Students from the university class I teach and readers of my books and previous posts know the story of the Bookkeeper and the Surgeon. The thrifty Bookkeeper accumulates a significant sum and lives a comfortable life, while the highly paid Surgeon is short financially at retirement.
The Surgeon is a really terrific professional. He’s high-earning, charitable, and an overall great person who just spent too much money. Unfortunately, money habits sometimes transfer from generation to generation.
Happily, the children of people like the Bookkeeper are armed with a sense of value and a thriftiness that allows them to continue the tradition of wealth building while enjoying a comfortable and stress-reduced lifestyle.
After I had assisted the Surgeon in rightsizing his financial life, making sure he and his wife would have income for retirement through some very difficult “Plan B” recommendations, his son came to him for a loan. When “The Doc” asked me what he should do, I arranged to meet with the son.
On the day of the appointment, the Surgeon’s son and wife came to my office. We made a list of all of their assets and liabilities and created a simple net worth statement. We discovered his net worth was a negative $200,000! In other words, he had $200,000 more in debts and liabilities than he had in assets. And a number of pressing bills due. We discussed bankruptcy.
This was an educated man, with graduate degrees and high earnings, but who had lived the lifestyle that he had learned growing up with the Surgeon. To their credit, the couple decided they had the ability to pay off their debts and not file for bankruptcy relief.
My recommendation was much the same as the one I recommended for his parents, but this time it was earlier in life by 25 years. The choices were difficult and involved a drastic reduction of expenses, trading out expensive luxury cars, slashing entertainment and dining expenses, and eliminating club memberships. Their children were moved from private prep schools to public education so that they would be able to afford to attend college in the future. Eventually, they had to rightsize their home as well.
Additionally, the wife, trained in a professional career but not working, returned to the workforce even though she really did not want to be employed.
This was a drastic change in lifestyle and social standing, but necessary to “turn it around,” which they were able to do over time.
There are a number of lessons here: (1) money management habits can be transferred from generation to generation, (2) getting started on a savings program early in life (before age 30, if possible) combined with an appropriate lifestyle is recommended, (3) delaying financially responsible life decisions can be really painful for you and the people you love, and (4) it is sometimes possible to correct your financial situation even at mid-career or at retirement, but there are consequences.
I wrote the book The Five Financial Foundations for people everywhere who need help getting started financially. The book was never intended to be a detailed, deep dive into the financial world. It’s all about just getting a start, building a “foundation” for future financial wellness. The book is about 50 pages in length and, thanks to my great editor, it’s an easy read. If you or someone you know needs a financial jump-start, order a copy on this website or from Amazon.
The Surgeon in my story would have benefited from a copy of my book The Five Financial Foundations for Physicians because the rules are different for the newly graduated medical doctor who doesn’t have the opportunity to save and invest before age 30. Give the recent med school grad you know a copy to get her started down the path the Surgeon in my story found almost too late.