Financial Planning for Doctors
Doctors should take the following steps to ensure that their finances are in a good condition-
- They should not be tempted to splurge once they start earning money. Some of them feel they missed out on opportunities to have fun as they spent many years studying and started to earn well much later in life. They splurge on fancy vacations, new cars, eating out etc. It is important to keep a check on expenditure and concentrate on savings and investments.
- They should ensure that they have adequate life cover and disability insurance cover so that financial needs of family and profession are taken care of in case of unfortunate events
- Decent indemnity coverage is must. (I will write separate post on this)
- In some cases practice is their biggest investment doctors have – you should know how to nurture, grow, save & ring fence that.
- Doctors have a very busy schedule. They are also called in for work many times post work hours. Apart from this they have to manage family, health, social engagements etc. It is important that they have a proper fitness schedule. They have to eat right and exercise so that they are in good physical shape. They need to switch off from their work every day for some time and pursue what they like so that they are mentally fit. This is important for a sound financial health.
- They have to make a financial plan the plan should have financial goals listed and they should execute the plan to achieve these goals. If they do not have time to research and make one, they should hire the services of a financial planner. [hope doctors understand importance of professionals]. They need to have a proper investment plan. They should invest in a variety of assets including equity, mutual funds and debt so that their investment portfolio is diversified and they get optimum returns and long-term capital appreciation. They should ensure that their debts are not beyond their means.
- They should pay off education loans taken and only then go for home loan or loans for buying property to set up the clinic. They should ensure that they understand their investments and performance of the investments rather than blindly following the advice of the financial planner. They should revisit the financial plan regularly and tweak it as per changes in their life situations and macro and micro economic conditions.
- They should also invest in themselves by upgrading their skills, learning about latest trends in health care and networking with other doctors and professionals in the healthcare business.
- Doctors’ lead busy lives but it is important for them to focus on their finances so that they can grow their wealth, manage their taxes and have a healthy and secure financial life. This is important for a good long medical career as well.
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