So, you've graduated ... now what?

By Greer Gibson Bacon, CFP®

Congratulations to the Class of 2019!You've just graduated from medical school or a physicians' assistant program, or finished up your residency. It's been a long haul but you're about to reap the rewards and you have a major case of 'pent-up demand".  You want a new car ... a new house ... maybe a lake place ... private school for the kids ... maybe a live-in nanny.  You want to enjoy your new status and you want everyone to know it.

Good idea?  That depends on how you "value" current lifestyle vs. wealth accumulation from a personal perspective.  Along those lines, I offer a few observations from my 40 years as a professional wealth manager.

      1. There's only way to accumulate wealth.

Unless your last name is Gates, there's only one way to accumulate wealth.  Very simply, you must spend less than you earn, then invest your savings wisely.

2. You can't borrow your way to prosperity.

There's an army of private bankers lining up to tell you how much you can borrow.  Whatever the amount, it's too much.  In my experience, people who borrow to "the max" have little room for life's comforts and long-term savings. If you have student loans, determine the "best" way to pay them.

3. Appearances are deceiving.

There's a big difference between "looking" wealthy and "being" wealthy.  Very often, people leading high status lifestyles (think designer clothes, luxury cars, expensive homes, and so on) have low net worth relative to their income.  In other words, if you're tempted to keep up with the Joneses, you might find that their true story reads a lot like The Emperor's New Clothes. If you want to maintain a secure, comfortable lifestyle in retirement, you need to establish a "sustainable" lifestyle now and accumulate wealth.

4. Don't fall for "Sutton's Law". 

When asked why he robbed banks, Willie Sutton famously responded because "that's where the money is".  Along those lines, you'll be pitched "special deals" that are available "only to a select group of doctors and physicians assistants".  While this is certainly flattering (and it is intended to be), look carefully before you leap.  These deals are often better deals for the issuers than the investors.  If you have any questions or concerns, ask a trusted advisor to help you review it.

5. Choose a team of trusted advisors. 

At a minimum, your team should include four key advisors.  A certified public accountant (CPA) will help you manage the income tax liability that comes from earning a high income.  A life insurance agent, chartered life underwriter (CLU) or chartered financial consultant (ChFC) will help you manage the risk associated with your premature death or disability.  An estate planning attorney will help you manage the personal and financial consequences of your death or disability.  Finally, a certified financial planner (CFP®) will help you and your other advisors pull it all together.

Finally, my best wishes for a long and prosperous career.

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