Your priorities affect your lifestyle and net worth

When it comes to making money and living well, we all have different priorities. Some people choose to spend a great deal of money on their family while others choose to live a fancier lifestyle as a single person or invest for their future. Since you can’t rely a huge raise at your job or a large influx of cash overnight, you have to prioritize spending money on the things that are most important to you. The choices you make have a huge impact on your lifestyle and net worth. For example:

If you prioritize living by yourself in the city… realize that this simple desire is considered a luxury. Many people want to live in the city close to various entertainment options and nice restaurants. They value having their own personal space and want the freedom to come and go as they please. Since this desire is so common, the demand for one-bedroom apartments in the city is high. Because demand is high, the prices are high. In my current city of Atlanta, a modern one-bedroom apartment in the city can cost around $1500 a month, if not more. Paying $1500 a month in rent may require a big sacrifice. It likely means that you cannot save or invest as much money as you otherwise would each month.

If you prioritize investing money for retirement… realize that doing so means the paycheck deposited into your account each month will be lower than it otherwise would. For a person making around $60,000 per year, who plans to allocate at least 10% of their income for retirement and building wealth, their monthly take-home pay will decrease by about $500 per month.  For people who are already on a tight budget, getting $500 less each month may be a little too much to handle. For other people, the $500 per month is doable and they like knowing they are building their net worth and will be able to retire with enough money in the bank when they please. Investing money in retirement accounts is vital since it allows you to build wealth in a tax-efficient way but doing so may require you to live below your means. You may have to decrease monthly bills by opting to live with a roommate, travel less, or drive a more affordable care.

If you prioritize living a nice lifestyle (with fancy cars, good food, and lots of spare cash to spend) … realize this costs a lot of money. Choosing to live in a nice apartment or home will increase your monthly mortgage (or rent) each month. Choosing to lease or purchase a luxury vehicle may cause you to have a car payment that is well over $500 per month. Having spare cash to spend on concert tickets, frequent restaurant outings, and weekend bars can cost you hundreds of extra dollars per month as well. Although you have the freedom to live that lifestyle, understand that doing so may prevent you from being able to invest money for retirement. It may also preclude you from saving money in an emergency fund or being able to go on vacations without getting into debt.

If you prioritize giving money away… realize this may require you to make a sacrifice in another area of your life. As a Christian, I tithe. This means I give away 10% of my income each month. Because I give away 10%, I have 10% less money to invest, spend on housing, or use to save for a future vacation or wedding. To make up for this “loss,” I lived way below my means and shared an apartment with a roommate for 2 years until I was able to increase my income. Giving away money may be an important religious tenant for you as well. If so, think about how you can fit this financial priority into your current lifestyle. 

If you prioritize saving money (for a nice vacation, future wedding, or house down payment) … realize this may require you to live in a cheaper apartment, invest a little less towards retirement, or be more frugal in your disposable spending. Perhaps you have a goal of saving $5,000 a year to finance a large international vacation and build up your emergency fund? This may require you to save an extra $400 a month. This may require you to turn down a few happy hour invites or forgo a few music concerts. If that doesn’t work and you can’t figure out where to get the extra $400, you may have to get a side hustle or part-time job that can net you the extra money you need. 

If you prioritize having a family (with children) … realize that although having a family with children can bring you joy, it may also add to your monthly expenses. With more people, you may need more space which means getting a larger apartment or house. Because there are more people, you will also have to spend more money on food. If you have small children, you may have to allot a certain amount to daycare. All of these added expenses can amount to thousands of dollars per month causing you live a more frugal lifestyle and decreasing the amount of money you can allot to other things like travel, entertainment, and investing.

My point? You may have to pick and choose what to spend money on. Until you increase your income, you won’t be able to do it all. Part of being a fiscally responsible young professional means that you have to prioritize your desires and figure out what’s most important to you.

• Would you rather build wealth as quickly as possible by investing a large chunk of money for retirement or do you want your own personal space via a luxury one-bedroom apartment?

• Would you rather avoid going into debt by saving up for a fancy vacation and unexpected expenses ahead of time or do you want to spend your disposable income right now by consuming expensive food, nice cars, and city entertainment?

