Should Physicians Buy the Expensive Luxury Car?
We could probably compile a book with all the threads on our online physician communities about whether it’s okay to buy a Porsche 911, exactly how financially secure you have to be before considering the purchase, and the ‘help me convince my spouse’ angles.
Hot take from a blog that focuses on financial responsibility, but also on building the life that you want. Buying an expensive car may be a great idea. You just have to put it in the context of your life, and understand that the decision is deeper than 'YOLO'. Below, we’ll cover what you should take into consideration before buying the dream luxury car, including not just the financial opportunity costs (which are real), but also the upsides beyond just that it’s a fun car to drive.
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Why do physicians love nice cars so much, and is it a problem?
Okay, this is going to sound obvious, but something we’ve actually put a lot of thought into. We all know of the graduating trainee who takes their signing bonus and goes out and buys a new car before even getting that first attending paycheck.
It kinda makes sense. There’s been a huge lead up to this point - they’ve likely been driving the same car for 10 years while salivating over the cars in the doctors’ parking lot, and they’ve also been depriving themselves of vacations, time off, and basically anything in the way of self care while they ate crackers from the nursing station. Buying the car is about so much more than the car - it’s the feeling that they’ve finally arrived, sitting in their driveway, reminding them daily that it was all worth it.
All of that has value. You can’t delay gratification forever, and you have to enjoy the journey. The more important thing is that you make the decision eyes wide open about what the opportunity costs are, and then decide if you are okay with them (and if you can truly afford it).
Understand that the dollar value of the car isn’t the actual cost of the car - i.e. a $75,000 car is not a $75,000 decision
There are so many costs, both real and potential, associated with buying an expensive car.
Cars cost a lot more than just the MSRP
When you calculate the cost of a car, make sure you’re factoring in:
The increased insurance from a car that is worth 10k to a car worth 100k
Property taxes, depending on your state
Maintenance costs - expensive cars are way more expensive to maintain than that trusty Toyota that got you through training
Financing costs if you’re not paying for it in cash - interest payments add up quickly
Repair costs - when things go wrong in expensive cars, it’s… expensive. The parts cost more, you may have to do it at a dealership instead of the autoshop down the road, which is more expensive labor and parts, and you may have to rent a car for a few weeks or even months while the parts are imported from Europe
Gas - paying for premium gas every time you’re at the pump is going to hurt your wallet a little more than your old car, especially in today’s economy
Parking, car washes, or other day to day costs that you may spend on this car that you may not have cared to spend on that trusty car that you didn’t mind getting dinged up or that you weren’t trying to impress anybody with
You’d be surprised how quickly these costs add up. You could go from barely thinking about your car as an expense to it being a big part of your budget quickly
There’s also the opportunity cost of the money you didn’t use to pay down expensive debt or that you didn’t invest
This is the one we see people stressing about a lot more on the communities. The fact is that many people in our online doctor communities can afford these cars if it’s a priority. They know they would love to have the car, but they have a hard time actually spending that money here when they know what else they could do with it. That’s money that could have been part of your investment portfolio, a down payment on a house or set aside for your practice buy-in, money towards paying back your student-loan repayments, or more progress towards financial independence.
The fact is that there is a very real opportunity cost to any luxury purchase, even though we all tend to focus on the houses and the cars. Suppose instead of putting $80,000 toward a car, you invested that money and earned an average 7% annual return. After 10 years, that $80,000 could grow to roughly $157,000. After 20 years, it could become roughly $310,000. After 30 years, we're talking about roughly $609,000.
That doesn't mean your $80,000 car cost you $609,000 in the moment, but it does mean that choosing the car over the investment potentially cost you the opportunity to have that much money in the future.
If you need somebody to help model out these opportunity costs for you, this is a place where having a trusted financial advisor can bring in some perspective. We have a list of financial advisors for physicians if you need it.
Only you can decide whether that $600k will make a difference in your life in the long run, and whether that sacrifice was worth it. We’ll move on to how to frame that now.
If you think of every purchase solely in terms of opportunity cost, you’ll never buy anything nice
The fact is that as physicians, we tend to be practical and want every decision to make sense. If you tell yourself that the purchase doesn’t make financial sense, you’re probably right (but we’ll get into why you might not be in a second, and it’s not just that your car could be a collector edition that gains value).
Personal finance exists so that you can have joy
Personal finance is supposed to help you enjoy the life that you want. The point is that you make responsible decisions so that you can make a few decisions that are just splurge decisions or decisions that bring you joy. You are allowed to spend money.
Joy has value
Not only are you allowed to spend money, but spending money on things that meaningfully improve your life is part of the point of becoming financially successful. If you actually really like nice cars, and/or you have a long commute, having a nice car can make that investment very much worth it by allowing you to enjoy that part of your day more.
