Practice on Your Terms

Why Financial Independence Matters (Plus 3 steps to get there)

March 03, 2025

You’ve spent years studying and working around the clock—rotations, night shifts, clinics—yet you’re finally on the path to the career you’ve dreamed of. You love medicine, but loving your work doesn’t mean you have to rely on it financially forever.

Financial Independence (FI) isn’t about ditching your stethoscope for good.

It’s about granting yourself the freedom to choose: the freedom to go part-time if your personal life demands it, to walk away from toxic workplace environments, or to take a sabbatical if burnout strikes. Whether your ultimate goal is an early retirement or simply having more control over your time, FI empowers you to shape your medical career—and your life—on your own terms.

Below, we’ll break down what FI looks like for physicians, and outline the tangible steps to get there.

What Is Financial Independence?

At its simplest, financial independence means accumulating enough wealth (through investments, savings, and/or passive income) so that you no longer have to work. You can still choose to work—many do—but you do so on your own schedule, under conditions that suit you.

For physicians, FI can unlock:

  • Part-time schedules without financial stress

  • Freedom from toxic work environments or administrative burdens

  • Time off for travel, family, research, or teaching

  • Control over retirement timing, rather than being forced out

Source: Medscape

Achieving FI can be especially challenging for those who start earning later in life and grapple with substantial student loan debt.

However, with physician-level incomes and a well-devised financial strategy, FI is more attainable than it might seem.

3 Steps to Financial Independence

1) Pay Off High-Interest Debt First

Before building wealth, clear the financial baggage slowing you down.

High-interest debt–debt that charges a rate above the average federal student loan or mortgage rate–can quickly outpace any returns you might earn from investments, so attack those balances methodically.

Key priorities:

  • Credit cards: Always pay off monthly—no exceptions.

  • Private student loans (if high interest): Consider refinancing if you can secure a significantly lower rate.

  • Any debt over ~6% interest: Prioritize aggressively; the interest may outstrip your investment returns.

What about federal student loans? If you’re pursuing Public Service Loan Forgiveness (PSLF), stick with income-driven repayment. Otherwise, consider aggressive repayment or refinancing based on your career plans.

✅ Action Item: Make a plan to pay down debt. List all balances, interest rates, and payoff strategies.

2) Invest Early & Automatically

Your paycheck isn’t what makes you rich—your investments do.

The most powerful tools in your financial arsenal are time and automation: invest consistently and let compound interest work for you in the background.

Where to Invest?

  • 401(k) or 403(b) (Employer-Sponsored Plan): Aim to max out. If your employer offers a match, it’s free money.

  • Backdoor Roth IRA: Offers tax-free growth—especially valuable for high earners.

  • Taxable Brokerage Account: Ideal for investments beyond your retirement accounts, providing flexibility and liquidity.

  • HSA (Health Savings Account): If you’re eligible, this can be a triple tax-advantaged way to save and invest for healthcare expenses.

How Much to Invest?

A solid guideline is to invest at least 10% of your gross income. If you can push it higher (15–20%), you’ll accelerate your path to FI.

How to Invest?

Resist the urge to chase the latest hot stock or cryptocurrency.

Broad-market, low-cost index funds (like VTI or VOO) provide diversification, minimal management fees, and a “set-it-and-forget-it” simplicity.

✅ Action Item: Set up automatic, recurring contributions to each investment account (401(k), Roth IRA, etc.). The less friction in saving, the more likely you’ll stick to it.

3) Control Lifestyle Inflation

New attending salary? The temptation to spend is real.

You might fall into the “I deserve it” trap—buying a big house, luxury car, or start paying private school tuition for their kids before building a strong financial foundation.

You’ve likely delayed gratification for years, so you might feel you deserve these things. That’s totally normal to feel that way.

But if you let your spending scale up too quickly, you risk perpetually living paycheck to paycheck—despite a six-figure income.

Instead, consider the Attending Jump Rule:

Continue living like a resident for 2–5 years after becoming an attending. Funnel the extra cash flow into investments and debt reduction first, and only then layer in luxury or nonessential expenses.

Example: Dr. L’s First Year as an Attending:

  • Salary: $250K (~$20,800/month gross)

    • Federal & State Taxes: ~$80,000 (~32% effective tax rate)

    • Net Pay After Taxes: $170,000 ($14,200/month take-home pay)

  • Stuck to a $3,000 rent budget instead of upgrading to a $5,000 apartment.

    • ~$24,000 per year in savings from lower rent

  • Maxed out 401(k), Roth IRA, and HSA before buying any luxury purchases

    • ~$74,150 per year (44% of take home)

  • ~$5,000 monthly budget for other fixed/variable costs including student loan minimums, insurance, transportation, food, and discretionary spending

After three years (assuming a 7% annual return), Dr. L will build a ~$250K+ portfolio while maintaining a balanced lifestyle.

✅ Action Item: Set a spending plan and automate your financial goals first.

Putting It All Together

The goal? To practice medicine because you want to, not because you need to.

Step

Action

1. Pay Off Debt

Make a plan for student loans & high-interest debt.

2. Invest Early

Automate contributions to 401(k), Roth IRA, and brokerage.

3. Avoid Lifestyle Creep

Delay big purchases and prioritize saving early.

FI gives you freedom. Whether it’s spending more time with family, cutting back on shifts, or walking away from a bad job—financial independence creates options.

Action Items for This Week

✅ List your debts: Interest rates, balances, and paydown strategy.


✅ Check your retirement savings rate: Are you investing at least 10%?


✅ Automate your finances: Set up auto-investing before lifestyle creep happens.

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