For doctors and dentists
Even though most doctors and dentists earn a reasonable level of income, it doesn’t mean that good money management is always practiced. Some still find themselves swimming in a multitude of debts, living beyond their means or simply not having time to keep track of where money is going each month. Here are 11 personal finance tips to help keep the focus on making your money work for you.
(1) Create a financial calendar
If you frequently forget important financial dates, plug them into your calendar. In the same way you expect patients to keep a note of their appointments, follow this habit so you keep on top of paying personal debts, personal tax, renegotiating loans or researching new mortgage rates before the term ends.
(2) Review your interest rates
If you are paying off debts, always choose the debt first with the highest interest rate, where possible. Typically it will be credit cards as they usually attract the highest rates, although take care with overdrafts too.
(3) What is your personal net worth?
Your personal net worth is the difference between your assets and your debts. Tracking this figure is worthwhile to see how you are progressing towards your financial goals, or give a warning sign if you are moving backwards.
(4) Set up a personal budget
A personal budget can be monthly, quarterly or annually, and aims to cap the amount you will spend in a given period. The aim is to make sure you are paying everything you need, whilst saving towards things you want in the short term, such as holidays, and also saving towards longer-term events, such as your retirement.
(5) Instead of a “crash” diet, try a “cash” diet
It is surprising when you switch to using just cash how mindful you become of spending money. Give your credit and debit cards a break for a few months, if you find yourself constantly overspending. Draw cash once a week, according to your budget and if it runs out, well, you will have to wait a few days until the next withdrawal day. Similarly, if there is excess, you can roll it forward, reinvest it, or go and spend it – it’s within budget after all.
(6) Schedule a “Money Minute” once a day
These days with bank apps available, it should be easy to access your bank frequently. Try scheduling one minute per day to check finances. Even if it is just knowing the exact balance on your bank statement or credit card, or counting the cash you have in your wallet, it helps keep your mind focused on money, and not let any nasty surprises go unnoticed.
(7) Try the 50/30/20 rule for financial planning
Allocate 50 percent of your income, after tax, to necessities such as mortgage / rent and living costs. Allocate 30 percent to lifestyle costs, including dinners out, holidays and clothes, as examples. Allocate 20 percent to paying off debts, saving for emergencies and adding to your retirement.
This is just a broad estimation and will change depending on your age, number of years to retirement, and other factors.
(8) Visualise your financial future
The best way to achieve financial goals is to visualise your ideas by writing them down and keeping them somewhere you can constantly refer to them. This helps you stay on track and remember what path you are on, and the reward that awaits if you continue taking action to pay off debts, or save more money.
(9) Be specific with you financial objectives
When setting financial goals, make them specific. Detail how much debt you want to pay off and by what date. Detail how much you want to save to use towards what, and by when. Also, when you want to pay off your mortgage and retire, although granted these may change as time passes.
(10) Make careful spending choices
If you are the kind of person to just want everything, then there is a risk of spending more than you earn. When making purchases, especially large ones, weigh up the benefits of each and see which is of more value to you. For example, is this new watch something I need, or should I continue saving towards the holiday in [insert dream destination here] next year?
(11) Value yourself
Keeping an eye on your personal finances can give a great sense of satisfaction. Letting debts spiral out of control can mean consequences further along the line and a sense of always treading water. Value yourself and your money and always try to keep that “rainy day” pot topped up, as this will give you financial freedom, especially in unforeseen circumstances.
Need more money management tips? Speak to Darren
Dental & Medical Financial Services are specialists in financial planning. This starts with the basics of money management. Darren can help get your finances in order with bespoke advice.
Tel: 01403 780 770