day and have everything you’ve ever wanted, so use the process to shape the life you want to live and make it better with every milestone hit.  

What’s your timeline look like?  What milestones have you added? What are you excited about adding into your life?  Send me a message and let me know how far along the path you are.  

financial independence for doctors