Over the last 30-plus years working with hundreds, probably thousands, of clients, I’ve observed the traits common to how the financially wise handle their money. I also have learned what some otherwise successful people do to fail financially. The true story of the Bookkeeper and the Surgeon illustrates what I discovered through real-life lessons. (Although the characters in this story are fictitious and not based on any one person, the character profiles are based on a number of actual people I have known.)
I met the Bookkeeper more than 30 years ago when, as a young stockbroker-investment representative, I made a sales call to him. After a few conversations, he cautiously invested with my firm and over the years added to his holdings.
While raising a growing family with a full-time homemaker wife, he continued to add money to his “permanent” investment portfolio and held cash in reserve for large purchases, limiting the amount of money he needed to borrow and minimizing the interest paid. Within a few years, he had the family home paid off and was on his way to a debt-free life. He drove nice, late-model used cars, always paying cash. He helped his children as they made their way through college and into adult life.
Now retired, with his family educated and raising children of their own, he lives a comfortable lifestyle in the same longtime home and has zero financial concerns with a net worth of more than $5 million.
Through my early years in the financial world, I learned about common traits of investors like the Bookkeeper. I eventually put them on paper in the form of my book, The Five Financial Foundations, available on this website for $11.95 (or on Amazon).
The Surgeon was a high-profile member of the community, and shortly before his retirement, he asked me to help him review and organize his sources of income.
The Surgeon lived in a custom-designed home, had sent his children to the best private universities, drove luxury cars, and had a high social image and an impeccable professional reputation. But when it came time to discuss his life-income projections after a full working career, I discovered a problem.
After working for years, earning more than $1 million in salary for a number of them, he had accumulated only enough to provide income for five, maybe six years into retirement. Not a great situation if you have a life expectancy of more than 30 years.
As you can imagine, I was dismayed to deliver the news that the Surgeon would not be able to ever have the retirement he had imagined. My recommendation involved extreme measures in reducing spending and selling the custom home, right-sizing to a smaller home or apartment. Also necessary was the reduction or elimination of some expensive pastimes (i.e., country club memberships), social involvements, and travel. I suggested trading in the expensive luxury cars for less expensive, but reliable, transportation. Needless to say, these changes made a drastic impact on the family situation.
This story is a contrast in lifestyles that led to very different results for the families involved.
To help young physicians on their way financially, I recently published a new book, The Five Financial Foundations for Physicians (available on this website for $11.95, or on Amazon), based on the wise wealth management practices of a number of medical professionals that I have been honored to serve.
The message in the two short books mentioned here is simple but not always easy to implement. If you or someone you know needs direction in getting started saving money and building wealth, one of these books might be extremely valuable.