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November 17, 2009


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I would be careful of making any generalizations or stereotypes based on occupation. Unlike FMF, I know PLENTY of doctors and attorneys. By far, the majority of them are doing just fine or well. They are quietly putting away money and making smart investment choices. Yes there are some that have the 2 mortgages, 2 ex-wives, 3 kids in private school, fast cars, etc. But in my opinion that is BY FAR the exception, not the rule. While I agree in principle that you can get rich even without a high net worth, I'd say that it's much easier to get rich if you make wise spending/investment choices AND you have a high net worth.

By contrast, I know many people who have tried to start their own business and failed and have consequently gone into debt. What (in my opinion) FMF tends to underestimate is that starting your own business is IN AND OF ITSELF and EXTREMELY RISKY undertaking. In other words, you can be the most prudent person when it comes to spending vs. saving, but the very act of starting your own business is such a high risk exercise that it more than outweighs the "good behavior" of spending wisely.

I've attempted to do all the right things in my financial life, such as using credit wisely, having an emergency fund, investing for retirement and long term goals, spending less than I earn...all of that.
I have, in the past, had my net worth wiped out by a failed business, suffered setbacks from job layoffs, medical situations...a number of different apparently unavoidable situations.
So, there's an element of good fortune involved in attaining wealth and/or high net worth (Neither my wife or myself have held "high income" jobs). I hate to say it's all luck, because I continue to believe that if I consistently do the right things, the long term effects will be positive, but there is certainly an element of luck involved.
We do have a higher net worth today than we had ten years ago, but it's been a roller coaster ride!

I'm an engineer and can confirm that in my experience engineers tend to be growing wealth. I figure it's because they can do the math, see the benefits of compound interest, and are generally logical and self disciplined enough to ACT on that information. High starting salaries also help. (Think about the difference between a doctor, who is in school/residency until he is 35, then makes $200k, and an engineer who starts making $70k at age 23. He may never make more than $100k, but the engineer is WAY ahead at 35, and compound interest can do its work).

Also, you should see the spreadsheets my coworkers make for any major financial decision - prepaying the mortgage, buying new vs used car, changes to our health care plan, monte carlo simulations of the stock market, etc. These people know how to do the analysis, and they DO IT, and make financially wise choices. Sometimes it catches me by surprise when talking to someone who doesn't know how to do this sort of analysis (i.e., my mathmatical mom, who doesn't know how to use Excell or other modern computing options, or people that struggle with understanding the math involved). I would find it very hard to make good financial decisions if I couldn't just set up a calculation/simulation to find the answer.

I agree that you don't need a high income to have a high net worth, but can you have a high net worth on a low income?

And yikes, don't you know that med school ain't cheap? Being 1-200K in debt sure does a number on your net worth. And you have to pay malpractice insurance out of your $200K salary.

h, and most physicians work 80 hrs a week, which doesn't leave much time for making and obsessing over spreadsheets on their financial lives and such.

The textbook definition of net worth is assets minus liabilities. If someone had little or no debt (liabilities) and lived on less than they make, they would have money to invest (assets) and their net worth would increase more than someone who had a high income and high debt.

Net worth is not proportional to your income. You can have a great income and have a negative net worth.

What did he say about Engineers? It wasn't clear just from that line...

I'm curious how my profession fares!

As a retired engineer I second your observations completely.
Incidentally when I was marketing a financial program that I spent long hours and 2 years of my retirement writing I had the following statement on my website in the biggest and boldest letters available.


You couldn't be more correct. I found that my math skills, my discipline, and my obsessively logical mind were the critical factors in my success in the stockmarket. After Rocket Science I found that the mathematics involved in the technical analysis of stock trends was like going back to kindergarten. In one fabulous year, 1999, I made more money in the market than my total gross earnings as an engineer during a 32 year career in aerospace.

Right now one of my daughters is dating a very successful engineer and I have been giving her lots of encouragement, however her comment to me after she first met him was, "He's 6' 3" and looks like Richard Gere, but there's one problem, he's an engineer." I have offered to e-mail him but she won't hear of it.

Katharine --

Engineers have higher than expected net worths on average.

Enginerds have less social demands on their lifestyle so they can naturally spend less than many other professions. (just poking fun)

Seems that society places a lot of consumption pressure on the professions that "spend". There is zero pressure for a teacher to drive a nice car, but there is a ton of pressure for a doctor or a manager to do so. Image is part of the reason they are in those high earning positions in the first place- they way people view them and the way they present themselves. Most high income/low wealth professions required the spending to get to the high income level. On average, engineers and teachers are not trying to develop business/sales.

