Best Gift Ideas for Doctors

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Have you been racking your brain, trying to find a gift for a doctor? Here is some guidance on buying gifts for doctors, and the very best gift ideas for doctors, with purchasing link. Get your gift chosen confidently and quickly.

Doctors can be difficult to buy for. They are known to earn a pretty good income, and most love to spend it too! What can you buy a doctor you know that won’t break the bank, but is bound to be a big hit?

I will outline gift ideas for doctors from patients, training doctors, family and friends. By the end of the article, you should know what you want to get as a gift, and know where to purchase it quickly and easily.

Best Gift Ideas for Doctors from Patients

If you have received treatment from a private physician, you will have paid the fee for this service. If receiving care from a public doctor, they will receive payment for this service from medicare and/or yourself. This seems obvious, but I feel the need to reinforce that you do not owe the doctor anything.

The most valued gift is one of appreciation. A handwritten note thanking them for their work (particularly if they have gone beyond what they are paid for) really is a wonderful gift to receive. I have still kept letters written by patients years ago. Having worked in both private (briefly) and public medicine, I was struck by the difference in perception and gratitude of patients between the two services! Public hospital and general practitioners are definitely underappreciated! Once patients pay hundreds of dollars for the same doctor and service, they seem to appreciate it far more. From my limited experiences, the rigorous quality control mechanisms public health services use can feel a lot like constant nitpicking! There is little positive feedback received by staff, and it is so appreciated when received.

If you send a letter of appreciation, or a small gift, remember to include the rest of the team. No doctor works alone, and their supporting team of nursing and other staff can get forgotten.

If you are determined to buy a gift, consumable gifts generally go down well so some extra special tea room treats* will never go to waste!

Best Gift Ideas for Doctors from Colleagues

Have you had a supervisor who has gone above and beyond the necessary to support you in what has been a very difficult year? Are you thinking about buying a gift to thank you and looking for the best gift ideas for doctors?

Again, a simple thank you, or card* with a personal note is the appropriate option in the vast majority of cases. Other options are tricky, and may even be uncomfortable or verge on professional boundaries if too generous. YOu may not know much about your supervisors likes or dislikes, and they may have expensive and specific tastes in wine!

If you want to give something, again consumables are probably the most guaranteed to be a success. Coffee is of course the international currency for doctors. If you’re a baker, a homemade cake or biscuits can be shared amongst staff to celebrate your colleague’s awesomeness.

Best Gift Ideas for Doctors from Family and Friends

Do you have a doctor amongst your family or friends that you are looking to buy a gift for Christmas, birthday or another special occasion?

Doctoring can be thirsty work, and I’m sure I’m not the only one who has lost their water bottle…again. Get your doctor friend a personalised water bottle so it’s easy to keep hydrated on a busy shift.

Washing your hands every 5 minutes with hospital soap and rubbing alcohol are so harsh on your hands. L’Occitane hand cream feels really luxurious and this set contains a perfect tube to carry in scrub pockets.

A little pricey, but sure to be appreciated. This gorgeous doctor’s bag could be a wonderful gift from the doctor’s spouse.

If your doctor friend is about to discover nights for the first time (or is struggling with sleep), I thoroughly recommend this super comfortable eye mask. It’s so important to get good rest between shifts, and blocking out the light helps a lot. I have discovered most eye masks are pretty annoying, this is the best I’ve found. It blocks the light really well, has great quality fabric and feels quite luxurious. It will also help the all-important ear plugs stay in!

 

Best Gift Ideas for Doctors who Are Graduating

Your newly graduated doctor is often thrilled with anything Doctor-y! They’ve been studying for 6+ years to finally call themselves a doctor. It’s not cool to show off, but after such an achievement, everyone likes to pat themselves on the back.

A special pen engraved with the doctors title, name and qualifications is a perfect gift for the home desk.

Anatomical jewellery such as this heart pendant are super cool for the budding cardiologist.
This novelty mug would make a perfect secret santa gift for the doctor with poor handwriting!

Best Gift Ideas for Doctors who Are Going on Parental Leave

The Little doctors series are an adorable collection of board books for babies. Here is the link for the Neurology for babies book, but there are plenty more adorable topics.

A book all about baby, and personalised with their own name will be enjoyed over and again.

