If you’ve been in practice for any length of time as an associate or business owner, you’ve probably had this thought at some point as you’ve made more money: I’m doing pretty well ... so why am I not getting ahead? You may look good on paper – yet you don’t have as much saved as you think you should.
I’ve been there myself. Early on in practice, I remember hitting two big collection months right in a row: around $95,000 and $97,000. At the time, those numbers felt huge; and they still are. The long hours, the stress, the risk – it was starting to pay off.
So, I did what a lot of people do at that moment. I rewarded myself. I went out and bought two expensive watches. At the time, it felt justified. The business was growing. I could afford it.
However, that first month when the dust settled, overhead came in around $93,000 – rent, payroll, marketing, equipment loans, down payment on new equipment, and everything else I had to pay for. I had roughly $2,000 left. In hindsight, it may have been a bit premature to buy expensive watches.
Around that same timeframe, I made another decision – one that had a much bigger impact. I bought a very expensive house. On paper, I qualified. The bank was eager to approve it. But looking back, it was a classic case of putting the cart before the horse.
A bigger house doesn’t just mean a bigger mortgage. It means bigger property taxes, higher maintenance, more upkeep, and more brain space being taken up.
So, while I technically could afford it, I hadn’t built the margin or safety net to support me in case of low collection months. I bought the house before I’d earned or deserved it. The watches were the same story, just on a smaller scale.
I wasn’t making bad decisions because I lacked intelligence. I was making them because I was reacting emotionally to short-term success.
For me (and other small business owners), this isn’t a knowledge problem. Most doctors already know what they should be doing: save more, invest consistently, be tax-efficient, plan ahead.
When income starts to increase, lifestyle tends to follow. It can happen subtly. A few upgrades here, a few decisions there. A nicer home. A newer car. More reinvestment into the practice. It all feels reasonable. But over time, it adds up and before long, you may have solid income and cash flow ... without the balance sheet to match.
Another potential issue is overconfidence in the business value itself. I’ve seen plenty of doctors who’ve convinced themselves their practice is their retirement plan. It’s not; or at least, it probably isn’t.
Let me explain. Most practices depend heavily (or even completely) on the owner. They require your presence, time – and even cash infusions during low collection months. When it comes time to transition or sell, the practice most often does not command the high appraisal people expect – unless the practice has been built to run without you. In this instance, you potentially could expect a decent multiple of annual free cash flow, but in my experience, this is rare.
I’ve had conversations with doctors who assumed their practice sale would entirely fund their retirement, only to realize it wasn’t as simple or as profitable as they thought. Your practice or associateship can be an incredible income engine, but it’s meant to fund your wealth, not be your wealth.
The other issue I see is avoidance or procrastination. Thinking about the future forces you to slow down and ask questions most people would rather not ask. Am I actually saving enough? If nothing changes, where does this lead? What happens if I can’t or don’t want to work at this pace forever?
Those questions get pushed off because they create discomfort. It’s easy to tell yourself: After this year; after the next phase of growth; or after things settle down. But things don’t really settle down, they just change.
And without a clear plan, money comes in and gets spent based on what feels right or most pressing in the short term.
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A Few Practical Takeaways
Decide on a savings rate (after giving). If it’s not intentional (and ideally automated), the money will disappear. Our most successful clients across any age category consistently save 18%-22% of their take-home pay.
Build assets outside of your practice early. Time and consistency do more than most people realize. Don’t believe me? Read my last article [April issue]. Time and consistency have the potential to provide millions of dollars in retirement.
Just because you qualify for something doesn’t mean you can afford it. Just ask yourself if this major purchase will lead you closer to or further from financial independence.
Get a real plan in place. Forecast where you want to be 20-30 years from now and work backward, ultimately getting to the question, What do I need to start doing next month to accomplish my long-term financial goals?
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Most chiropractors will make plenty of money over the course of their careers – that’s not the concern. The concern is whether they’ll convert that income into something that provides long-term financial freedom, or whether they’ll look up 20 years from now with not much to show for their efforts.
I’ve made those mistakes myself. The watches. The house. The decisions that felt right in the moment but weren’t aligned with the bigger picture of working toward financial independence.
And that’s really the point. This isn’t about being perfect. It’s about being aware and having a plan. The mantra at our wealth management practice is simple and grounded in Biblical truth: give first, save and invest second, then spend. Saving and investing is simply paying your future self a paycheck for the day when you’re no longer working.
The difference between building a good (or even great) income and having actual financial independence usually comes down to a handful of decisions, made consistently, over time, with intention and discipline.
Disclaimer: The Wealth Group is a Securities and Exchange Registered Investment Advisor. No content contained herein should be construed as an offer for investment advice or an offer for the purchase or sale of any security, insurance or other investment product. Investments involve the risk of loss, including loss of principal. Please consult with a qualified financial, tax or legal professional before implementing any strategy presented here. Data presented in this column is obtained from believed reliable sources, but cannot be guaranteed as to completeness or accuracy.