Nice Tyler, but to generalize, probably true!

Meredith - Where do you live, where do you work!?!??
As an engineer of over 6 years, I'm still not making 67k (let alone 70k at 23!!) and most of my co-workers aren't making that much either. This is in a high cost of living state too! I do agree w/ you on the math / compounding logic.

BTW - Most of the HIGH SCHOOL teachers (even physical ed teachers) make as much if not more then me w/ the same amount of experience. Let's not forget that they also only work 8 months out of the year compared to my 2 weeks vacation. Don't beleive me, check out this website that shows teachers salary:

I'm am really considering leaving engineering for teaching....

Saving money needs rationality and discipline. The ones who get rich are likely those who bother to open a new bank account for that 1% interest difference.

Check this out, 9 years of teaching experience and coaches one sport:

Salary: $92,278
Position: High School Classromm Teacher
Full/Part Time: Fulltime
Percent Time Employed: 100%
Assignment: Psychology (Grades 9-12 only)
Years Teaching: 9.0
Degree: Baccalaureate

Limey - I got quite a chuckle out of your daughter's comment! I think, by and large, engineers are way more interesting than stereotypes give them credit for.

Beastlike - hmmm...sorry, I didn't intend to make you feel uncomfortable with my salary estimates. For what it's worth, I'm an electrical engineer, I have a master's degree, and I graduated from a top rated engineering school. I live in a medium cost area, but for a company that has pretty standard salaries (i.e., I wouldn't make more if I moved to NYC or CA). Yep, I got lucky in a lot of ways, and have it pretty good now. Like you, though, I sometimes think about going into teaching - I'd choose high school math. If anyone wants unsolicited advice, from what I've seen, getting a master's degree boosts your starting salary considerably, and is worth every penny (and often times you can TA or work your way through). Also, it seems Electrical/Computer and Chemical engineers get paid the most, Mechanical somewhat less, and Civil (who usually work for the state) the least. This may change, though, as more jobs get sent offshore...Civil engineering is seeing a bit of a revival, as building roads and buildings can't be sent overseas.

The error here is to not account for the intangible wealth of careers. Doctors and lawyers have fairly stable long term careers so do not need as much wealth as others. Usually high salaries translate into short careers that do not compensate adequately for that shortness and so require much greater wealth building. The duration and stability of a career often more than makes up for a modest salary.

I am an engineer (computer) and I'm doing around $115,000/yr, but that is because of certain "certifications" and a masters degree. I have thought about going into teaching, but my aunt is a teacher and works WAY too much for what she gets paid. They work way more hours a week than anyone gives them credit for. Plus you have to have a 'teachers' mindset. For me, the hardest part about getting my masters was trying to interpret what my teachers were saying or what they were not saying. Teaching is a skill and many teachers lack it. I think most engineers are of that 'I do, not explain' mindset (or at least the ones I've worked with - including myself)

@Beastlike, I hate to say it, but either move or get a better job. Engineers usually start out high and stay high. I know I started out making $58,000 and that was in a DOWN period right after the bubble burst. As FMF says, either move or find a better job.

Good luck with your decisions!

Interesting comments. My little sister has an engineering degree. She got layed of a couple of years ago from her job as an engineer. After having a hard time trying to find a comparable job she decided to go back to school. She just recently finished and is going to be ... a math teacher. She says its what she really wants to do.

Engineer here too. I don't find it one bit surprising, nor do I find the number of engineers posting here coincidence either.

While teachers might tend to have higher than average net worth RELATIVE to THEIR income, I can tell you first hand that they don't have high average net worth OVERALL. My mother was a teacher (just retired this year) and she worked more hours than anyone I've met in engineering and got paid much less. Growing up with that played a huge part in my career decision.

Beastlike, is that stat from the Illinois site you posted? I find it hard to believe, maybe IL is different? Maybe coaching a sport puts them over the top? ...but just an educator with a BA/BS can't expect to make more than 50K where I'm from, no matter what their experience.

I am just slightly obsessive about saving money.
That is if you think that a multi-millionaire opting for a smaller garbage can in order to save $5.35/month on his city utility bill is obsessive. As a child in England it was drummed into me that "If you take care of the pennies, the pounds will take care of themselves."

I am not at all offended by the term "enginerds", I take it as a compliment and identify with it.