Part of being an adult means you have the freedom to make your own decisions and spend money how you see fit. However, you can’t have it all, and neither can I. What are your priorities? What will you choose?

6 Steps To Redesign Your Career

Many of us have goals and dreams. We may even know our purpose in life or have a side project or business idea that we are passionate about. Instead of letting this go by the wayside or telling yourself that now isn’t the time, find ways to bring these ideas to life. Be bold and use the combination of your skills, talents, passions, and values to redesign your career. Bestselling author and current talk show host Elaine Welteroth talks about this in her new masterclass. Several other young professionals have emphasized similar thoughts. Instead of going to work unfulfilled, use the steps below to redesign your career.
 
Step 1: Make note of your skills, passions, and talents. The first part of redesigning your career is to make note of things you are good at and pinpoint things that bring you joy. If you aren’t sure, ask your closest friends what they think your strengths are. Are there things that other people struggle with, but you do with ease? Is there something you are highly educated in or have tons of experience with that has made you an expert of sorts? Is there a certain topic that people often ask for your advice on? Maybe it’s politics or finance or being a mother or starting a non-traditional career or opening a business. Take some time to write down your skills, passions, and talents. You will use this information to redesign your career.
 
Step 2: Create a vision of what you’d like your career to look like. Once you have your list of skills, passions, and talents, use it to gather ideas and create a vision of what you’d like your career to be. Think of creative ways you could use your skills in your current job. Are there talents that you can monetize? Do you want to create a business centered around your passion? If you’re not sure, get some ideas from others. Find celebrities, entrepreneurs, politicians, or colleagues you want to model your career after. Pinpoint aspects of your job, or their job, that you find fascinating. Dream about what your ideal career would look like. What do you want to spend your time doing every day? Create a vision of what you want.
 
Step 3: Make time in your schedule to work on this vision. Once you have a list of the things you are good at and take the time to visualize what you want your career to look like, the next step is to start working on it. Begin by figuring out how to go from where you are now to where you’d like to be. Is there something else you need to learn about your craft that you don’t yet know? Read a book, listen to a podcast, or take an online course to increase your knowledge.

Perhaps you know a lot about the kind of career you want but you don’t know marketing? You can write the best book or develop the most amazing product in the world but if no one knows it exists then what good is that? Learn how to market yourself. Get better at social media. Write pitches to programs, jobs, and companies who can help you gain experience. Take an entry level job to learn the ropes. Shadow people to get more insight on the industry you want to enter. My point? Now is your time to grind it out. Invest time learning more about the things you don’t know.
 
Step 4: Incorporate these elements into your day job to gain experience. Once you have a vision for your career and have learned more about your craft and how to market yourself, find ways to use these skills to gain experience. Leverage your expertise at your current job (or get a new one) to get even better. I know you may want to branch out on your own. Perhaps you are tired of the bureaucracy at your current job or maybe you’re just bored? Resist the urge to move too quickly. This may be a prime opportunity for you to test out your ideas before you make the big plunge to start a business.

If you love photography, volunteer to take some company photos at the next outing. If you like website design, offer to upgrade the current website or assist your colleagues in getting websites of their own. If you like physical fitness, start a fitness challenge at your job or offer free workout courses. My point? Find a creative way to test out your ideas in the safe environment of an employed job. You may discover that you don’t know something as well as you thought. Perhaps you have a weakness you didn’t realize before. Now is the chance to hone crafts, further develop skills, and test out ideas. You get to make mistakes and learn what works or doesn’t work while still having a paycheck come in each month. Take advantage of this safety net.  
 
Step 5: Discover ways to monetize your skills and passions. With the previous stage you basically started a hobby and found better, more efficient ways to carry out that hobby. Once you get good, gain the necessary experience, and figure out what ideas work and don’t work, your next step is to turn this hobby into a legitimate side hustle. How? By finding ways to monetize it. Once you’re good at something or gain invaluable experience others don’t have, you should figure out how to monetize it. Even the most altruistic person has to find a way to make a living.