A beautifully soft and fluffy towel to wrap the precious little one in is a safe present that is practical too.

Best Gift Ideas for Doctors who Are Retiring

Have you been tasked with buying the retiring doctor a fitting gift? If the good doctor is going traveling, a top notch first aid kit will provide all the equipment needed in an emergency.

A good quality pair of ear conduction ear phones are an ideal gift for the active doc who wants to listen to music or podcasts on the go.

Remember, if the doctor is not your friend or relative, a heart felt note will be the most appropriate gift in most situations. There are plenty of suggestions above of the best gift ideas for doctors to choose from.

Get your gift chosen and purchased and wrap it (can I suggest ). Before you go, check out this blog on how to actually stick to a Christmas budget.

Are you a doctor and have other gift suggestions? What is your favourite gift you have received from a patient or student?

 

What to Spend Your Money on: How to be Happy!

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what to spend your money on

Finally!  Less talking about saving and investing in this post.  More talking about what to spend your money on!  Life shouldn’t all be delayed gratification, there are, after all no guarantees. 

So how will you choose to spend your money?  We all have a limited amount, so you probably want to get the most bang for your buck! 

“Money doesn’t give you happiness” sure… but food, shelter and the ability to pay your bills give you a good night’s sleep.  That’s a pretty good start.  As you gain control over your finances, spending less than you need for all these basics, a world of opportunity opens up. 

Research has tried to find a mathematical answer to the question, how much money do you need to be “Happy”.

Around $159,000 is the optimal income for a single person for life satisfaction.  Interestingly, this is around double the Australian median income.  I suspect it’s highly variable, as we all have different aspirations.  To be happy, we probably need enough income to pay the bills, and fund most of our discretionary desires.      

A big secret to happiness is to desire less than you can afford. 

What to Spend your Money on When You’re Rich

You, presumably, don’t consider yourself “Rich” yet given that you’re reading this post.  That’s ok, this is an imaginary exercise.  Imagine you have endless financial resources.  You won the lottery jackpot, or you’re a Kardashian.   What would you change? 

My vision of this post-lotto win life involves a beautiful house, overlooking the beach, chilling in the pool with my family. 

I work a few shifts as a doctor (not enough to suffer burn out!) and still run the blog.  We would cook less and get a driver to take the kids to school most mornings (and avoid the traffic). 

Our family will take at least 6 weeks holiday every year, visiting far flung family and exploring new places. 

I exercise daily (and have a personal trainer to get the most out of my sessions).

House cleaning, blog editing and marketing are outsourced to someone excellent. 

We have friends and family to the house regularly for drinks and dinners.  I still read a lot, but now from my hammock overlooking the beach. 

The main differences from my current life are more of an abundance of time and freedom, as well as a beach view from my home! 

I have recently read an Australian finance book, “Money School*”, which talks about a “Shit to gold” ratio. 

The author Lacey has really put a name to what we all tend to do with these fantasies. 

If you had endless financial resources, are there “shit” times you would be able to outsource or avoid? 

Hopefully there is a bit of “Gold” in your life you would keep or increase. 

We can often improve our shit to gold ratio without a large financial windfall. 

But the lotto fantasy exercise is a great way to work out what your ideal life even looks like.  

What to Spend Your Money on: The Essentials

If you lost your job, what is the absolute bare minimum you would need to survive on?

A Home

What is the cheapest safe accommodation you could buy or rent? 

This will likely involve a change in suburb, and possibly a longer commute. 

My family could rent a 3-bedroom townhouse for under $18,000 per year, which is actually similar to our mortgage repayments (12 yrs after purchase). 

Food

What is your essential food spending?  Your grocery bills without convenience items, treats, soft drinks, cigarettes and alcohol.

I estimate ours to be around $9000 per year (family of four).

Insurance

What are your essential insurance costs? 

I consider home and car insurances, income protection and life insurance to be essential. Read more on which insurance policies you need, and when to cancel.  

I don’t get a lot of benefit from private health insurance, so this could be cancelled. 

Insurance costs as a sole (high) income earner with small children are pretty shocking. 

Our costs for these policies come to around $11,000 per year.

Transportation

At a push we could run on 1 car for the family and using public transport. 

Our cars are old, so no downgrading required. 

Estimated costs $2,000 per year

Utilities

If we strip our bills back to basics they include electricity, water, gas, landline and 2nd hand phones on pay as you go contracts. 