I was around when the very first female engineers were hired into our department and the guys were sent to classes in affirmative action so that we would learn how to respect them. One of them was assigned to me, a very attractive young woman from MIT (the university I would have given anything to have attended). It didn't take very long at all before they proved themselves and were totally accepted by a bunch of chauvinist old guys.
BTW the engineer my daughter is dating has an MS in EE and an MBA and works as a manager for a company that is a leader in design automation tools, she told me he makes about $135K/year. Since they are both close to 50 and divorced the ultimate outcome would not be a marriage but the "significant other" route for various financial reasons.

Engineers are highest paid after doctors/lawyers/management, which require additional years of school/residency/internship/luck.

I originally started out planning on being a doctor. I took all the classes to go onto med school (anatomy, phys, bio's chem, etc,etc) but luckily I took a U.S. healthcare systems class. At the same time I took some "fun" classes and one was website design. I hated my healthcare class because of all the BS with the insurance companies and LOVED my intro to CS class. I made the ultimate decision to drop out and start a new major. My parents were PISSSSSED, but now they understand and I thank god I did it everyday.

All of my best friends are either doctors, dentists, physical therapists or PA's and I see how much debt they've accumulated from all the schooling. I'm debt free and socking away. Best decision I ever made!

This is really interesting. What about other trades people, where do they fall?

As a software engineer I tend to agree with Meredith and others.
I work in a research lab of a large interntational IT corporation. People who work in my building are mostly engineers with MS and scientists. I'd imagine that many if not most people in my building have income over 100K. Also managers, the vast majority of them have PhDs as well.

Yet as I walk in the parking lot, I don't see fancy cars. Maybe one or two, but most cars are Hondas Civics, Toyota Corolla and other similarly priced cars; some old some new. Also people dress casually, and I am not even talking business casual - it's more like over 70% are in blue jeans and sneakers. I tend to dress nicer, but I don't feel any pressure at all to spend money on clothes and shoes. If anything I look at something and think "oh, this is nice, but 1) I have no place to wear it - I already have something for special occasions and I don't need anything for work 2) nobody would appreciate it. Same about jewelry.

Plus, I think engineers may be more practical, have strong math background and tend to think about the bottom line.

"Doctors and lawyers have fairly stable long term careers so do not need as much wealth as others."

This is actually a good point. If your job is secure you don't need as much wealth as if you may be laid off at any time. Also, if you like your job, you may not want to retire and just want to work for as long as you can. Sure, there are many engineers who like their jobs as well, but they can be "retired" before they want to, and it may be really difficult to find another job once you are over 50.

Incidentally, when I started I thought I'd get very generous pension and medical care in retirement. Plus, my employer had no layoff policy at the time. I still save some small percentage of my salary because 1) this was the way I was brought up 2) I didn't need that much. But psychologically the need to save was much less than after the retirement benefits were frozen, promise of health care in retirement gone and layoffs became the norm.

In Silicon Valley a BMW used to be the car of choice for many people working in the IT and related fields. The BMW, if you believe their ads, is supposedly the Ultimate Driving Machine, but my sense is that niche is now being rapidly taken over by the Toyota Prius. It also helped a lot when buying a new Prius also got you a sticker that entitled you to use the diamond lane during the commute period.

The engineer in me would love to have a really modern car like the Prius but I already have a 13 year old, gas guzzling, '91 Mercedes 560SEL with low mileage, in pristine condition, and running perfectly, which I now drive only when my wife is using her much more efficient and newer C230. Also as a longtime Sierra Club member and tree hugger I'm trying to do what little I can to lower carbon emissions.

Doctors still make good incomes despite malpractice costs, educational expenses, and declining reimbursement from insurance companies. It is the easiest way to guarantee yourself a six figure income even if you have to wait 5 to 10 years extra. What you do with that income will influence net worth.

This sound like a generalization, but i personally know doctors who makes tonnes of money and are wealthy like crazy, i know others who make equivalent but are nose deep in debt.
It does not mattter how mathematical or scientifically inclined one is, life is about choices, priorities, and living within the means.


All else being equal, I'd rather have a $500K/yr salary than a $100k/yr salaray!

QUOTE Meredith: "you should see the spreadsheets my coworkers make for [...] the mortgage, new vs used car, health care plan"

Yes, that sounds like something engineers would do. Our entire education can be summarized as "optimize ... using your math skills".

@Beastlike: your $92k teacher may be the counterpart of the $150k engineering graduate. They probably exist, but will you likely be earning that kind of money? Look at average salaries instead.