If you feel bad about charging money for services, ask yourself if you’d rather spend 40+ hours per week at a job you find less than fulfilling or if you’d rather spend that time doing something you love. You have to make a living somehow. You might as well do something you love. But don’t worry, you don’t have to be an entrepreneur. Owning a business isn’t everyone’s dream and it’s perfectly fine if it isn’t yours. Either you will monetize your hobby yourself by turning it into a side hustle or you will work at a company who does that for you. My point? You need to make a living so it would be great if you found a way to make a living doing the thing you enjoy.
 
Step 6: Turn your side hustle into a business – and make it your career. This may seem like a no-brainer, but believe it or not, many people never make it to this step. It can be terrifying to leave the safety net of an employed job to venture out on your own. It can also be quite daunting to ask for a promotion at work or leave your current job for a better, more fulfilling job at a new company. Trust me, I get it. But there are certain times in life that we have to be brave and take a chance. Apply for your dream job. If you get it, great! If you don’t, ask for feedback to learn how you can be an even better candidate next time. Find ways to excel at your job and move up in the company until you are doing what you love.

If your goal is to own your business realize that going from side hustle to full-time entrepreneur will require a unique set of skills. Do you have the correct business structure? Do you keep good records? Do you need to hire help? Are you ready to manage others? Do you have the financial stability needed to stay in business as you are getting things off the ground? Discover what you need and work on those things. Make sure you have a financial cushion for unexpected costs and events. When you have your foundation in place, take the plunge. Redesigning your life is about having enough confidence in your ability to succeed and a large enough desire to pursue your passions that you overcome the doubt and fear that inevitably exists and decide to go for it. You can do it.

What to do with work retirement accounts when you change jobs?

Many money savvy young professionals utilize retirement accounts to invest money and minimize their yearly tax bill. While doing so is great for wealth creation, many people are unsure of what to do when they change jobs. Maybe you’ve wondered the same thing? Perhaps you’ve contributed 5-10% of your salary to your work retirement plan and now find yourself in the transition period about to work for a new employer. While you are excited about the new job, maybe you wonder what to do with the retirement account you had at your old job. Here are 5 options to consider:

Option 1: Leave it where it is. If you like the retirement plan options at your old job and the fees are low just let the money stay there and continue to grow. Unless your old employer demands that you move it, you can likely just the money you contributed in that same account. Although you can’t continue to contribute to that particular work-sponsored account if you no longer work there, you can let the money you already invested keep building over time. You can start withdrawing the money from that account at age 59.5 without incurring any early withdraw penalties but you must start withdrawing it by age 72. If you like the investment options offered by your employer, such as standard low-cost index mutual funds, then keeping the money where it is may be a good option.

Option 2: Roll it into your new job’s retirement plan. This may be a good option if you’re not particularly thrilled with the 401K options at your old employer and like the retirement plan investment options at your new job better. It may also be a good idea if you don’t want to keep track of multiple different 401Ks (or 403b’s) and would prefer to have them all at the same place. If you want to rollover the money into your new job’s retirement plan you simply contact the custodian or manager of the 401K (or 403b) plans at your old job and let them know you want to rollover the funds into the 401K (or 403b) at your new job. This a direct transfer. All you have to do is fill out some paperwork. (Some jobs may make you wait until you’ve been at the new job for a certain length of time before they let you do the rollover so contact your new job and ask). Since the money is going from one pre-tax retirement plan (at your old job) to another pre-tax retirement plan (at your new job) you won’t owe any taxes. You are simply combining 2 accounts into one. If you don’t want to do a direct transfer, you can also have the person in charge of your job’s 401K write you a check for the money and you can then deposit that check into your new job’s 401K yourself. (By law, you must make the deposit within 60 days.)

Option 3: Put the money in a traditional IRA. With this option, you call a brokerage firm like Fidelity, Vanguard, etc and let them know you want to open an individual retirement account (I.R.A) or tell them that you want to roll money from your old job’s retirement plan into your existing IRA. Putting the money into a traditional IRA may be an option for people who may not have good retirement plan options at their new job or want a bit more control over their investment plan options. The biggest advantage of opening an IRA this is that you now will have control of your retirement account and it won’t be controlled by your employer. With this control you can invest in whatever you want, whether that’s individual stocks or various mutual funds you find appealing. You also do not have pay any extra money in taxes when you transfer the funds. Through a self-directed IRA, which is a traditional IRA that you have control over, you can even invest in things like real estate, art, business partnerships, and precious metals. The downside of putting the money in a traditional IRA is that you will now be excluded from using the backdoor Roth IRA method which allows high income earners to put money into Roth IRA accounts each year.