Estimated costs $3000 per year

Professional Expenses

Doctors have high professional expenses. 

In order to legally work as a doctor I pay around $4,000 in fees and legally required professional insurance per year.

Clothing

Basic, cheap clothing for the year?  Maybe $1000 per year for our family.

Interesting.  This brings our family of fours essential spending for a year at around $48,000.  We spend around $135-140K! 

Plenty of discretionary spending going on in the Aussie Doc Household – but aligned well with our priorities. 

It’s surprised me realising how low we could drop our spending in an emergency. 

Can I really call myself a financial blogger with all this spending?!

I guess this is how bloggers like Strong Money Australia live on under $50,000, by cutting out almost all the discretionary spend, who knew! 

What to Spend Your Money on: Discretionary

Higher income earners can enjoy plenty of discretionary spending. 

They can choose to upgrade to “luxury” in some, but importantly not all categories. 

Everyone makes a trade-off.  You (+/- partner) are 100% responsible for how you choose to allocate your finances if you earn more than the average income ($80,000). 

So, choose carefully and remember to be grateful for the opportunity. 

If your neighbour has made different choices, coveting their jet ski, or part time work schedule is a complete waste of energy!

Home

The difference between the absolute bare bones essential safe shelter for you and your family is discretionary. 

Even in expensive cities, there are relatively cheaper accommodation options.

Remember upgrading is a conscious choice. 

This category has such huge potential for swallowing up all your discretionary spending, you need to consider the sacrifices you will make as a result. 

Think through all the categories and make sure you have your spending priorities aligned with your values.

A home with ocean views is in my post lotto fantasy. 

I love the idea, and it’s not completely out of reach given that I do live and work in an inexpensive town. 

But the sacrifices required in the other categories (mostly time and holidays) make this a luxury I’m willing to do without. 

It’s probably better for me to get a bit more exercise and walk to the beach anyway!

Transport

Again, the difference between the bare bones basics of essential transportation cost and your vehicle of choice could be significant. 

This is another huge consumer of discretionary spending. 

Remember new cars are only new until they’re driven. 

Unlike housing, vehicles really can’t be considered an investment in 99% of cases. 

Vehicles burn cash like fuel.  Consider all the other categories you are sacrificing before making your final choice.

Private School Fees

These can be extremely expensive!  There are plenty of good public-school options.  If you choose private school for your kids (we did) make sure it is worth the sacrifices for you family.   

Holidays

Holidays, of course, are entirely discretionary.  In my opinion life wouldn’t be much fun without them though! 

They can certainly be done on a budget, as camping is a lot of fun with young kids (who tend to appreciate the simpler things).   

Australia is a big country, and much of it can only be seen using a sturdy vehicle and tent. 

Overseas travel may or may not be a priority for yourself.  Work out an average annual holidaying budget based on your priorities.

Eating Out

Are you a foodie?  Do you enjoy eating out regularly, or is it often done for convenience? 

If you have a habit of grabbing food when you’re out because you didn’t get round to organising your own food, I bet the take out is not too good?    

If eating out brings you joy, budget it, but try not to waste money or crap junk food you don’t even enjoy. 

Clothing

Are you a fashionista?  Do you like to buy the latest trends to dump them in landfill the next year? 

Spending less often neatly aligns with being more environmentally friendly. 

Consider better quality classic clothing that you won’t need to replace for many years. 

If you are into designer handbags, watches, shoes or other items, consider the value they bring to you and weigh up against the other categories.   If it’s a priority to you, enjoy.

Alcohol

Alcohol, we all know is a bit of a waste of money and health. 

Again, think about what you really value.  If you really enjoy a decent bottle of wine at the weekend, or drinks out with mates on a Friday, accommodate this by cutting your spending elsewhere. 

Of course, will power and self-control tend to disappear after a few drinks, so if you like to go into town for drinks with mates, you may need other strategies to ensure your not drinking all your discretionary income.

Subscriptions and Memberships

It’s worth reviewing these regularly and cancelling those that are not providing you sufficient value. 

Do you need multiple streaming services?

Do actually use the gym?

Time

Time, the most precious resource and we’re all running out!  Remember, when choosing to upgrade your discretionary spending you are sacrificing time.  Go back to your lotto fantasy, what is your work schedule like? 

