Many doctors aren’t as financially secure as they’d like to be, despite making relatively high incomes. Having considerable student loan debt, a large mortgage in an expensive area, or multiple kids enrolled in private school or college are all potential factors weighing on the average physician’s finances.

Well, let me tell you—here are the four main ways the rich get richer.

 

They start their own business

 

Instead of having a typical job following rigid schedules with a capped salary, many rich people opt to start their own businesses instead. By owning a business, they are able to write off business expenses on their taxes, such as internet bills, travel costs, and fancy dinners with colleagues—expenses most people have to pay for out of pocket. The ceiling for how much money you can make is also much higher, and you won’t be limited to a certain salary, so you’ll have the potential to make exponential profits.

 

Some physician side gigs include completing surveys, starting blogs, hosting podcasts, giving consulting advice, investing in real estate, serving as nutritionists, tutoring kids, publishing books—the list is endless. Many of these things we may already be doing can be done under the umbrella of owning your own business, which brings significant advantages come tax time. 

Be sure to talk to your accountant or financial advisor to determine which business structure makes the most sense for you. 

 

They find ways to lower their taxes

 

While most people complain about paying taxes or merely hope for a refund in April, the wealthiest among us approach taxes in an entirely different way. They view the tax code as a list of incentives from the government, and they follow it accordingly. Their reward for this “obedience” is lower taxes. 

For example, the government wants us to create businesses (as I’ve outlined above) because entrepreneurs create jobs for other people and generate revenue that stimulates the economy. Thus, the government provides incentives for business owners by taxing them at lower rates and allowing them to write off many of the expenses the average person has to pay for out of pocket. 

 

The government also incentivizes citizens to invest in nonprofit organizations and charities, as doing so provides funding, education, housing, and other resources for the less-fortunate. It also reduces the amount of money the government has to use to subsidize relevant social programs. Thus, the government allows people who donate to charities, churches, and nonprofit organizations to have tax deductions of up to 50% of their entire income. 

Just think of all the rich people you know who have started foundations and scholarship funds. These people may not have started charities just to lower their taxes, but decreasing their taxes by hundreds of thousands of dollars each year is certainly a bonus. 

As a physician you can do the same thing. If you are already planning to give to organizations, churches, or nonprofits, why not do so in a way that helps you lower your taxes as well? This may include reconsidering the timing and frequency of your donations, giving appreciated shares of stocks instead of cash, utilizing a donor advised fund, or taking a qualified charitable distribution from your work retirement account. 

 

 

They invest in assets and save the maximum for retirement

 

First and foremost, the rich want to maintain their wealth. One way they do this is by investing and purchasing items that increase in value over time.

They put their money in stocks, purchase commodities like gold, invest in different forms of energy, and take advantage of real estate opportunities, such as buying land, homes, and apartment buildings. These assets increase in value from year to year and create additional cash flow on the side to supplement their income. These types of assets also come with substantial tax breaks and special rules that allow investors to write off their expenses and protect portions of their income during tax season. 

 

They change their pay structure

 

Instead of earning a salary like most people, the rich are paid in four main ways.

First, they no longer accept a set salary and instead negotiate various bonuses for added pay. This pay change not only allows them to make more money, but it also motivates them to be more effective in how they earn—and rewards them for doing so. When their company or organization makes profits, so do they. 

If that appeals to you as a doctor, then you may want to consider a job in private practice and negotiate a partnership stake after a few years, ensuring increasing equity and a share of the profits. 

 

Third, rather than getting paid based on the amount of hours or days they work, they instead get paid based on the value they bring. This is especially common among professional speakers who can charge thousands of dollars for giving a speech at a conference or hosting workshops at company retreats. If you are a physician who isn’t afraid of public speaking, you can do the same thing and start charging for your talks, or by requesting payment for giving Grand Rounds presentations at an institution.

 

Your fee will be based on the value and impact you bring to the audience.

Lastly, the rich up their pay by having multiple streams of income. Instead of being dependent on one job, they acquire multiple sources of revenue. Some of these opportunities are passive, such as investing, and others are active, such as taking on a side job, doing consulting work, or collaborating with businesses.