Safety has value
If most of us look at the cars we drove during residency and fellowship, they may not have been the safest cars. They may have started as safe cars, but after years of deferring the optional maintenance items or allowing our tires to wear a little too thin - or just delaying the purchase of a new car that had better safety features - the cars we drive at the end of training likely aren’t the safest cars we could afford. Protecting your family and the life you’ve built is a big deal.
If you need an example of this, see this post, where we were so glad that we had both the safe car, as well as disability insurance. (And if you haven’t secured disability insurance yet, you probably shouldn’t be spending your money on a nice car before you’ve protected the income that allows you to get it - get your disability insurance today).
The value that joy brings can be financial as well
Most of us know that if you spend your entire career making all the smart financial decisions, you may retire with a lot of money, but if you haven’t enjoyed the journey, it’s a problem. Let’s take this one step further and look at it another way - in the context of physician burnout.
Physician burnout comes into play when we think that things aren’t worth it anymore. We spend our entire training and careers delaying gratification, missing valuable moments with friends and family, and navigating the often incredibly frustrating parts of the changing healthcare landscape.
If you don’t have things that make the sacrifices feel like they’re worth it (and yes, the joy of saving lives can only take you so far for so long with how many things are broken in the current healthcare system), it will eat away at you. We’ve seen so many threads on the communities where there’s a proverbial “straw that breaks the camel’s back” that forces people to cut back clinically or even quit medicine entirely.
Quitting your physician job has far more impact on your financial situation and stability long term than the car does. We’re not saying that to justify irresponsible decision making - but to say, if you can afford the car, and you truly view it as one of the fruits of your labor that makes your hard work worth it, it can actually be an investment into your own career longevity.
Yes, these are slippery slope arguments that can create lifestyle creep issues that actually are financially irresponsible
Honestly, the car is usually not the make or break of any physician’s financial situation. It’s the thinking that comes along with it that you have to be careful about. If the high from the car is just the gateway to the expensive house, the country club membership, the private schools, the luxury vacations, and more, you may then have an actual financial problem.
You never want to let ‘YOLO’ turn into the reason that you have to work for the next 3 decades not because you love it, but because you have created a lifestyle that requires your paycheck to sustain it into perpetuity.
Setting your spending priorities
Some doctors make enough to ‘have it all’ from a financial standpoint. But the reality is that most physicians don’t (see ’How much do doctors make’ for a breakdown by specialty). More likely than not, you’ll have to pick a few buckets where you allow the occasional splurge. Make those the ones that YOU actually find value in, not what society tells you to spend money on. If a car to you is just a thing that takes you from point A to point B, then don’t spend the money on the car that society expects you to have. Spend it on the vacation that matters to you or whatever your splurge of choice is.
The importance of the financial plan
Here’s the financial piece of this article. It’s so important to have a budget and a financial plan which allows you to splurge on the things that actually bring you value.
Your financial plan is what will make you more comfortable spending money on those things you’re hesitating to spend money on
It’s so much easier to spend money once you know that you’ve set yourself up for success with your financial goals. Always pay yourself first, and once you’ve filled all those essential buckets and truly know that the rest is extra, it’ll be a lot easier to spend the money on the things that bring you happiness.
If you’re not sure how much is ‘enough’ to save, read these articles:
If you’re still hesitant, it may be time to talk to a financial advisor, who can model out all these scenarios for you and give you the confidence in your projections, as well as help you plan for major expenses.
PSG resource: Financial Advisors for Physicians
Checklist for buying an expensive car as a doctor
So here’s the deal. While there’s no one size fits all approach to this question, here’s the questions we think you should be asking:
Am I buying this car because it would bring me joy, or because society tells me I have to drive a flashy car to show them I’ve made it?
Can I truly afford this car and all it’s associated expenses, while not neglecting my other financial responsibilities?
Am I comfortable with the opportunity cost of not using this money elsewhere?
Is there an in between where I get this car but get it used or with less features, to mitigate some of the opportunity costs, or can I truly afford to go all out and be comfortable with it?
What would I be giving up if I bought this car, and am I okay with that?
Are there secondary gains from this car, such as increased career longevity or safety?
Conclusion
Buying a luxury car is where personal finance truly gets personal. If you want to be thoughtful about the decision instead of just yelling “YOLO!,” we hope this article offers you some context to think through the decision - and hopefully be a lot more comfortable with it, regardless of which direction you choose. Remember, you’ve worked hard, and you deserve to have the fruits of that labor. There’s no point in living like a resident when you’re not a resident - it’s more about being thoughtful about how you spend this hard earned money, and directing it towards the things that bring you value and joy.
Additional personal finance resources for physicians
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