Even if you are drowning in debt, this article will help provide you with the important steps you need to take as a PT to over come your debt and discover the path to financial independence.
What is “financial independence?”
Financial independence, often termed “FI” has many definitions but basically it is where you have enough money accumulated that work now becomes optional.
Essentially, you are now independent and are now the ruler of your own life. Wow, that sounds like an amazing life! So, how does one achieve this illustrious “financial independence”?
The 3 tiers of financial independence
First, I want to teach you in my opinion, the 3 tiers of financial independence. The 3 tiers are: ultimate FI, moderate FI, and Budget FI. Others may term these different, but I sort of like these titles!
1. Ultimate financial independence
This is the highest level of FI, where you have so much money that you can do anything, buy anything, and never ever have to work. We are talking Fergie, P-Diddy, and Beyonce level of finances.
I’m not going to sugar coat it, it’s highly unlikely PT’s will get to this level. But don’t worry, there are 2 other levels.
2. Moderate financial independence
This level is where you aren’t the Bill Gates rich, yet you are have plenty of funds to do anything and buy anything. You’ll never ever have to work, but you also can go buck wild and buy every sparkly thing in sight.
3. Budget financial independence
This is what us physical therapists are trying to achieve.
At budget FI, you’ll be able to work or not work, but you’ll be living a more budget friendly lifestyle.
But, the good news is, that at least as a PT you will be able to achieve financial independence!
How do I calculate how much I need to be financial independence?
Experts have come up with a variety of calculations.
The most conservative calculation is to take you current expenses and multiply by 33 or to take your earnings and calculate a 4% withdrawl rate.
All this math can really give you a headache. But, more importantly, these calculations take in to account a lot of variables.
Instead of these calculations, you should look at 2 things: your earnings and your savings. If you maximize your earnings and maximize your savings (or minimize your spending) then you’ll put yourself in the best position to conquer your student loans as well as achieve financial independence.
Maximize your savings rate to achieve financial independence!
Mr. Money Mustache ( a popular finance blog) suggests the best way to achieve FI is to maximize your “savings rate” which is your earnings subtracted from your cost of living.
Essentially, the more you can keep of each dollar in your pocket, the more your money will grow and the better off you’ll be!
How To Maximize Your Physical Therapy Savings Rate
As a PT, you may feel that you have no way to move up and no way to earn more, but you can earn 6 figures or more! You just have to think outside of the box!
3 Steps To Maximize Your Earnings As A PT And 6 Figures:
- Find a high paying 9-5 job
- Start a side hustles
- Earn passive income
1.Find a high paying permanent position
A typical PT earns only $60,000 – $70,000 a year. But, there are some positions that pay you much more, in fact, you could earn potentially 6 figures.
- Travel Physical Therapy
- Contract Physical Therapy
- Home Health PT
2. Start a side hustle
There are many side hustles you can perform as a PT, and I actually wrote another in depth blog post on this topic that highlights my top side hustles for physical therapists,
- Social media, digital marketing, and blogging
- Personal training
- Starting your own PT practice
- Health coaching
3. Earning passive income:
- High interest savings and checking accounts
- 401K and IRA’s
- Other investments
Robin Hood is a company that allows you to invest for FREE plus they are starting a online savings account that provides 3% interest rate and NO fees! If you use this code when you sign up (which is free), you’ll get a free stock!
Minimize your spending
- Look into moving to a lower cost of living locations, cheaper housing, and cheaper rent
- Carpool or find a lower car payment
- Find roommates or moved in with loved ones/partners/relatives
Remember every dollar helps! Did you know that every extra $1 per hour is a $2080 a year raise!
Summary: Keys: Loans, Min Spend/Max Savings, Max Earnings
- Keep it simple, maximize your earnings and minimize your spending.
- Have a plan for every dollar you earn.
- Track your earnings and spending with a budget.