Savings Rate: The Key to Financial Independence

Coming to Australia Surrounded by Scarcity

My eight years as a poor medical student sharpened my frugality and ultimately inspired The Frugal Doctor. I arrived in Australia at 18 with a one-way ticket and a weight of expectations from The Motherland. No one in my family had a university degree, let alone a medical one.

My income was small because my time was limited. Between long lectures, clinical placements, and part-time work (restricted to 20 hours a week by my visa), every dollar had a purpose. I learned early how to stretch a small income as far as possible.

Early Lessons in Frugality

As a medical student, I often had to make do with less or without. I survived on home-brand food. I walked long distances to placement in worn-out shoes. I delayed every purchase that wasn’t essential. As an international student, funds were limited, and I couldn’t afford to travel home.

In eight years, I only returned to The Motherland once: to interview as one of three finalists for a Rhodes Scholarship. I didn’t get it, but the experience reinforced my drive and resilience. I picked myself up and kept studying.

Migrant Doctor Earning an Income

When I finally started earning as a junior doctor, it felt liberating. Yet I was determined not to fall into the trap of lifestyle inflation. After years of living with little, saving came naturally.

A decade later, when I returned to The Motherland, the village celebrated its very first doctor. Singing and dancing over many nights, the only way they knew how to celebrate. “Congratulations, Doctor from Australia!” they cheered. With pride came more weight of expectations.

Saving Income and Delaying Gratification

I was driven to save and build wealth. Without even tracking, I consistently saved 40–50% of my take-home pay. My goals were clear: buy my first car, save for a home deposit, travel and invest in shares.

People often asked, “You’re a doctor now, why not get a car loan or a novated lease?” But I wanted to pay cash for my car, invest in shares, and own a home debt-free.

By 29, I had purchased my first car. By 34, I had bought my first home and started investing. Yet despite my discipline, something was missing. I had mastered saving but not investing.

The Turning Point

In February 2021, I reviewed my finances:

• $30,000 in shares
• $98,000 in superannuation
• $17,000 in cash
• $240,000 sitting in my home loan redraw

The numbers told an interesting story: I had built equity, but I hadn’t built wealth that worked for me. I was house rich, asset poor.

I was saving diligently, but not investing strategically. Saving isn’t enough: you have to invest your savings. Around the same time, I came across Mr Money Mustache’s classic post, “The Shocking Simple Math Behind Early Retirement.” It reframed how I thought about the whole thing. The path to financial independence wasn’t about working harder. It was about putting my money work. I knew exactly what I needed to do: shift from simply saving to intentionally investing and building financial wealth.

From Saving to Building Wealth

From that point on, I decided every dollar I saved had to be directly invested into assets, primarily index funds or exchange-traded funds (ETFs). Following J L Collins The Simple Path to Wealth, I realised that simple, low-cost investing will quietly build financial independence.

For me, savings rate = investment rate. If I save 50%, I invest 50%.

Saving was the foundation. Investing became the catalyst. Together, they’re building my way to financial independence. And one more important lesson: I don’t count my home as a wealth-building asset. It doesn’t bring me an income.

Are you investing your savings?