When you go to a doctor, it’s rare for them to prescribe solutions based just on immediate symptoms. There are questions about your medical history and lifestyle details before getting down to the appropriate solutions.
For doctors, dealing with their personal finances has to follow a similar methodology. There needs to be a professional advisor who can dig deeper to find wealth solutions rather than a piecemeal focus on investments and tax saving.
Unique requirements of Doctors
Certain aspects of a doctor’s profession and earning pattern require special attention. Most doctors start earning relatively late thanks to the lengthy qualification process.
By the time doctors are qualified to practice independently, they are already close to 30, whereas their peers may have a 5-7 year head start in terms of earnings. This means that some amount of aggressive savings are needed in the first decade of professional work to make up for the lost time.
For doctors with their own practice income can be uncertain, to begin with. Those who work with public hospitals will get good experience but at the cost of income. This means they have to focus on personal money management.
At the same time doctors, in both private and public hospitals, are likely to have little time at hand to pay any attention to building a sound financial foundation.
Some say that doctors never retire. While often true, doctors also need to keep studying for further qualifications such as for their super-specialisation.
All of this put together means detailed attention on personal financial management so that they are financially prepared, whether for emergencies or for up-skilling.
Things to keep in mind
For doctors who run their own practice, the focus on income-generating assets or regular income may be more pronounced when it comes to asset allocation.
The equity like risk would already be contributed in a large way from the private practice. Moreover, income from professional doctor fees can be non-linear, as a result the savings pile for each month can be different.
With proper financial planning, such private practitioners can focus on saving and investing higher amounts in months where income trends upwards.
Given that most doctors, whether in private practice or in employment, do not have the luxury of time, it is of utmost importance to outsource financial planning to a professional.
Financial planning is not just about tax planning and filing. Rather it means working through your income, expenses and savings in a manner that there is regular investing and focus on goals. This, despite a non-linear income.
For doctors with an independent practice, there is also a need to keep business profits separate for growing and managing its expenses.
This is another reason to manage personal finances adequately so that savings can cater to life goals and emergencies, rather than relying on money meant for their practice or business.
Lastly, a working retirement might mean that expenses don’t fall as much as anticipated even in the later years. This along with the need to upskill can have a financial impact in years when earnings begin to slow down.
An unending work-life, calls for a relentless focus on personal financial management. Professional advisors who can give their time and attention where doctors themselves can’t are the need of the hour. This is especially critical when it comes to a medical professional’s financial health.