Growing up in the nineties, a million dollars sounded like a lot of money and becoming a millionaire seemed an unattainable possibility. In 2018, the reality is that there are more millionaires than ever before: 16.5 million millionaires in the US, 357000 millionaires in Canada in 2017 as defined by individuals with a net worth of greater than 1 million excluding their primary home. If we include principal residence value, the number of millionaires would multiply manifold — especially in hot housing markets like San Francisco, New York, Vancouver, and Toronto.
That said, a million dollar net worth remains an important target to shoot for in the path to financial independence. On first glance, it may seem counterintuitive to discuss wealth building strategies on a blog called The Buddha Online as one of the core tenets of Buddhist philosophy is that suffering comes from wanting (material wants and others). While I highly doubt that Buddha ever extolled the virtues of amassing a high net worth, I firmly believe that financial independence is an important part of happiness strategy and must be discussed.
While it’s true that money doesn’t buy happiness (health and youth are finite, wealth isn’t), I think that freedom to work when you want at what you want goes a long way towards making us happier individuals. Simply put, the sooner we become financially independent and stop being wage slaves, the sooner we have control of how we spend our finite amount of time on earth. After all, we only get so many spins around the sun — what species would voluntarily choose to spend their youth chained to a desk in school and their prime years of adulthood chained to an employer only to finally retire at age 70 (or later by the time my generation retires) when they are too ill and infirm to enjoy life? I’ve worked in healthcare long enough to have many patients assure me that the ‘golden years’ aren’t necessarily all that golden. Moreover, if you’re like me and have a health issue that may render you unable to work prematurely, achieving financial independence as early as possible becomes critically important.
All of this to say that I believe achieving a net worth of 1 million dollars as soon as possible is a good starting point on the path to long term financial security. I’ve arbitrarily chosen 30 for the purposes of this article because 30 is the 1/3 point in life and — as much as I hate to admit this — is the point where youth and fun are pretty much over.
Achieving a net worth of 1 million dollars by age 30 is not a simple equation. There are several factors which will impact how quickly you can build wealth:
- Education: Don’t spend too many years in school and don’t think that you must pursue post secondary education (more on this later). If you decide to go the conventional route, acquire as many skills as you can, take accelerated programs and don’t waste time. Go to a feeder high school, Ivy undergraduate, and Ivy postgraduate if you can — it will pay off later. Ivy league schools are not a meritocracy, they’re a pyramid scheme and choosing the right feeder high school dramatically increases your chances of going to Harvard, Yale, or Princeton for undergrad. Likewise, the ‘right’ undergrad program dramatically increases your chance of getting accepted to prestigious post graduate programs such as Harvard Med, Columbia Law, Wharton Business School and so on. Without the right pedigree of schools, you’ll be hard pressed to get admission into the top Ivies even with a 4.0 GPA, 99th percentile MCAT/LSAT/GMAT, and a summer spent deworming orphans in Africa. In turn, once you graduate from an Ivy and attain coveted ‘alumnus’ status, your future progeny will benefit as they will then be preferred for Ivy admissions. It sucks but it’s reality; if you can’t change the game, master it and use it to your advantage.
- Play to your strengths: Choose a career that builds on and highlights your strengths rather than exposes your weaknesses. Moreover, choose a field that suits both your aptitude and your temperament. We can classify IQ into verbal IQ and quantitative IQ (more on this later). Most of us are stronger in one category than another. For instance, I have stronger verbal than quantitative skills. I would probably do okay in tech, finance, or engineering but would be unlikely to thrive. High verbal IQ is a useful asset in a career like Medicine which requires the ability to rapidly assess and synthesize large amounts of complex information and then translate it to a vulnerable population through dozens of difficult conversations each day. That said, medical education tends to reward ‘black and white’ thinkers more so than ‘abstract’ thinkers and emphasizes memorization or lists over critical thinking. Are my verbal skills used in my career as an MD? Sure — I’m a pretty decent doctor, but I’m not exceptional. Could I have been exceptional by utilizing my verbal skills in another field? Perhaps, who knows? To put it more generally, Mark Zuckerberg’s quantitative IQ is off the charts — perfect for a tech CEO who launched Facebook by writing thousands of lines of code. Oprah is an inordinately successful talk show host because of her exceptional verbal IQ. I would argue that both are successful because each chose the field most appropriate for their unique skill set. Imagine if Oprah had to write code for Facebook all day while Mark Zuckerberg hosted talk shows featuring emotional interviews with celebrities?
- Temperament matters: Temperament matters — maybe more than aptitude. Simply put, you have to fit in with the people around you and work the way they work. I once had a dream where my program director and department chief were sharpening a pencil (I was the pencil in this dream) but the pencil wouldn’t fit in the round hole — they kept saying ‘I’m sorry, I can’t fit a square peg in a round hole.’ I have a flexible mind and work best in flexible circumstances. Rigid structures such as set working times, geographical limitation, and rote curricula can be endured but won’t result in my best work. Contrarily, others need structure and strict discipline to thrive.
- You don’t have to become a professional: When the middle class thinks of ‘safe’ occupations that will guarantee a comfortable life for their children, conservative professions such as doctor, lawyer, teacher, accountant come to mind. But if you’re hands on rather than academically minded, don’t force yourself into an academic program or waste money on a traditional college or university program. A technical program or business can be an equally good or better choice. After all, a landscaper can bill $40000 for four days work, a concrete pourer can earn $60000 for one basement foundation; meanwhile, I bill $25 per patient follow up visit (before overhead and taxes). Take off 40% for overhead and 50% for taxation (highest tax bracket) and I’m taking home $7.20 per patient follow up. Even if I see six patients per hour (which is suboptimal in terms of patient care), my net income for that hour is $43.20. The barista at the hospital Second Cup earns unionized wages and makes $36 per hour; when I learned this, I almost dropped out of residency!
- Don’t become a doctor: Seriously. Don’t become a doctor. Medicine is possibly the worst avenue for building wealth early. Yes, we earn good incomes and have secure jobs but the delayed earning potential is simply not worth it. Imagine working your absolute hardest 100+ hours per week for the first 13 years of your career when you are at your best, brightest, youngest, healthiest, and most energetic all for free? Does it sound insane? That’s because it is. Imagine if I put 100+ hours/week x 50 weeks/year x 13 years of sweat equity into my own business? Where would I be today? We also lose out on years of compounding, investing, and real estate appreciation. Finance, tech, business, engineering, and dentistry are better options that allow you to start earning at least ten years before medicine and getting a leg up. Hypothetically, had I done dentistry, I would have graduated at 23 in 2008 when the median house price in my city was only $379000. Ten years later in 2018, the same house costs $765000 but incomes haven’t increased – an MD in 2018 earns the same as an MD in 2008 (or less because billing codes have been cut). Finishing training early, working early, saving, investing, compounding, and buying real estate early is hugely advantageous.
- Take every advantage: Millennials are a famously privileged generation. Many millennials are the beneficiaries of paid for or subsidized first cars and first condos. If you are lucky enough to be beneficiary of such a condo or vehicle, don’t sell it, don’t move, don’t buy a new car. Having a paid off car and paid off condo is a huge advantage in life, particularly when you are starting out. In the years since I’ve graduated, it’s been a constant juggling act to save for both housing and retirement simultaneously. If you’re one of the lucky few to have a mortgage free home and loan free car, don’t squander it. Stay there until you are financially secure enough to move to the next level (i.e. have a good retirement nest egg built up).
- Save, invest, compound, purchase real estate — and repeat: Much has been written about this on personal finance blogs. More on this later in a separate article as this is too big a topic to cover here.
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