Question. I am an emergency physician who recently completed residency. How can I make sure I am as successful in my finances as in my clinical practice?
A. Business expert H. James Harrington once said, “Measurement is the first step that leads to control and eventually to improvement. If you can’t measure something, you can’t understand it. If you can’t understand it, you can’t control it. If you can’t control it, you can’t improve it.” As emergency physicians, we have become intimately familiar, perhaps too familiar, with business-related metrics (eg, door-to-doctor time, physician satisfaction rating, and percentage of downcoded charts). There are also metrics for your financial life that can be measured and allow you to “keep score” in working toward your financial goals. Of course, the purpose of keeping score is not to compare yourself to anybody else but to compare your performance from year to year and against your own financial goals. This article will discuss four of the most important measurements.
Your Net Worth
Perhaps the most important measurement someone seeking financial success can monitor is net worth. Net worth is the sum total of all your assets minus the sum total of all your liabilities. Assets include bank accounts, retirement accounts, investments, home equity, and the cash value portion of life insurance. Liabilities are primarily debt, such as student loans, mortgages, auto loans, and credit card debt.