[FPMD: Slight hiccup yesterday with the PMD publishing schedule, but hey - better late than never! Welcome to another installment of Future Proof posts on Physician's Money Digest (PMD). Today I want to tackle a quite difficult task - how to determine whether you are on track to your American Dream. As usual, read the full post at PMD. An excerpt is provided below.]
"Future Proofing" is the process of anticipating the future and developing products/services that will withstand the demands of that anticipated future. We all future proof on a daily basis - we eat in anticipation of being hungry, pay the electric bill in anticipation of darkness, bring an umbrella in anticipation of rain, etc. In fact, one of the biggest shifts in healthcare recently has been all about future proofing - "preventative care." Here are 5 steps to answer the difficult question - are you financially future proof?
STEP 1 - DEFINE YOUR FINANCIAL FUTURE
This is the first, most important and unfortunately the most difficult step. Defining a financial future is easy when you speak qualitatively. It’s the American Dream - house on a hill, good paying job, nice car, family vacations etc. However, it is very difficult, nay, impossible to determine exactly how much money one needs to achieve all those components. For one, your dream is likely going to change with your station in life. Single, married, kids, pets, chronic health conditions? Your goalpost is constantly moving. In addition, your dream is likely drastically different from mine. Are you a homebody, an adventurous outdoorsperson, an entrepreneur, a world traveler? Your needs are going to be very different from the person next to you. So how can you even start to figure out that magic number? Get comfortable talking about money. Find a person who you believe is living the lifestyle you want, get comfortable with that person and find out the total expense (not income) to live “your dream” in TODAY’S DOLLARS. See? I never said this was going to be easy.
STEP 2 - DEFINE TIME TO REACH THAT FUTURE
This step is easy. Most people want to work for a set period of time, then sit back and enjoy the fruits of their labor. Even those of us who love medicine are unlikely to want to work 60 hour/week indefinitely. What is a comfortable time frame for you? 10, 20, 30 years in practice? There is no wrong answer.
STEP 3 - ADD UP YOUR OFFENSE
Read the rest at PMD. Then come back and share your thoughts below.
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