you know about the banking equation? Do you realize that the more you know about the banking equation, the more valuable you'll become both to yourself and others?' />
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Dynamic Chiropractic – June 3, 2010, Vol. 28, Issue 12

Money: Use It or Lose It

By Tomas McFie, DC, PhD

Margaret Thatcher, the late prime minister of England, once said, "Nobody would remember the Good Samaritan if he'd only had good intentions. He had to have money as well." There's no doubt about it, the Good Samaritan understood the banking equation.

So, what do you know about the banking equation? Do you realize that the more you know about the banking equation, the more valuable you'll become both to yourself and others?

You see, there's a reason why the average salary in this profession remains fixated in the range between "$45,000 and $96,000 a year."1 And there's a reason why those earning more are experiencing burnout. It has nothing to do with where you went to school or where you currently practice. Alumni associations are full of doctors proud of their alma mater - and you should be, too. But while you were earning your diploma, you learned nothing about the banking equation. The sooner you do, the sooner you'll keep more of the money you make.

In coaching doctors across the United States and Canada, one thing remains consistent regardless of which city or part of the country a doctor practices in: Doctors don't have a clue about what the banking equation is, or worse yet, they've never even heard of it. This educational snafu is the number-one reason why doctors don't have more money. It's not because of the economy, third-party reimbursements or poor clinical skills; it's because of a lack of knowledge. What are some common financial caveats doctors overlook because of this lack of knowledge? Let's look at five of the big ones.

1. Pay Yourself First

By far the most common gaffe doctors commit is an oversight of the age-old axiom pay yourself first. Those in the profession fortunate enough to have known I.N. Toftness and/or enjoyed him as a mentor were given a copy of Think and Grow Rich, which Andrew Carnegie commissioned Napoleon Hill to write. Some even took time to read that little book, which talked about the importance of paying yourself first.

Toftness owned a twin-engine airplane that he flew around in, and he liked to boast about how much money he had to pay back on the Social Security checks the government sent him (he was in his 70s at the time.) That was impressive to me as a 24-year-old and it's still impressive to me today. Think about how many other people benefited because of I.N.'s productivity besides his patients. This took place because I.N. paid himself first.

2. Don't Spend More Than You Make

A second error doctors commonly commit is violating the simple maxim don't spend more than you make. Robert Kiyosaki defines what the middle class is when he characterizes this group "as those who buy liabilities." Doctors epitomize Kiyosaki's definition. Be it cars, boats, homes, clothes, clinics or whatever, doctors seem to want it.

3. Credit Purchasing or Leasing to Own

Along the way, doctors commit the third most frequent financial blunder: credit purchasing and/or leasing to own. Credit gives sanction for compound interest (what Albert Einstein referred to as "the eighth wonder of the world") to go to work. Inevitably, some CPA or tax attorney has advised about the great tax deduction this interest provides. But the fact remains that you've got to earn it before you can deduct it!

So, to protect those hard-earned dollars before the tax man takes his share, doctors tend to be a magnet for a number of financial planners, bankers and other financial "experts." Each of these "experts" arrives on the scene feverishly fending for their own share of all the money doctors are supposedly making. It's a real feeding frenzy, at least for awhile.

Pathetically, unsuspecting doctors typically feel quite significant about all the attention. Consequentially, they purchase enough annuities, bonds, securities, money market accounts, SEPs, IRAs, 401(k) plans and term life insurance to make them feel that their family would be better off if they were dead than alive. And all this because doctors haven't been educated about another fundamental rule in the banking equation, stated simply: Whenever you lose control of your money, you lose money.

4. Lose Control of Your Money and You Lose Money

Financial wizard Warren Buffet puts it this way: "Diversification is a protection against ignorance. It makes little sense for those who know what they're doing." You see, securities aren't secure and term life insurance doesn't produce anything except premiums until you're dead. Annuities, bonds and money-market accounts simply lock up your money where you can't touch or use it without penalties and/or fees; while IRAs, 401(k) plans and other qualified plans defer taxes today and then hit you hard with taxation later when you really need the money. Do the math, doctors!

Given enough time and treating wounds with salt, the financial gurus will inevitably arrive. Gurus attempt to save wretched souls from financial hell. They swoop in and, as a first step, cut up all credit cards in sight, saving one for emergencies (if you should die and your spouse needs to "put you in the ground" emergencies). Gurus dispense guilt to persuade penance for past "sins" in hopes of obtaining the sacred vow to "pay cash" for everything from now on and supposedly live happily ever after.

Talk about hell! Now the heat is really on. Doctors work harder than ever to make ends meet. They see more and more patients in attempt to stay afloat. But the more patients they see, the more expenses they accumulate. Gurus call this financial freedom, working longer and harder to avoid debt. In reality though, it's called burnout. Because all too often, the harder you work, the more behind you become.

5. You Finance Everything You Purchase

You see, these entertainment gurus never understood, and never will, that "you finance everything you purchase; you either give up interest to others by using their money or you give up the interest earned on your money because you spent it."2 There isn't any other way when you don't control the banking equation.

Happening onto the scene afterward and consulting with doctors who are licking their wounds isn't a very pretty sight. They've often become diffident, defensive, doubtful and destructive; self-destructive. And of course, this negativism always does wonders for their practice, family and lifestyle.

Take Control of Your Money

But what would happen if doctors could learn and understand how to control the banking equation so it worked for them? What if doctors could learn to pay themselves first and put this money to work financing their own practice, family and lifestyle? Isn't that what you went to school to have and enjoy, anyway? Is it really impossible to enjoy life and serve humanity at the same time? Emphatically, NO!

Think about it like going green - green with your money. You're going to have to learn to recycle your money. That's what controlling the banking equation is about. The problem is you're currently not in a position to profit from the banking equation. Next time, we'll discuss how you can alter your position. But for now, you've got to decide if you're happy with the fact that all the money being generated in your banking equation is going to somebody else. Wealth has to reside someplace. And you can control where that money resides. You use it or lose it, it's as simple as that.

In the meantime, doctors, stop trusting "experts." Take the responsibility for your own financial future. You didn't become a doctor by consulting "experts," did you? You're not a mechanistic allopath. Become proud of who you are financially, not just of where you went to school.


  1. Bureau of Labor Statistics, 2009.
  2. R. Nelson Nash. Becoming Your Own Banker, 2000.

Dr. Tomas McFie, a 1985 graduate of Palmer Chiropractic College West, has owned four wellness clinics in three states in his 25 years of practice. He is the founder of Life Benefits, Inc., and writes and lectures extensively on how to understand the banking equation and reap the financial rewards.

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