I love to work part time, enjoying a reasonable balance between been challenged at work, with plenty of time to spend with our young children.  I value my time at this stage in my life very highly.  In my post lotto fantasy, I would work less hours than I do now, and have more choice over my schedule.  I am lucky enough to be able to take leave at half pay, and so save some discretionary income to fund extra weeks of holiday each year.  “Working” on this blog appeals to me because of the flexibility. And the fact I’m a massive money nerd of course! 

What would your ideal schedule look like?  Is it different to your current situation? 

Is it a high enough priority to direct some discretionary money to achieve something closer to your ideal situation?

Making the World a Better Place

All readers should try giving some of their discretionary budget away. 

Another secret of happiness is to focus on helping others. 

It feels good to donate to those so much less fortunate.  It gives me a buzz every time I see my donation to Give Direct, doubling another (extremely poor) family’s income for a year so they can get ahead. 

Retirement

Last, but probably the biggest goal to achieve: Eventually having enough investment income to support you when you want or need to finish work. 

It’s hard to imagine when you would want to retire when you are young, just setting out on your career. 

But neglecting this can result in financial stress and having to work when you no longer want to. 

Early starters need to sacrifice very little to achieve this goal. 

Late starters need to catch up, and without the benefit of decades of interest compounding, will have to make sacrifices to retire when they want or need to.

Deciding what you spend your money on is a series of important decisions, taking into account opportunity costs.  Start acting like your rich and spend on the categories you truly value, and cut the excess.

Aussie Doc Freedom is not a financial adviser and does need offer any advise.  Information on this website is purely a description of my experiences and learning.  Please check with your independent financial adviser or accountant before making any changes.

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This article may contain affiliate links. If there are any in this article they are marked *. An affiliate link means if you click on the link and purchase a product, at no extra cost to yourself, I will receive a small commission.

Ten Financial Mistakes to Avoid

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Who Makes Financial Mistakes?

I doubt anyone can honestly say they have not made financial mistakes. 

I made plenty of errors by the time I turned 40! come in all shapes and sizes, from petty to life changing. 

The outcome of some financial decisions is not known often for many years.  Without certainty, investing is a game of playing the odds and minimizing risk.  You cannot invest without taking some risk. 

No one is going to make it through life without making some errors of judgement.  The aim of the game is to reduce the risk of large or repeated financial mistakes. 

Financial Mistakes to Avoid in Your Twenties…

– Taking on Education Debt without Considering Expected Return of Investment

Debt can be good, bad or tolerable.  Education debt is generally considered “Good debt”. 

The government have recently introduced the “Job ready package,” which has adjusted subsidization of tuition fees, according to anticipated job availability. 

Universities are not happy, raising the ideal of education for education’s sake.  But few students can honestly afford to dig themselves into debt without the security of likely employment, and a salary that will eventually compensate their debts. 

I see the change in subsidization as a helpful hint for young school leavers to examine the reality of their intended studies. 

I can’t say I put a lot of financial analysis into my study choices, apart from that I could loans to cover my expenses! 

Many school friends were disappointed to need to work unrelated minimum wage jobs for a year or two after graduation. 

For those that go ahead and pay the extra to study their passion, there will at least be less competition.  Many others will find other ways to learn the skills they need.  No one buys a painting because their impressed by the artists professional qualifications!  

– Looking Rich

Your 20s’ are a vulnerable time.

Self esteem is often under developed.  There can be an urge to prove yourself, and appear successful to parents and peers. 

Spending more than you earn to have the clothes, electronic goods, car and home that projects an image of success is a common error. 

As you get older, people tend to be relieved to care less about what others think.  Humans are pretty self-absorbed, over time most realize nobody is looking anyway! 

Now I am financially successful, I feel absolutely no inclination to flaunt it, instead liking to blend in.  Trying to impress others is a complete waste of time, if you can accept this in your 20s you are well ahead of the pack.    

Not Saving for the Long term

It’s easy to have a short-term outlook.  The very few who think and invest for the long-term during their twenties reap massively out sized rewards. 

From age 25, just $255 extra per fortnight into your superannuation earning 7% will grow to $1million by the time you are 60. 

Financial Mistakes to Avoid in Your 30’s

Your 30’s are often full of huge financial moves, moving up the ranks of your career, perhaps having kids and buying a home. 

