Whenever I am introducing a new idea to my physician group or the hospital. The first question in everyone’s mind is how this translates into dollars. I need to convince them why they need to implement a certain process or system and what the Return On Invest (ROI) would be. So, what is your ROI by implementing a productivity system? Check out below!
Here are 5 ways implementing a productivity system can help you achieve financial independence:
- What is Financial Independence and What Does it Mean?
- 1. Clear Insight into All Your Projects and Commitments
- 2. Prioritize your Financial Learning and Knowledge Bank
- 3. Implement a Financial Plan Through Next Actions
- 4. Paying Yourself First and Scheduling Regular Financial Checkups
- 5. Help Create your Side Hustle for Passive Income
- What’s stopping you from achieving financial independence?
What is Financial Independence and What Does it Mean?
To me, Financial Independence is defined as the ability to not have to work and still be able to live the current lifestyle I am living.
There are many ways to calculate the amount needed to reach your financial independence goal and the most common calculation is to take your total annual expenses and multiply it by 25 to get your retirement amount goal for financial independence. I created a calculator so you can calculate your retirement goal for financial independence: HERE. So for example, if your annual expenses are $100,000. You will need about $2,000,000
Now what
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1. Clear Insight into All Your Projects and Commitments
I first realized I had no clue what was going on with my finances during my medical school, residency or fellowship training, this is despite having a financial advisor during my fellowship years. I tried to start learning more but felt I never had time to do so given so many other projects and commitments I had during that time. But after realizing how important taking control of my finances was, I knew I had to set it as a priority somehow.
One of the greatest benefits of implementing a productivity system is that it allows you to have a clear view of what is going on in your life. All projects in your mind are listed with next actions for each project. You will be astonished how many projects are active in your life once you list them out. When I give a productivity lecture and ask physicians to start writing down all projects that require more than two steps in their life, the typical list will average 40-50 active projects.
Most people do not have a clear understanding of all of the active projects and commitments they have signed up for. They keep saying “yes” to new opportunities without taking into consideration what is on their current plate. A productivity system will give you a global view of all your projects and allows you to triage new incoming projects to see if you are actually able to handle them. Also, when you have a global view of your projects, you start to think about only accepting projects that will serve to benefit your long-term mission and goals. Any projects that do not contribute significantly to your life should be cut out and what remains are projects that truly improve your life.
After seeing the importance of finances during fellowship, I added financial independence to my active projects list and had to shift my long-term goals. I still kept all of my other long-term goals however I knew I needed to cut back a little on each goal in order to accommodate this new addition. I then had to relook at all of my projects at that time with a different view-point with respect to the new long-terms goals. I had a goal publication rate of 4-6 articles per year and cut it down to 2-3 per year. I also cancelled some lectures for the year that were not directly contributing significantly to my career. This negotiation of time must occur prior to accepting a new project in your life.
The point is that if you truly want to be financially independent, you need to make it a priority, not just a thought. You will be surprised when you make your project list how many things you are committed that do not actively make your life more meaningful, maybe cut these out or decrease the amount you do them. My rule of thumb is if an incoming project has substantial benefit to your life and the things you are cutting out will have little effect on your life then you should take the incoming project. Financial independence definitely met those criteria for me and hopefully for you too!
2. Prioritize your Financial Learning and Knowledge Bank
Once you have added financial independence as an active project in your life, now you can start setting next actions to work towards your financial independence goal. You will not feel guilty spending time on the subject because you have carved out a specific place for this project in your life. You are not forcing it into a small space that doesn’t fit. You actively created a space for it in your life and now are just cultivating it.
The first step to learning something is you need to understand the basics. The first book I read that really helped me understand the basics of physician finances was by the White Coat Investor (I also recommend the recent book from The Physician Philosopher’s Book as a great starting point). I set a weekend and read the book from cover to cover and my life has not been the same since then. It affected me as much as reading my first productivity book Getting Things Done by David Allen. I doubt I could have done anything else that weekend that could have changed my life to that extent. Working on another lecture on ultrasound would unlikely have given me similar life benefits.
If I didn’t make finances an active project in my life using my productivity system, maybe the White Coat Investor book would have just sat on the shelf for a few weeks, months, years? (How many of you buy a book but never find the time to go about reading them?) I ended up scheduling time in my life to become financially literate through online reading and books to increase my knowledge bank. This was while still maintaining a very healthy career and personal life, thanks to a solid productivity system.
