Society typically associates wealth with large paychecks or high earnings. However, true wealth and secure financial standing are not generated by the amount of money you bring in, but by how you manage that money. Many high earners have a much lower net worth than you would suspect, largely because of a few common mistakes that we see people with large paychecks tend to make.

As you manage your finances, don't assume that your large income will be enough to save you in the long term. Creating and sticking to a financial plan is essential to building wealth and securing your financial future. As a physician, you face unique financial situations that affect your overall wealth management and financial planning. As you manage your finances, be sure you don't fall prey to the three most common financial mistakes made by physicians and other high earners.

Mistake #1: Delaying savings

You may have entered the workforce late because of the extra education and training programs required for a profession in medicine. That's not all. You may have hundreds of thousands of dollars in student loans. If you're like many physicians, by the time you entered the workforce you may have been behind on retirement savings and overwhelmed with debt.

Regardless of how much money you're making as a physician, this burden can be overwhelming. In fact, many physicians and other high earners fall even further behind on savings as they struggle to pay off debt, balance their new careers, and live the lifestyle they desire.

The most effective solution to this problem is to optimize proper saving habits as soon as possible. If you are a young medical professional still in school or training, meet with a financial expert to discuss how you can start saving for retirement now. If you are an experienced professional, an expert can help you allocate assets to make up for lost time, pay down debt, and catch up on your long-term savings.

Mistake #2: Overspending

Along with large paychecks comes the societal expectation to have the accompanying trappings of wealth. All too often, these expectations cause high earners overspend on the big things—such as a house, cars, and fancy toys—at the expense of building a secure nest egg.

However, remember that you can likely still live the lifestyle you desire while planning ahead. In your early career years, you might focus on living more modestly as you lay your foundation. As your career progresses, your lifestyle expenses can get larger. As they do, consult with a trusted advisor to ensure you stay on track so you can reach your long-term goals.

Mistake #3: The do-it-yourself mentality

Just about everyone is prone to making financial mistakes associated with investing. However, because high earners bring in more money, they have much more to lose when these mistakes happen.

When it comes to investing, high earners tend to assume that being successful in their career means that they will also be successful personal investors. The reality, however, is that do-it-yourself investors tend to put in a lot of time and typically see mediocre results. This isn't because of a lack of intelligence; it is largely due to the adverse effects of emotion and bias in investing.

Consider teaming up with a professional to create an investment plan that will save you valuable time and increase your overall returns. As an added advantage, you will benefit from having an unbiased, third-party voice to help you manage your investments and keep you on track during market swings.

At TrueNorth Wealth, one of Salt Lake City's wealth management firms, we specialize in working with physicians.

We are fee-only financial planners who are dedicated to creating and executing a financial plan catered to your individual circumstances. Consider a no-cost consultation today; visit us on the web at https://www.truenorthwealth.com/ or contact us at 801-316-8175.

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