Money is often tight with so many competing priorities.  Financial progress may feel slow, just make sure you’re moving in the right direction

– Paying Interest on Depreciating Assets

To build wealth efficiently using leverage, you want to buy assets that appreciate more than interest paid.  The gradually widening gap between asset value and debt owed is where wealth is built. 

If money is borrowed for depreciating assets, such as vehicles, the gap is still widening – but this time to destroy your wealth.  And the gap gets much larger much faster. 

Even if you have no capacity to buy appreciating assets, avoiding depreciating assets like the plague will put you in a far better situation when your income does increase and give you breathing room. 

– Drift

Drift is unintentional spending.  You will be busy with work, exams, kids and life. 

It’s easy to ignore your finances and forget to set and work towards goals.  If you are lucky enough to be able to pay the bills and lifestyle expenses without worrying, it’s easy to feel you are doing pretty well. 

Remember to make a plan, put some savings aside for emergencies, investment, retirement and other goals.

– Buying the Wrong Home

Buying a home is a huge financial decision and your entire financial future can be heavily influenced by your choice.  No pressure! 

The median house price Australia wide is $550,000.  The capital city Australian median is over $800,000. 

Make no mistakes, this is a huge amount of money.  Lifestyle choices should influence, but not entirely drive the decision of what, where and when to buy. 

An example: Three Registrars

All three of our registrars are looking to buy their first home to live in.  They all have a good borrowing capacity and plan to spend $800,000. 

Assuming a long term 6% interest on 90% lending of $720,000, each registrar will pay a total of $834,000 in interest over 30 years on top of the principal amount. 

Each registrar has saved up and pays upfront for a 10% deposit ($80,000) and buying costs ($48,000). 

Alan buys a home on the outskirts of a regional town, capital growth only keeping pace with inflation (2%) so he doesn’t make any real growth, but at least he’s not paying rent.  

Jo buys a house near where she works, outside the big cities but with a busy local economy.  Her home grows in value at 4% (real growth therefore 2%, adjusted for inflation), compensating for the interest paid over the years. 

Laura lives and works in Sydney and has brought a scruffy unit in a desirable neighbourhood.  She is lucky enough to see 7% (5% real) growth over 30 years, which multiplies the value of her home.

Beyond just saving rent, or compensating for interest paid, this equity growth allows Laura to borrow to buy further income producing assets. 

Laura’s financial success is incomparable with Alan and Jo’s.

 

– Buying a House “Just to Get on the Ladder”

In medicine, postgraduate doctors move regularly to fulfill training requirements. 

Young professionals often feel the pressure to buy a home just to get “on the ladder”.  Those planning to keep moving often buy and then rent out when they move on. 

This can be great idea, but you want to buy a place like Laura’s if possible.  To buy for purely personal reasons, you need to be staying in one place for 10 years. 

If staying put for less than this, the decision is an investment. 

Investing for a better return elsewhere whilst renting may be a better financial decision.   Index funds/ETF or a carefully chosen investment property are both good options. 

– Neglecting Retirement Savings

It is easy, and very common, to neglect retirement savings due to all the competing financial demands during your 30s. 

But this is the decade you have most influence over your retirement age and lifestyle (assuming you weren’t too interested in your 20s!). 

Make sure you are taking advantages of all the tax savings associated with superannuation. 

Consider investing extra inside or outside superannuation.  At 30, an extra $375 per fortnight invested earning 7% will grow to an extra $1 million for retirement at 60 years old. 

It gets far more expensive as you get older due to the dwindling influence of compound interest

Financial Mistakes to Avoid in Your 40’s…

– Paying off Your Mortgage

Controversial I know! 

I know the thought of being mortgage free is a psychologically tempting prize. 

Inflation is what makes the price of goods, services and income increase every year.  The Reserve bank aim to keep inflation at 2-3 % long term. 

Due to inflation, your mortgage debt and repayments relative to income reduce over the years.   In thirty years time, your mortgage repayment will feel far less significant than it is today. 

At current record low interest rates, paying off your mortgage early is a huge opportunity cost. 

Consider investing savings sooner rather than later to maximize growth before paying off your mortgage.  Or split savings between the mortgage and investments. 

Just don’t leave thinking about investing until after you’re completely debt free – you will have missed out on most of the growth potential. 

