Why Most Doctors Struggle Financially Despite Huge Incomes

After years of medical school, internships, registrar training, and specialist exams, doctors in Australia finally reach the point where the financial rewards start flowing. Compared to the average Australian worker, a doctor’s income is well above the norm. According to the Australian Tax Office (ATO), medical professionals consistently sit among the highest income earners in the country.

With that higher income comes choices — and often, temptations. It’s common for doctors to upgrade cars, move into bigger homes, send children to private schools, and plan lavish holidays. While these rewards may feel well deserved, they also come with risks. This is where the concept of lifestyle inflation comes in.

What is Lifestyle Creep?

Lifestyle creep  is the gradual increase in spending as income rises. Instead of extra earnings going into investments, superannuation, or paying down debt, they get absorbed into day-to-day expenses and luxuries.

The problem isn’t just the money spent — it’s that higher expenses reset your “normal.” A $1 million home feels modest once you’re used to it, and upgrading to a $2 million one feels justified. Each step upwards increases financial commitments and reduces flexibility.

 Why Doctors Are Especially Vulnerable

Doctors often don’t see a strong income until their early 30s or later, after years of study and modest pay, which can create a strong urge to reward themselves when the money finally starts coming in. Alongside this, social and professional expectations — such as driving a luxury car, living in a prestigious suburb, or sending kids to private schools — can add pressure to maintain a high-cost lifestyle, often encouraged by peers or family.

Banks also contribute to this dynamic by treating doctors as “blue chip borrowers,” offering special home loans with lower deposits and waived Lenders Mortgage Insurance, which, while seemingly beneficial, can lead to over-borrowing.

On top of all this, the intense stress and emotional toll of the profession can result in burnout spending, where doctors indulge in expensive holidays, fine dining, or shopping as a way to cope and decompress.

Case Studies

Case Study 1: Dr Sarah, the GP ( Poor Doctor)
Sarah, a 38-year-old GP in Melbourne, went from an income of $120,000 as a registrar to $300,000 in private practice. Within 2 years, she upgraded to a $2.5 million home, took on private school fees, and bought two new cars. Her mortgage and school fees absorbed so much of her income that despite earning three times her old salary, she felt financially stretched.

Case Study 2: Dr James, the Specialist
James, an anaesthetist in Sydney, resisted lifestyle inflation by paying himself a fixed salary of $180,000 a year, even though his practice income exceeded $600,000. The rest went into superannuation, index funds, and paying off his mortgage early. By age 45, James had built a $4 million investment portfolio, giving him the option to cut back hours without worrying about money.

These contrasting examples show how financial choices — not just income level — shape long-term outcomes.

The Hidden Costs of Lifestyle Creep

High expenses can reduce flexibility by locking doctors into long hours and making it difficult to pursue career shifts, such as moving into research or part-time roles. Larger mortgages and loans also increase financial stress, especially when income from practice declines, as seen during events like COVID-19. Additionally, overspending on lifestyle delays financial freedom, since every extra dollar spent now is a dollar that isn’t invested for the future.

Strategies to Avoid Lifestyle Creep 

1. Pay Yourself First
Set aside 20–30% of your income for wealth-building before spending. Automate this into super contributions, investments, or debt repayment.

2. Create a “Doctor Salary”
Even if you earn $500,000+, pay yourself a consistent amount (say $200,000). Treat the rest as business surplus and investment capital.

3. Delay Upgrades
Commit to a cooling-off period (e.g., 12 months) before making major purchases. Often the urge fades, or you’ll be in a stronger position later.

4. Focus on Experiences, Not Things
Studies consistently show that people gain more satisfaction from experiences (holidays, family time, hobbies) than from material possessions.

5. Work with a Specialist Medical Accountant
Doctors often don’t have the time to manage finances themselves. An specilaist medical accountant accountant like Tolevsky Partners can help keep you on track.

6. Define Financial Freedom for Yourself
Not every doctor needs a mansion in Toorak or a beachfront property in Bondi. For many, freedom means working three days a week, taking extended leave, or being able to retire before 60.

Final Thoughts...

Lifestyle creep is one of the biggest silent threats to doctors’ financial wellbeing. The income is there — but unless it’s managed carefully, it can slip through your fingers.

By being intentional about spending, resisting social pressure, and prioritising long-term wealth creation, doctors can enjoy both a rewarding lifestyle and true financial independence.

The key is simple: don’t let your lifestyle grow faster than your wealth.

Disclaimer: This article contains general information only . It is not designed to be a substitute for professional advice and does not take into account your individual circumstances, so please check with us before implementing this strategy to make sure it is suitable