3. Implement a Financial Plan Through Next Actions
After spending about a few weeks learning as much as I could I then felt the need to implement the things that I had learned. Using my productivity system, I created project folders for my finances including paying off student loans, inputting net worth, contributing to a back-door Roth IRA, calculating FIRE amount, calculating my savings rate, opening a solo 401k, determining my asset portfolio, etc.
I listed each of these sub-projects and created next actions and specific dates and time in my schedule that I could perform them. Instead of just hoping that I will have time at some point to do these tasks I actively created time for them (remember financial independence is now an active project!).
It was intimidating because my financial advisor at that time was recommending against doing my own finances. So, I just started with the easiest tasks first like calculating my net worth and then calculating my FIRE amount. I started to build more confidence because each small step I took I felt like I can do this! I was able to do my own back-door Roth IRA, solo 401k, plan my savings rate, etc. I ended up not using my financial advisor anymore by the end of fellowship.
Many people can get stuck at this stage because of “analysis paralysis.” This is when someone analyzes a situation so much, they feel so overwhelmed that they end up do nothing (paralysis). I have found this is a common situation in my own colleagues who have financial advisors and say, “finances are too complicated” or “I don’t have time to do all of those things.” Learning your own finances can allow you to retire 5 or even 10 years earlier so please just make it a priority and create the time to learn some of the basics. Even if you have a financial advisor it is crucial to know the basics to make sure they are leading you in the right direction.
Having a productivity system breaks down all of your projects into bite-sized actions that are doable and usually only take 10-20 minutes to perform. When you look at a lofty goal such as financial independence or a research project, it can seem daunting and maybe you never even start. However, if you don’t think about the end result but ONLY think about what the next action or step is in order to achieve your goal, you are much more likely to act.
4. Paying Yourself First and Scheduling Regular Financial Checkups
It was such a relief not having a financial advisor anymore and feeling I have complete control over my finances. Before I discontinued his service, he reminded me the benefit of a financial advisor is that they will automatically contribute to my retirement (Roth IRA, solo 401k, etc) as well “keep track of things” for me. I thought to myself as long as I can do those things by myself I should be fine.
Paying yourself first involves prioritizing your savings, paying down debt, and contributing to retirement accounts before spending money on other things (vacations, expensive homes, cars, etc). You are basically paying your “future you” instead of splurging on the “current you.” This is not to say that we didn’t go on vacations, but we made sure to “pay ourselves” first and then use the remaining money to enjoy other luxuries. My wife and I lived like residents after training and paid off all of our student loans within 1 year after fellowship. In addition, with a reliable productivity system, you can set up recurring reminders to contribute to your Roth IRA, HSA, solo 401k, etc. Your future self will thank you.
I perform regular financial checkups on all of my accounts and my net worth about once every month or two using: Personal Capital. I also use Quicken to look at my daily transactions on my credit cards and bank accounts to make sure there is no fraudulent activity. I also attach receipts for any deductions using Quicken and keep track of bookkeeping for our rental properties. Once again, I use my productivity system to remind me to perform these and it takes less than 10 minutes a day to maintain this.
5. Help Create your Side Hustle for Passive Income
By making financial independence an active project in your life you are well on your way to being on FIRE with just understanding the basics of personal finances and maximizing retirement accounts. However, many people would like to have a means of having passive income with the hopes of reaching financial independence earlier and on their own terms. Passive Income, MD has a great list of potential passive income side hustles.
I started a real estate side gig in 2016, buying multiple rental properties and investing in real estate crowdfunding deals which has been providing significant side income.
I decided I would start a blog on one of my biggest passions, productivity. The Physician Zen website is the result of this decision and is my own side hustle. I knew it would be a huge project so I had to look at other parts of my life and reorganize/cut out other projects that did not mean as much to me as they used to.
I needed to carve out time each day in order to try to produce a quality blog for readers. Most successful bloggers from my reading do something similar. Passive Income MD recommends setting
What’s stopping you from achieving financial independence?
With a productivity system, you can overcome almost any obstacles, including learning about finances and creating a financial independence plan. With just some simple steps my wife and I were able to implement plans to destroy all of our student loan debt and obtain a net worth of over 1 million in our mid-thirties. The Return on Investment by implementing a personal productivity system has been substantial. We didn’t do anything special, just took small steps there using our personal productivity system. Learn how to create your own system and be on your way to financial independence by subscribing below!