Once you are on track to reach financial independence by your desired retirement age, paying off your mortgage may provide a nice lifestyle boost.

– Focusing on Income over offspring

These are peak earning years, but for many of us critical years to be present and growing strong relationships with growing children.  

The need to get ahead financially and be present for our kids can often conflict. 

Ideally you want to do the heavy financial lifting before kids, but that is often not possible. 

Try and balance the two priorities so you don’t suffer later regrets.    

– Divorce

Of course, this may relate to a mistake made a decade or two again – marrying the wrong person. 

Divorce is the commonest, most devastating financial event to occur. 

Chose your partner carefully, talk about your goals, finances, and core beliefs early and regularly. 

Financial mistakes to Avoid in your 50’s and Beyond

There are few working and compounding years left to recover from errors.  Risks taken should be reducing.  A big issue is suddenly realizing you are not on target for a reasonable age retirement, taking excessive risk to try and compensate. 

I met a lovely chap, who after achieving a reasonable retirement nest egg, withdrew the lot to buy a franchise in the local shopping centre. 

The business could not make a profit and eventually he lost all his retirement savings as a result. 

Passion projects and new careers at this age need to carefully minimize downside risk.

– Speculation

Also encouraged by a feeling of needing to catch up, those wanting returns above 7-8% can be tempted to speculate. 

Day trading, FOREX, investment property brought without research and independent advice and cryptocurrency are all areas that can look shiny and attractive but hold significant danger. 

Have someone you trust that you can run ideas past, and make sure you consider their opinion. 

How to Recover from a Financial Mistake

People don’t like to share their errors, so you rarely hear about them.  If you have made a large financial error, you may be in a dark place.  It can feel very lonely.  You are definitely not alone.

I have had the unfortunate experience of watching my own folks make a $400,000 error.

They were absolutely determined to invest in their builder’s commercial build, despite a complete lack of knowledge and experience.  The adult kids’ relationships with our parents was at times strained due to us repeatedly raising concerns that this was a terrible idea.  

It is still very difficult to talk to my parents about why they went through with this risky investment.  They were promised 15% returns, and I suspect just liked the idea.  

When it became obvious the money had gone, they went through denial, panic, anger, regret, sleepless nights and nausea. 

It felt like they were enacting their revenge on us for our teenage years, as we went through most of the same emotions along with them!  I was very concerned about their health as a result of this incredible stress.  I am very grateful they pulled through.   

Of course, it is best to avoid financial mistakes.  But if you have made a regrettable error, hopefully it’s not as severe as this example. 

You will eventually put the error in perspective and move on.

Learn what you can from your mistakes.  What factors contributed to the error that you can avoid in the future? 

Find a silver lining!  My parents kept their home, and their health.  They will have to live with a tighter budget as a result of their budget, but will be fine. 

It is important to stop these errors (or hatred for the person who ripped you off) turning you into a bitter person

How to Avoid Financial Mistakes

 

#1 Don’t rush into any large financial decisions.  Read as much as you can.  Gather information from multiple qualified sources. 

#2 Always look first at risk, identify all risks associated with a decision.  Can you minimize all risks?    

#3 Lose your ego (and build self-esteem instead).  Buying cars and homes to impress others will send you broke

#4 Avoid debt for depreciating assets like the plague

#5 Remember your 1st home purchase can impact your financial journey massively.  Consider renting, rent vesting and buying.  A home purchase is always an investment as well as a lifestyle asset.

#6 Avoid drift with a financial plan that you review yearly. 

#7 Embrace the super power of compound interest – put extra into superannuation early.  Invest rather than pay off your mortgage unless interest rates increase > 5%

#8 Look after your relationships

#9 If it looks too good to be true it probably is – Always check an exciting opportunity with someone you trust who may be able to talk you out of speculating or putting your money in a scam

#10 Spend less than you earn (even a little). Increase the gap gradually over the years until you are on target to your goals.

Aussie Doc Freedom is not a financial adviser and does need offer any advise.  Information on this website is purely a description of my experiences and learning.  Please check with your independent financial adviser or accountant before making any changes.

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This article may contain affiliate links. If there are any in this article they are marked *. An affiliate link means if you click on the link and purchase a product, at no extra cost to yourself, I will receive a small commission.

