December 15, 2025

12 Steps to Financial Independence - Part 1 #043

32 minutes

We kick off a special three-part miniseries designed to help physicians fast-track their journey to financial independence. Inspired by one of Tyler Olson's most popular tweets, this conversation breaks down the first four steps every physician should take once they finish training.

From avoiding the "I earned it" trap to setting your savings rate and building your emergency fund, we share practical insights, real-life examples, and a healthy dose of financial wisdom for doctors at all career stages. Whether you're navigating your first big paycheck or wondering how to build a solid financial foundation, this episode is packed with actionable advice to help you secure your future and live life on your own terms.

Looking for help with Disability Insurance, Physician Banking, Student Loan Refinancing, Physician Mortgages, Contract Reviews, and more? Check out our "Best of the Best" sponsors page to find a list of the professionals Chad & Tyler team up with for their clients.

You will want to hear this episode if you are interested in...

[00:00] Steps 1-4 to financial independence.
[06:33] Plan early for financial success.
[08:15] Avoid the urge to upgrade lifestyle prematurely.
[13:53] Know your number and understand what you value.
[21:45] Your first big pay raise is the easiest time to start saving.
[26:15] Emotional and behavioral benefits of cash reserves.
[28:58] Level two emergency fund strategy.

First Four Steps to Building a Solid Financial Foundation

Physicians are often seen as high earners with "easy" financial lives, but the reality behind the paycheck is much more nuanced. Years of demanding education, delayed earning power, and lifestyle pressures create a unique set of financial challenges. We break down and expand on the first four critical steps of 12 for newly minted attending physicians to set themselves up for long-term financial independence.

Step 1: Don't Fall for the "I Earned It" Trap

The "I earned it" mentality is tempting after years of sacrifice and hard work. The pressure of becoming an attending, the emotional weight of responsibility, learning new systems, and adapting to a higher-stress environment, often leads doctors to reward themselves prematurely. Upgrading to the million-dollar home, luxury car, and exclusive memberships before building a financial foundation is like eating dessert before you've had dinner.

Resisting these early lifestyle upgrades is about more than just discipline. It's about setting yourself up for flexibility and freedom in the future. Locking in big expenses too early can hinder agility, especially once family planning and unexpected life changes come into play. Focus on building wealth and stability before flexing assets.

Step 2: Track Your Real Cash Flow

Many physicians, especially those in the $300,000 to $600,000 income range, assume their paychecks can cover whatever they want. In reality, without tracking cash flow, even high earners can find themselves in financial trouble. It's so important to know exactly where every dollar goes. Start with three months of detailed cash flow tracking using tools like Monarch Money, Tiller, or even old-school spreadsheets.

Understanding your fixed expenses, discretionary burn rate, and real savings rate helps you make intentional financial decisions. Numbers don't lie, and self-awareness is especially important for high earners who may spend frivolously without realizing the long-term impact.

Step 3: Set Your Savings Rate

Because physicians generally start earning later than their peers, Tyler advocates a savings rate of 20-30% of gross income. Automate these contributions to retirement and brokerage accounts so every dollar is invested before it can be spent. Saving aggressively isn't about deprivation; it's about advocating for future spending, whether it's early retirement, reduced clinical hours, or the flexibility to change career paths.

If 20-30% feels ambitious, start lower and ramp up as your life stabilizes. The key is to automate and protect these contributions from being spent impulsively. "Every dollar you automate equals less guilt later," Chad Smith echoes.

Step 4: Build Your Cash Moat - An Emergency Fund for Peace of Mind

Tyler recommends three to six months of expenses in a high-yield savings account, but Chad sometimes prefers using post-tax income to calculate this number for greater security, especially for those early in their careers or facing job market uncertainty.

Think about what will happen if the unexpected happens. We share stories of real-life emergencies which bring home why liquidity matters. A well-funded cash moat provides both practical and psychological stability, letting doctors weather unexpected expenses or career pivots without panic.

Best Practice is to save enough to sleep soundly, then consider a "level two emergency fund" invested more aggressively for longer-term flexibility.

Making Intentional Choices

Financial independence for physicians isn't about simply earning high salaries, it's about making intentional, well-planned choices from day one as an attending. Begin by resisting the urge to spend, track your actual cash flow, set and automate a healthy savings rate, and build your emergency fund before investing in luxuries. Adopting these habits creates stability, agility, and options when life inevitably throws curveballs.

Stay tuned for steps 5 to 8 in next week's miniseries installment.

The best of the best list is a paid sponsorship, but these are professionals/companies that Tyler and Chad collaborate with within their own practices or have been vetted to earn a spot on this list. By supporting our sponsors, it allows Chad & Tyler to dedicate more time to you and the Physician Cents community. If you ever have a question (or not a great experience, which we don't expect!) about a sponsor, please let us know. We call it the "best of the best" for a reason, and we will maintain that standard for our listeners & viewers.

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