A financial plan is essential for doctors and their families. But don’t take our word for it. Here are 5 reasons every doctor needs their own financial plan. What would happen if you suddenly lost your job or became ill? Would you be able to pay your bills? How much debt do you carry? Are you prepared for retirement? These questions are important because they affect our financial health and well-being.
Financial Planning is a way of preparing for life events such as retirement, disability, death, divorce, unemployment, etc. The purpose of financial planning is to ensure that you have enough resources to meet your future obligations.
A good financial plan helps us achieve goals and live better lives. If you don't have a financial plan, then you might be putting yourself at risk. Here are five reasons why physicians should consider having a financial game plan.
- Saving is postponed. Worth.com shares that, “Building assets is a decades-long commitment, and the medical professionals who learn how to save and protect their earnings at the beginning of their career are more likely to be prepared for unexpected circumstances.”[1]
- Taxes are costly. In fact, it’s probably your largest lifetime expense. Knowing how to control taxes can provide huge benefits. More from Worth.com indicate that, “High earners pay a significant portion of their earnings in local, state and federal taxes. High-earning W-2 employees are not often afforded the many provisions that small businesses get with tax planning.”[2]
- Preventable errors. In this AMA interview, a suggested wellness approach to finances can help catch issues before they are problems. “…do a full review at least once a year, and it’s better to do a review of your finances in their entirety at least quarterly. …physicians may make errors that could be prevented, such as allocating their savings without the appropriate diversity that would keep them from being exposed to too much risk.”[3]
- You are unique. From Medical Economics, “…what you may prescribe for one patient may be quite different for another in a similar situation but with alternative goals, concerns and resources. Similarly, authentic financial planning is not simply a financial plan by the numbers.”[4]
- It provides solid financial footing. James Dahle says, “No matter your specialty, every doctor will benefit from having a comprehensive financial plan, including a written investment plan that specifies short and long-term goals, savings amounts, accounts that will be utilized, asset allocation (mix of investments), and specific investments that will be used. …This will not only provide for a comfortable retirement, but it will ensure a secure financial footing throughout their careers that allows them to provide for their family, focus on their patients, and minimize their burnout.”[5]
While building your own financial plan is possible, it often takes time and experience to do so properly. Whether you do some of it on your own or outsource the work to experienced professionals, the most important point is to have a plan and follow it. Your future self and family will thank you for it.
[1] Peoples, V. (2021, July 28). How to build and protect your wealth: Financial planning tips for Medical Professionals. Worth. Retrieved July 19, 2022, from https://www.worth.com/doctors-financial-planning-tips/
[2] Peoples, V. (2021, July 28). How to build and protect your wealth: Financial planning tips for Medical Professionals. Worth. Retrieved July 19, 2022, from https://www.worth.com/doctors-financial-planning-tips/
[3] Farouk, A. (2016, February 9). 6 top financial planning mistakes physicians make. American Medical Association. Retrieved July 19, 2022, from https://www.ama-assn.org/practice-management/career-development/6-top-financial-planning-mistakes-physicians-make
[4] Brancato, P. C. (2020, November 12). 10 reasons physicians need a good financial planner. Medical Economics. Retrieved July 19, 2022, from https://www.medicaleconomics.com/view/10-reasons-physicians-need-good-financial-planner
[5] Dahle, J. M. (2022, May 24). Doctors need and deserve a real financial plan. Doctors Need and Deserve a Real Financial Plan. Retrieved July 19, 2022, from https://opmed.doximity.com/articles/doctors-need-and-deserve-a-real-financial-plan?_csrf_attempted=yes