What is Your Money Mindset: Why Does it Matter?

Money Mindset

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What is Your Money Mindset?

Your money mindset is the beliefs and attitudes you have about money. 

It is likely your initial money mindset was heavily influenced by your parents’ attitudes.  Later on, friends, colleagues and social media influences tend to rub off too. 

It is important to examine your adopted money mindset to evaluate whether it is still serving you.

Two opposing mindsets are often described – the scarcity and abundance mindsets. Popular media states that a scarcity mindset is bad, and an abundance mindset good. 

The Scarcity Mindset

A scarcity mindset often develops in families with little financial resources, or those that overstretched themselves with huge mortgages or poorly managed cash flow.

Those with a scarcity mindset think “I can’t afford that” or “I’ll never be able to achieve my financial goal”. 

If you don’t think achieving financial freedom is possible, you will never make the changes needed. 

We have been fed unrealistic expectations for our incredible lifestyles, and as a result can feel like we have no room for saving.

I remember thinking about saving to invest as a new graduate doctor. When I looked at my budget, the amount I could save would make no meaningful difference!  I decided to wait until I was on a better wage. 

A decade later, on a generous salary, the amount I could save still looked pathetic in comparison with my goal.  Of course, my goal was now more ambitious given I had a decade less to achieve it. 

With any big hairy audacious goal, the end result always seems far-fetched.

The Scarcity Money Mindset in Above Average Earners

Common sense would suggest that households earning over the Australian median household income ($116K gross in 2017-18) have saving and investing capacity.  

But, if the extra is tied up in lifestyle commitments such as bigger mortgages, car payments the saving potential can be lost. 

The definition of “Rich” is not double your own income as most of us believe!  There will always be someone more wealthy. 

When your peers are high earning professionals, perspective can become grossly skewed. 

If you allow yourself to fall victim to the scarcity mindset, you will never have the right attitude to build financial freedom.

The Abundance Mindset

There is a lot of talk online about “Manifesting” your desires (and poof!  They will suddenly appear). 

If you are a minimum wage household with several kids, wishing for wealth is clearly not going to cut it.  Extremely dedicated and strategic hustling is going to be required. 

But a positive attitude is definitely required.  Without it, no hustling or planning will be done!  

Positive mental imagery, writing down your goals and believing in yourself are important tools are important in all achievements. 

What difficult goals have you achieved in the past?  I bet you used these tactics to get through.  Imaging my relaxed and happy life after passing postgraduate exams was probably the most powerful motivator.     

Your habits are the thing that will determine whether you achieve your goals or not.  You just need the right mindset to set goals, and stick with the steps required, especially when they take a long time. 

The idea of the abundance mindset is to believe you have more than enough money, and you just have to choose your priorities. 

The Abundance Money Mindset for Above Average Income Earners

For higher income earners, keeping your feet on the ground is essential.  Instead of comparing your income with your wealthy mate, remember to compare with the Australian median household income. 

When the Abundance Mindset Goes Wrong

“I can afford it”.  It’s not just doctors who get sucked into this mindset, but they may be the worst culprits. 

The average Australian could not imagine that a household earning over $200K could possibly not become rich. 

Financial planners tell us doctors, like many other Australians, fail to save for the future.

Superannuation is a great safety net of forced savings for most employees.  But self employed individuals are at risk of losing out on this safety net.  It is common to be cash poor setting up a business, and without the government mandating super contributions, they often don’t get made. 

Consistently contributing extra to superannuation from a young age is the easiest and cheapest way to achieve wealth over the long term.

The abundance mindset that comes with a decent salary can lead to a belief you can (and should) afford every luxury you can think of over the years.  It can lead to an assumption that you will be able to retire when you like, and will never be susceptible to financial shocks. 

By the time many realise this is not true, they are 50+ getting very interested in when they can retire… and with too little time to build substantial wealth.  

A financial plan is essential.  Although you can pay a financial advisor for a plan, you need to choose a trustworthy advisor, and be able to weigh up options and assess risk/benefit yourself.

Once you have your plan, and your investment money is put aside, you know how much you have to treat yourself with.  You only live once!  But the plan and saving should come first (your future self will thank you for it!)

Marketing Placebo effect

Even though placebos are inactive, they have a positive effect. 

