Why are teachers more likely than physicians to become millionaires?

In the National Study of Millionaires (Ramsey Solutions, 2018), over 10,000 millionaires were surveyed.  Can you guess the top three professions of millionaires?

  1. Accountant
  2. Engineer
  3. (wait for it……………….)


How is it possible that America’s school teachers, who are some of the most underpaid professionals in the country, are more likely to become millionaires than physicians?  Physicians on average make more than four times the average household income in America.  And yet, as a group we dramatically underperform our wealth building capabilities.

Dr. Sarah Stanley Fallaw, author of The Next Millionaire Next Doorresearched this topic and provided some incredibly valuable insight.  Plumbers, electricians, teachers, and everyday working people who make smart money choices tend to do well.  It’s amazing, but it shouldn’t be surprising.

Let’s break down some of the reasons that keep physicians from becoming millionaires.

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7 facts about millionaires physicians need to know

Income doesn’t equal wealth

This should be patently obvious, but it’s amazing how inept physicians are at translating income into wealth over time.  The average American millionaire has 4x as great an income but 36x as much wealth as the average American.

Millionaires can take an average income and leverage that into wealth by making smart choices.  As we’ll see below, this usually involves making smart investment choices and having the discipline to spend less money than they make.

Student loan debt prevents physicians from being millionaires

Physicians on average come out of medical school with >$250,000 in student loan debt (Carter, March 2020).  That puts them way behind their peer group in terms of building wealth.

By the time a physician completes medical school, they are 25-30 (or older), and they are deep in student loan debt.  The next 3-6 years (or more) of training are not high earning years, and many physicians are doing good to just not go deeper into debt.

So, physicians start their income-producing years in their mid-thirties and start a lot farther behind in terms of net worth.  In contrast, their non-physician, financially savvy peers have been earning a steady paycheck for 10-15 years, have gotten out of debt, and have been investing consistently.  It takes years or decades, even with a high income, to make up that difference.

Physicians are less likely to maintain “social indifference.”millionaires

“Social indifference,” the ability to not change one’s spending habits based on seeing other people’s spending habits, is required for building wealth.  “Keeping up with the Joneses” is harder in the era of social media, but it’s still important. 

Physicians tend to come out of training ready to spend a lot of money on that first big paycheck.  “It’s my turn”  is a commonly invoked phrase. 

We naturally feel the pressure of our peers to buy a bigger house, nicer cars, and send our kids to fancy private schools.  There’s nothing wrong with those things, but it’s a problem if you can’t afford it.  We need to strike a balance.  We need to celebrate the happiness of others without internalizing their spending habits as being required for ourselves.

Most millionaires embrace frugality, but physicians succumb to “lifestyle creep.”

You can’t judge someone’s wealth by what they drive, buy, or wear.  Many physicians fall into the trap of leering at friends’ vacation pictures or new house on Facebook.  They see the pictures, and they think they need to buy that too.  You don’t know if that person can afford those luxuries. 

It’s important for us to become immune to marketing hype.  People are constantly seeking to get us to spend money on some product or service, and we need to say no most of the time.  Marketing messages consume our lives and prevent us from building wealth.

It’s also important for us to model frugality for our kids.  Most millionaires report that their parents modeled frugality, and that led them to build wealth.


Wealth is attracted to people who respect money, and respect for money includes the discipline to manage it effectively.

– Dr. Sarah Stanley Fallaw


Millionaires need financial discipline, and physicians miss this.

As I mentioned, we get that first paycheck as an attending physician, and it’s more money than we’ve ever had at one time.  So, we think, “Finally, it’s time to buy those things I’ve been waiting for.”  It’s so easy to buy too many things that we can’t really afford.

Financial discipline requires two big things:

  1. Save and invest consistently: Most millionaires invest every month in something.  The majority use their IRA or company’s 401(k)/403(b) plans.  You need to have investments that are making money for you.  That way, eventually you won’t have to rely on your income to have money coming in.
  2. Don’t spend money you don’t have: Stop believing the lie that debt is ok.  Debt is not ok!!  There’s no such thing as “good debt”!!  Don’t buy stuff on a payment plan.  Save up the cash and then buy it outright.

The illusion of a high income can lead to poor financial planning.high income

A small percentage of physicians would consider themselves DIY investors.  Many physicians pay no attention at all.  Most of the rest would benefit from having a financial planner in their corner.

Either way, have a plan!! Figure out how much money you need to retire.  Then figure out how much to save each month to achieve that goal.

Here’s my free guide on how to do that.

Make a plan!!  Don’t “wing it”!!!

Click to download for free!

Home ownership directly correlates with building wealth!

Your home is the biggest factor that contributes to inflated spending.  When you live in a bigger/nicer home, you have bigger expenses, on average.  Your home, as a general rule, isn’t an investment.  Think of it as an expense.  Yes, it’s invested money and you could downsize in the future.  However, most people don’t do that.

It’s great to own a home!  But, that comes with a lot of added expenses.  You need to be prepared for that.  Consider that when you decide what house you want to buy.  People will be willing to loan you way more money than you should be willing to take.  Make sure it’s something you can afford.

Final Thoughts

None of these strategies are particularly sophisticated.  It’s a matter of behavior, not math.  Do you have the financial discipline to make smart choices every day about what you’ll buy?  Can you save and invest consistently every month so you build wealth?

You’re certainly smart enough to do it!  If you got through medical school, you can do this.  It’s sixth grade math.  None of this is particularly difficult.  It’s a matter of keeping things in perspective, being disciplined, and doing it for several decades.

Boring?  Yes.

Unsophisticated? Yes.

Does it work?  YES!!!!!  Just ask the millionaires next door!

Further Reading

Please leave a comment below!  What’s your biggest takeway?

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Comments (6)

  • I really love it and can’t wait to read more. I am seriously looking for investment opportunities so What areas or avenues would you recommend that we invest in?

    • I usually recommend starting with good growth stock mutual funds in a Roth IRA. That’s a great place to start. Check out some of my other posts on retirement savings.

  • This might be a bit deceptive. The favored spouse of a working person that brings the dough is a teacher. The summer times are off to watch the kids, etc. How many of these teachers are by themselves? Take out the spouse more likely take out the millionaire status. As the more than insignificant wage earner it was up to my wife to get us to the higher status. I think I could get us there but certainly not as quick.

    • Joey-

      Interesting points. Actually, many teachers are married to someone with comparable income levels. That’s quite common. And, yes, there are some financial advantages to having lots of time off. The point that I hope this list illustrates is that doctors are not in the top five professions for millionaires, despite the relatively high incomes. That’s mainly because doctors tend to spend as much as they make and not plan for the future as effectively as people in other professions. The average American millionaire is a teacher, a plumber, an electrician, or other average worker, not an attorney or doctor. They have lower incomes but they’re better at managing money, on average. This was shown in Tom Stanley’s book, “The Millionaire Next Door,” and those data have been replicated many times. Doctors should take a lesson from school teachers, postal workers, firemen, and average American millionaires if they want to build wealth in a meaningful way.

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