Option 4: Convert it to a Roth IRA. Choosing to convert your work 401K (or 403b) into a Roth IRA is different from putting the money into a traditional IRA. Unlike a traditional IRA, which you contribute to with pre-tax dollars, you contribute to a Roth IRA with post-tax dollars. In other words, you contribute to a Roth IRA after taxes have already been taken out of your check and you never have to pay taxes on that money again. Why does this matter? Because with a Roth IRA you can invest in a way that allows your money to make even more money over time and you never have to pay taxes on the profits. Plus, you can take your contributions out of the Roth IRA at any time without any penalties which means it can serve as an extra emergency fund. In order to convert the money in your 401K (where you made contributions with pre-tax dollars) into a Roth IRA (which you contribute to with post tax dollars), you have to pay taxes on that money. For example, if you have $10,000 in your work 401K, and your marginal tax rate is 25%, then converting your 401K to a Roth IRA will increase the amount of taxes you owe by $10,000 x .25 = $2,500. This may seem like a lot of money now, but when you take the money out in retirement you may be paying an even higher amount in taxes since the overall amount in the amount will have grown over time. Before you decide what to do, see how much money you have in your 401K and calculate the taxes you’d have to pay if you converted it to a Roth IRA. If you can handle the increase in taxes, then converting it to a Roth IRA may be worth it.

Option 5: Cash it out. Technically speaking, you can cash out your 401K at your old job and have them write you a check for you to spend on whatever you want. This may be something to consider if you need the money to buy a home, pay off debt, or use for some other reason. While it may be nice to get an influx of cash, understand that the amount you get may be much less than you think. Since you did not have to pay taxes on money that went into the 401K, if you decide to cash it out, you will have to pay taxes on that money. Plus, if you are under age 55, you will also incur a 10% early withdrawal penalty. For example, if you have $15,000 in your work 401K and you want to cash it out, realize you will not get a $15,000 check. If your marginal tax rate is say 22% and you are under age 55, then you will only get a check for around $10,000 (only 2/3 of the money you had in the account) once you account for taxes and the early withdrawal penalty.

My point? You have 5 options of what to do with your 401K (or 403b) when you change jobs. In order to avoid paying a lot in taxes, some people tend to leave the money where it is or roll it into their new job’s 401K. If they can afford the taxes, then they may try to convert it to a Roth IRA to save themselves money in taxes later in life. Other options are to put it into a traditional IRA or cash it out. The choice is yours.

5 Life Lessons from 2020

This past year has been quite different. We’ve had to deal with a global pandemic, a national reckoning on race, a divisive election and so much more. Despite all of the changes and stress, we have made it through. Before we close out 2020 and start looking ahead to next year, we may want to reflect on some of the things we’ve learned this year that have helped us grow into much stronger people. Some of the life lessons I’ve learned in 2020 are:

1. Life is short and good health isn’t guaranteed. As a medical doctor who has been working in the hospital and clinic during the pandemic, this statement has become a reality for me more than I’d like to admit. I’ve diagnosed and treated many patients with Coronavirus. I’ve seen, firsthand, how people who once considered themselves to be fairly healthy have been deeply affected by COVID. Over 300,000 people have died from Coronavirus in America over the last 9 months and that number is steadily climbing. With this reality, I’ve been constantly reminded that a long life with good health is not guaranteed. For those of us fortunate enough to have our health, we must cherish it and make the most of our time here on Earth by doing things we love, pursuing projects we are passionate about, and do our part to make the world a better place.

2. Resilience and adaptability are critical traits for successful people. Many of us have seen our lives change in drastic ways over the past few months. Some of us have witnessed our family members and friends suffer various changes to their health. Others of us have had to witness the trauma of inequality and racial injustice. Some people have had to adapt to changes in their work environment and others have had to cope with a huge halt in the social interactions that were so critical to their mental health. My point? All of us have had to deal with something. Many of these challenges were things we couldn’t have predicted. Despite the unexpected happening, many of us have been quite resilient and adaptable. We are continuing to work, take care of our responsibilities, keep in touch with our families, and be productive members of society. Our ability to handle sudden changes and persevere through difficult times has made us better people and is essential for our continued success going forward.

