3 key money questions to ask yourself before a career change


When I was running my derm practice and questioning my career path, I met with a guy I’ll call “Mr. Bow-Tie.”

He owned a financial advising company in Austin.

Mr. Bow-Tie had salt and pepper hair, a compact build, and dark, thick-rimmed glasses.

He sported a red bow-tie with white polka dots. Probably not a real Texan, was my thought. But neither was I.

I asked Mr. Bow-Tie, “How much money do I need to retire?”

He looked at me, asked some questions, scribbled on a yellow pad and gave me a figure with a lotta zeros.

The amount certainly wasn’t what I had at that time but it gave me a target. It wasn’t that I wanted to retire and not work – I wanted to know what it would take to have financial freedom.

More to the point, I wanted to know if I could do something besides practice medicine, and be OK.

But I didn’t really know how to ask this question at the time since it wasn’t even a question I allowed myself to ask.

It’s too easy to go to that place of…if I leave medicine, I’m going to be homeless and eating at the soup kitchen.

I’d volunteered at our local soup kitchen and helped make that soup many times, so I knew it was pretty good. However, I didn’t want a steady diet of it – or the food fights that tended to break out in the sizzling heat of summer.

If you’re considering doing something different with your job or career, having a good understanding of your financial situation and goals is an important part of the transition process.

In this blog, I’m going to address 3 key questions to ask yourself about your finances that can be helpful when you’re exploring nonclinical career options.

One – What is your minimum income requirement?

Do you know what amount you need to live off of if you took a cut in salary or quit your job? When I ask this question of my clients, I get a range from $50K to around $300K, with an average of $150K.

Many of the nonclinical jobs pay more than $150K (click here to see my blog on nonclinical salaries). It’s a helpful exercise to review your spending and see what you truly need, and where you could rein things in if needed.

Starbucks? The country club membership? Eating out? The nanny? A car for the teen?

It’s your money, you get to decide what is negotiable and what’s not.

When I stopped practicing medicine, I sold my house and almost everything in it. I lived in an orange and green cabin for a while. Until my coaching business was on solid footing, I drastically cut my budget. I loved the simplicity of not owning much. Less stuff. Less to deal with. I cooked a lot – Tex-Mex you might call it.

It was easy to do this because I was on my own. I know a lot of you are married and/or have kids. This can be a good time to talk about money and what’s really important to those closest to you.

Sometimes spouses get worried about having to give up certain things or a perceived loss in status and become resistant to the idea of your changing careers.

Your salary may very well stay the same or even go up. There could be a temporary dip as you grow in a new position or start your own business. Regardless of what’s to come, there is a lot to gain from revisiting spending habits and having some conversations around money.  Fun… right?

Two – What are you actually earning per hour?

If you’re paid a salary, but work beyond your scheduled hours doing charting, taking call, attending meetings, etc., (pretty much all of you in practice) it’s helpful (and often depressing) to know what your actual hourly compensation is. This is useful when you’re considering a new job, career or side work.

For example, if you’re making $180K, and are paid for 40 hours a week, your hourly rate is $93.74. If you actually put in 50 hours a week due to all the extras, your hourly rate drops to $75/hr. If you put in 60 hours a week, your hourly rate is now $62.50.  (This scenario assumes 4 weeks paid vacation).

With many of you working extra hours, you definitely want to factor this in when considering other opportunities. A different job or career may have the same salary as you’re making but it would actually be a pay increase if you “only” worked a true 40-hour week.

It’s also not always about the dollar amount. We may trade dollars for peace of mind, not having to worry about malpractice, the chance to learn new skills, have more flexibility, or start our own business.

Three – How are your investments really doing?

Do you get those fancy financial reports from your investment company – the ones with the colorful pie charts and pages of numbers?

You wonder, How is my money really doing?  What number am I supposed to be looking for? Could they make it any more confusing?

You may feel embarrassed to ask your financial advisor specific questions, unsure what to ask. Or, if you’re handling your own money, you may check the balances but don’t dive in further as long as the number is going up. I’ll confess to that one!

I am no financial expert- hardly…But I’d like to share with you some general investing information I’ve gathered across the board from a number of financial advisors. Please adjust accordingly for your specific circumstance and check with your own advisors.

As a rough guide, if your money is invested in the market with moderate risk, a reasonable rate of return is around 7% per year. Some years will be more, some less, but 7% averaged over time is often cited as a benchmark.

Once you have determined your average rate of return, you want to compare how your portfolio is doing compared with the stock market.

This year has been a really good one for the market, with the S & P 500 around 23% and the Dow Jones at 18.7 % year-to-date. International financial markets are up ~ 20% and bonds up ~ 10%. So if your investments are in some of these sectors,  you should be higher than 7% for this year.

Next, you want to know what your investments are costing you. Ask your financial advisor what the total expenses are for the year – management fees, trading costs, etc. When the expenses are subtracted from your earnings, you will have your net rate of return.

Your financial advisor may tell you that your portfolio had a 7% rate of return, but if the expenses ate up 2%, your net rate of return is only 5%.

So.. to summarize, whether you’re investing your own money, or having someone do it for you, find out:

  • The gross rate of return of your investments
  • How the markets did for the same time period ( if applicable for your investments)
  • Your total costs

Net Rate of Return = Gross rate of return – costs

A caveat, your investments may be different than this example above of a diversified portfolio geared towards following the market. So please adjust accordingly.

When it comes to money, the only dumb question is the one you don’t ask.

I see how hard you work for your money. I see the sacrifice. I want your money to be a source of freedom and not a shackle.

Be gone, the golden handcuffs.

Make time and ask all the questions you need to ensure your money is working as hard for you as you are for it. 

‘Til next time,  


 PS, If you missed the last blog on networking on LinkedIn, you can read it here.

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