If a new pain killer for back pain was being tested, half the study participants would take the new medication, half would take a placebo. 

Neither patient or doctor would know which the patient was taking, as both can be susceptible to the “Placebo effect”. 

When taking (or prescribing) medication, we expect it to improve the medical condition. 

This positive attitude towards the medication can lead to improvement even if the pill is completely ineffective. 

Bizarrely, treatments that are more expensive, and those that hurt (i.e. an inject-able medication) tend to have a more powerful placebo effect.

There is a marketing placebo effect also.  “Luxury” products are more attractive because of their high cost.  We expect to “Get what we pay for”, but this is not necessarily true. 

Chanel presumably have sold at least one of these bags, an extreme example of the ludicrous susceptibility we have to marketing. 

What could possibly be so incredible about this bag that its is worth 20 times the cost of a similar good quality bag? 

It is not possible that the quality, durability or aesthetic appeal makes up for the price gap.  The prestigious brand appeals to our desperation to fit in, be accepted and admired. 

Companies spend big money working out how to manipulate our minds to pay them more money for less. 

Negative Attitudes Towards Money Itself

“Money is the Route of all Evil”

This common phrase that may have seeped into our subconscious. 

Money, of course is neither good or evil.  It is just a bartering currency.  Money can be used to support your family, donate to effective charities and build businesses that help others.

You could use it to fund evil purposes.  It’s clearly the human controlling the money that is making moral choices. 

The quest to amass money can encourage some to abandon morals to increase profits. 

Trafficking children or selling drugs is presumably motivated by money, and are the extreme examples. 

Assuming I have no super villain readers, you are unlikely to start committing crimes to increase your wealth! 

There are more nuanced decisions which can help keep your investing in line with your principles.  Choosing an appropriate ethical investment is complex, but there is a good introduction at Frugality and Freedom.  

Guilt

Guilt about your own financial success is an issue for some.  I am not financially independent and don’t have an unusual amount of wealth in comparison with my peers. 

But I am sharply aware, and sometimes feel ashamed, of my level of wealth in comparison with the rest of the world. 

I am often conflicted between wanting to have my comfortable life, and being appalled at the excess.  There are many in the world without even the basic living necessities of food, water, shelter and safety.  It’s hard to work out where the line is, when it’s reasonable to look after yourself, before giving more to others. 

But then, in contrast, I want to have plenty of time with my kids, a flexible schedule and long holidays to create lifelong family memories. 

Paying it forward with effective charity donations, avoiding too much lifestyle inflation and focusing on creating inter-generation financial security for my children have been effective strategies in managing this guilt. 

How to Change Your Money Mindset

“No point Crying over Spilled Milk”

Whatever mistakes you have made in the past (we’ve all got some), let it go and move on. 

Focus on factors you can actually change.  Anything else is wasted time and energy. 

Start now.  NOW.  No excuses.

No matter whether you want to retire early, adopting an “FI mindset” will provide you flexibility and options.   

Work out how much you can afford and set a direct debit up to force a savings habit.  It doesn’t matter if it’s a ridiculously tiny amount.  It doesn’t matter if it seems ridiculous. 

As savings grow, confidence compounds. 

Practice Gratitude

I know this is a bit trendy.  But so many people have lost perspective, and as a result desperately unhappy. 

Forcing yourself to think of things to be grateful for seems a bit silly at the time, but really does have a powerfully positive effect on your mindset over time. 

We all need to be reminded sometimes how lucky we are to be born into circumstances that allowed us to use electricity, the internet and drink clean water.  It’s just too easy to take for granted. 

Set Huge Goals

Set huge goals.  Dreaming is fun.  Turning those dreams into goals is powerful.  Set some big hairy audacious goals. 

Question Your Parents Money Mindset

Learn to (perhaps without telling them) challenge the money mantra your parents passed down. 

Mine, like many of their generation and social status, were focused on buying the most house they could afford (on the best street), then working 6 days a week for decades to pay it off.  It worked out well for them, but is not a strategy that suited my family. 

Congratulations on spending a little time thinking about your money mindset.  Thoughts often control actions, so adopting a healthier money mindset can provide an outsized return on investment.

Aussie Doc Freedom is not a financial adviser and does need offer any advise.  Information on this website is purely a description of my experiences and learning.  Please check with your independent financial adviser or accountant before making any changes.

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