3. Empathy towards others can go a long way. Along with the obvious challenges many of us faced in 2020, there may have also been a few silent battles we’ve had to overcome as well. Perhaps we had to cope with a job loss, a decrease in income, the end of a friendship, poor performance on an evaluation, or mental health challenges. Many of us have obstacles and disappointments that we may never broadcast publicly. My point? We never know everything other people are going through. Empathy towards and lending grace to people can go a long way. Your kindness may be the thing that brightens someone’s day and gives them hope that they can continue fighting the challenge they may be facing. Your compassion may give them the inspiration they need to keep going.

4. Good money management is an added shield of protection. The pandemic has affected many of us in numerous ways, including financially. Many people suffered a change in income. Those whose salaries were protected may have needed to spend more money on other things in their home or personal lives to cope with the change. Either way, one thing became quite obvious: Some people were better able to deal with the change than others. Some people had jobs that allowed them to save money over time. When the pandemic occurred, they had money available to use to help them handle any increased financial costs. Other people were not so fortunate. While there are a myriad of reasons why one person may have faced more financial challenges than another person, good money management is an added shield of protection for everyone. If you have money saved in your account for a rainy day, when emergencies or financial challenges arise you may not be nearly as inconvenienced and better able to weather the storm.

5. A strong support system can help us overcome the unthinkable. With all the changes we’ve faced in 2020, one thing has become crystal clear: having a strong support system is crucial. Whether it’s family members we love, coworkers we cherish, or friends we can’t live without, we all need someone to lean on and talk to every now and then, especially during times like these. Many of us have been unable to to socialize and live life as we would normally, all while facing health threats and numerous job changes that have tested the limits of our patience and adaptability. In the midst of all of this, it’s essential that we have some type of support. It can be difficult to keep it together at all times and remain positive in the midst of changing circumstances around us. We all need a strong support system to lean on and encourage us along the way.

Tell me, what are some life lessons you’ve learned in 2020?

Determine What Makes You Happy

A few weeks ago, I was talking to one of my friends from medical school. Although we normally catch up about something work-related, this time, our conversation was different.

I was describing a relaxing weekend I’d just had in which I spent most of my time writing blogs, watching holiday movies, drinking wine, and conversing with my brothers. It seemed so simple, yet I was satisfied.

I mentioned to her that although work has its stressful moments, I’m tired often, and haven’t been to the gym in so long I didn’t even know where my membership card was located, I was quite happy.

She was happy for me and mentioned that sometimes we get so caught up with our current responsibilities and schedules that we don’t stop and wonder if we are truly happy, or better yet, what happiness looks like for us. I could’n’t agree more.

For some people, happiness is having time to relax and unwind at home. For others, it’s the creation of priceless memories with their family. And yet for some people, it may be having a productive day a work, eating good food at dinner, traveling to a new place, or achieving a certain level of financial or career success.

Regardless of what your view of happiness is, it’s vital that you define it for yourself. Without defining happiness for yourself it can be difficult to prioritize tasks or achieve the long-term life satisfaction you crave. You may also find yourself working toward the wrong goals or expending too much energy trying to live up to other people’s expectations while neglecting your own.

As we close out 2020 and head into 2021, it’s vital that we not only get clarity on our long-term goals, but that we also get specific about what makes us happy and satisfied overall.

According to authors George Kinder and Jonathan Clements, there are several questions and scenarios we should ponder to help assess our happiness and determine what things we value most in life. They are:

1. “Imagine money were not an issue. What would you do with your time?”

2. “Look back through your life. When were you the happiest—what were you doing?

3. “Imagine that you have enough money saved to satisfy all your financial needs for the rest of your life. Would you change your life, and if so, how would you change it?”

4. “Assume you are in your current financial situation. Your doctor tells you that you only have five to 10 years to live, but that you will feel fine up until the end. Would you change your life and if so, how would you change it?”

