First off, you shouldn’t choose a career based on an Instagram graph with hypothetical numbers. Money is an important factor when it comes to choosing a career, but it shouldn’t be everything. It’s probably not a recipe for happiness if you hate the work you do, even if it pays well. But it’s probably not the best path either if you love the work you do but it pays so little that you struggle financially.
Keep in mind, both the doctor and welder in this example end up millionaires (even after accounting for inflation)! They both spent less than they made and invested the difference. This is how wealth is built, regardless of what profession you choose.
Here are the assumptions that we used when crunching the numbers:
Doctor:
– Student loans with 5% interest were used to pay for college ($30K/yr) and medical school ($50K/yr)
– $60K/yr salary during three years of residency
– $300K/yr post-residency salary, which increased 2% each year
Welder:
– Went to vocational training for one year, which cost $5K. This was paid for with a loan at 5% interest.
– Started with a salary of $40,000 which increased 2% each year
If the doctor never invested her savings but the welder did, the welder would end up with a $500K LARGER net worth than the doctor at retirement! The act of investing is oftentimes even more important than the income you earn.
As always, reminding you to build wealth by following the two PFC rules: 1.) Live below your means and 2.) Invest early and often.
-Vivi & Shane