Well, I'm a little different than most of the posters here. I have never made over 60k a year. I'm 53 and have managed to accumulate a little. I only have a BS in science. I own my own home and have no dept at all. I have been trying to save for retirement for many years. I have about 580k saved. Some in retirement accounts and some in individual accounts. I max out all the retirement accounts each year.

I do wish I made more. I think if I did I would just save more. I guess my point is that even on a low income, wealth accumulation is really just about saving and investing. Also I should point out that my investments are fairly conservative. I don't day trade or any silly stuff like that, but like everyone else I've been hurt a few time during our bear markets. I just stick with the plan. I know I'll never be rich. But I do hope for a comfortable retirement some day.

Woohoo. I'm an engineer and my wife is a teacher. Hey honey --- we're rich!

Hah, nice one Paul!

PDubbs - Yes, IL is where I'm talking about. I was referring to High School teachers only. I am fully aware of grade school / private school teachers making closer to the 30k - 50k range.

To you other engineers quoting these large salaries.... I'm telling you, you are doing quite well compared to the average. My wife is a compensation analyst for a very large company and being able to see everyone's salary, it isn't the norm. (At least in IL.) BTW, I am a EE in a ME's world w/ an MBA.

Remember, teacher's jobs are also more secure and come with a pension.....

I read an interesting article today on the Internet, it surprised me.
Basically what is happening is that a far larger percentage of the engineers graduating from MIT and Cornell are going into the world of finance and working for large investment banks like Goldman Sachs. At MIT it was 27%.

During my 32 year career at Lockheed Missiles & Space Corp. I was always impressed with the collection of great talent in engineering, mathematics, and computer science that worked there. At the same time I realized that the company was very restricted in the amount of profit it could make on its products because their biggest customer by far was the Defense department. It occurred to me back then that if they put the great talent they had and their supercomputers to work on ways to make a lot of money in the Financial world they could make a far greater profit.

What's happening today makes a lot of sense especially when you read about the supercomputers and talent that companies like Goldman Sachs have assembled to develop their computerized trading systems which have been reaping gigantic profits for them this year. Lockheed had all the scientific knowhow but none of the financial knowhow so it was really impossible for them but a no-brainer for smart, but very greedy investment banks like Goldman Sachs, Morgan Stanley, and JP Morgan Chase.

I don't blame the engineers, they have to go where the money is.

I can't agree more, "You have to have a high income in order to have a high net worth", this is absolutely nonsense, as a quant researcher, I have several friends around me, working as independent quantitative traders with low income at the beginning, but end up with a high net worth using their knowledge, courage and market sense.

@Old Limey I'm also an old LMCO engineer!

Lets hope the defense industry secures more funding soon as the current admin has slashed their budget.

My best friend is a stock broker with a major firm. He manages accounts whose net worth is $1 million or greater. Anyway, I asked him what is the most common career you see in these accounts. Expecting to hear doctor, lawyer, business owner, etc., he gave answer that shocked me - engineer. That's correct. I was shocked and then he explained that this career has above average salaries but what made the difference was the lifestyle. I guess these brokerage houses do a lot of profiling but they target engineers because they know they tend to be very frugal, save a lot yet earn a good living. To me this affirmed that wealth is not about how much you earn but about how much you save. It's also good to know I picked the right career!

As an attorney, I can understand this. Many people feel that attorneys have it made financially. Not so. It is very dependent on your schooling, location, practice area, and willingness to give up other things for your job. A attorney going to a big corporate firm is going to make more than a non-profit lawyer but they are going to have insane work hours. I work in criminal defense in a small population wise county. I make about $54k a year before taxes. But I have a 8-5 work hours and a flexible environment. I think it all depends on how you use what income you are given.

I'm a physician. Age 30. Make 250k per year. Work 45 hours a week. 170k debt from med school and college. About 100k between 401k and Roth ira. Just finished residency in June. As you can see, debt very managable. I don't work overnight or weekends. I enjoy the job very much. I can make double if I double my hours, but I have zero desire to do so. I think no matter what you do, the road to wealth is to spend less than you make. I sacrificed a lot to get where I am. Now I get to enjoy the fruit of my hard work.


When are you planning to pay off all your debt? In the next 2-3 years or beyond that?


Personally, I don't think we should group all physicians in one boat. Some of them make good money. Some, such as private practitioners make great money. A physician at a hospital could only be making as low as $150k. A private practitioner could be making several times that.

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