5. “Your doctor tells you that you have a single day left to live. You look back over your life. What did you miss out on? Who did you not get to be? What did you fail to do?”

As you answer these questions, what comes to mind? What do you think fills your life with joy and what are some ways you can attain that?

5 Ways I Maintain Some Work-Life Balance

One of the best things we can do for our careers is make sure we have work-life balance. Sometimes we can be so eager to “lean-in” and lead at our jobs that we fail to carve out time for family and life at home. While this may seem trivial, having balance between our personal lives and our professional careers can increase productivity and overall life satisfaction. As a resident physician who can work up to 80 hours a week, this can be challenging to accomplish. Here are some ways I’ve tried to muster more balance in my life:

1. Limit meetings and emails to business hours. As an ambitious medical professional who loves medicine, research, and health policy I am quite involved at work. There are several committees and organizations I’ve joined and numerous projects that require me to collaborate with other doctors. While these things bring me joy, they can consume my life if I’m not careful. One of the ways I’ve tried to handle this is by limiting in-person meetings and responding to emails during business hours. I might have to bend this rule on occasion for time-sensitive items, but for the most part I try to restrain from sending or answering work-related emails after 7pm. If I need to speak to someone on the weekend, I try to do it Saturday mornings so that I can have at least a day and half where I don’t have to worry about work.

2. Set expectations with patients/clients. As a primary care physician my job is to help manage a majority of the patient’s medical problems. This means I am constantly ordering labs, interpreting tests, and communicating with patients about a variety of different issues. At my residency program we even have a secure “patient portal” through which patients can send me messages, receive their test results, and ask me questions. While many patients love this system, it can lead to increased stress for physicians like myself. I am not given additional compensation for using the portal and often have to spend my “off-time” messaging patients and answering questions which reduces the quality time I have at home with my family. In order to achieve some sort of balance, I set expectations with my patients on the first visit. They know they can ask me questions on the portal but the response time will be 24-48 hours. All emergencies must go to an entirely different system. I will send test results but if patients have in-depth questions or medical concerns, they should schedule an in-person visit so that we can thoroughly address their problems. Setting these expectations make things clear for patients and allows me to live in the moment at home with fewer distractions.  

3. Have a reset day (or ½ a day) each week. Sometimes work can get so busy that everything else gets delayed. The dishes pile up, laundry isn’t folded, and the fridge starts to empty out. In order to minimize these times as much as possible, I schedule a reset day (or half a day) each week. For me, that day is usually Sunday. I get up, grab coffee and try to write blogs or articles for my website. I then get dressed and go to church. When the service ends, I go grocery shopping and come home to do laundry, sip a glass of wine, and watch a movie on Netflix. When the movie ends, I start to cook and meal prep for the week and usually end my day by reading part of book. This may sound trivial and basic but this is my reset day. For me, writing blogs is therapeutic and going to church helps me gain more optimism for my week ahead. The movie helps me relax and reading a book allows me to gain insight on things and temporarily escape from the stresses of my own life. This reset day is a must.

4. Maintain good personal health habits. The busier we get the easier it can be to forget about our own health. If we aren’t careful we can find ourselves constantly eating out, barely exercising, and mentally exhausted. To prevent this from occurring, I’ve tried my best to maintain good personal health habits. Before the week even starts, I take a look at my schedule and pinpoint days and times I might be able to fit in a run at the gym or a workout in my apartment. I spend the first 10 minutes of each day reading a small devotional and saying positive affirmations to begin my day as optimistic as possible. Lastly, I try to meal prep on weekends and prepare foods that are minimally processed with least 2 fruits/vegetables so that I ensure I’m getting most the nutrients I need to function at my best.

5. Schedule time with family and friends. As a person who loves to be social and interact with those I love on a consistent basis, I try to schedule time with my family and friends. At least once a month I try to have a Sunday dinner with my parents. Every other week, I spend time with my brothers either watching a football game or going to some sporting event. I even schedule time with my girl friends to go out to a movie or some social event in the city every few weeks. Since work can be demanding, I have to schedule time or it simply won’t happen. This means planning ahead and keeping things organized on my phone calendar.

Tell me, what are some things you do to maintain work-life balance in your career?