1 million dollars

Lifestyle creep

It’s easy to get carried away when you first start working. Your paychecks are 4- 5x more than your residency paychecks. You’re making more money than you’ve ever made in your life, and you feel there is an unlimited amount. Here is the reality check. It’s easy to get stuck in a consumeristic cycle when you have consistent cash coming in. Upgrading your lifestyle from a resident is not wrong. Certain things can improve your life by spending money on them. Avoid the million-dollar home, avoid the 100k car, as those will be recurring expenses that you will be stuck with for some time. Instead, get a modest home, continue driving your residency car, and start aggressively knocking down your loans if you have them. A more meaningful way to spend your money may be to go explore the world. It’s a one-time expense that often will leave you with better memories than a car.

Avoid Risky Investments

Choosing high-risk risk high-reward investments is an easy way to lose a lot of money. Avoid the friend who tells you about this awesome new company that’s going to 100x in the next few months. When you’re younger, you can have a high risk tolerance for your investments, but do not go chasing things you do not understand. You might be making a decent amount every month, but do not be careless with how you handle your hard-earned dollars. It’s reasonable to have a very small allocation of your portfolio into high-risk risk high-reward assets like niche cryptocurrency or alternative investments. I would say less than 5% can be allocated to highly volatile asset classes. In a similar precautionary tone avoid speculative investing. You don’t need to hit it big and win the jackpot. Your higher-than-normal income is a strong leverage tool to steadily and progressively build your wealth.

Absentee owners

Don’t take a back seat to your finances. Don’t think your financial advisor can make decisions on your behalf unsupervised. Don’t just hope you’ll eventually get wealthy just because you make 20k/month. Without a plan and without direction, you won’t be going anywhere. At the bare minimum, you need to know where your money is going every month. You don’t necessarily need to budget every dollar, but knowing your fixed expenses on a monthly basis can help you keep a general idea of your wealth. What I recommend is taking 5 minutes at the end of the month and just looking at how much came in, what left, and what remains in the account. Don’t be an absentee owner of your money. This leaves gaps and rooms for squatters and hidden expenses you’re not realizing are leaking out of your accounts every month.

In Summary

Be smart with what you’ve accumulated. Preserve and grow your wealth.

A.K, MD