The new year is a great time to focus on breaking old habits and instilling new ones. It may come as a surprise to you, that over the 25 years plus, that I have been in business, doctors and dentists adopt some of the poorest financial habits, despite their relatively lucrative income streams. How can you get your finances on the right track this year?
This article does not constitute advice. Professional advice should be taken prior to acting on any part of it.
Keep more money and save more money in 2017
If you would like to keep more money, as well as save more money, in the next 12 months, then it is important to become “at one” with your finances!
- No more ignorance to where your monthly salary is going.
- No more blaming your spouse, or children, for running away with costs.
- Responsibility is the key to making more and saving more this year.
If you know you are poor with money, the first step is admitting it and pledging to set some goals for the year ahead. These goals need to be achievable and give you actual reward come this time next year.
Here are three tips to getting your finances on track:
(1) Know exactly where you are now, financially
Before you can go forward, you must look back. Most people don’t have much of a clue about where their money is spent and that leaves then vulnerable to making the same mistakes over and over again.
When undertaking a strict analysis of the last, say 3 months bank statements and credit cards bills, you will soon start to see where your money goes.
If you frequently find yourself in the red, with an overdrawn bank balance, or worse, have the bank manager on the phone every month, then there is going to need to be some curbing of spending in order to be able to rectify the situation and move to a position where by you can actually make savings.
(2) What you want isn’t the same as what you need
It is of course natural to want to treat yourself and your family from time to time. However, a continual spend, spend, spend attitude is dangerous and only uses up your income stream, erodes savings, and makes sensible, long-term investment very difficult.
Sacrificing what you want today, will enable you to save for something greater in the future, maybe even something life-changing.
Determining whether a cost is something you need, or just something you want is a way to ensure your finances remain “on track”. Allocate a budget for monthly spending, dinners out, clothing, travel etc.
If there is the desire for a larger item, say a new sofa suite, or a new car, then plan for this effectively, rather than rushing out and making the purchase immediately.
Maybe even opt for the model down from the top, so you can still make savings that month, or see if you can manage a little longer with what you already have.
Feeling comfortable with delaying gratification may take some time to get used to, but making the start is key.
(3) Clear debts first, then make savings
Doctors and dentists, despite earning often sizeable salaries, still frequently have significant debts. This is due to excessive spending and lack of time to fully get to grips with the finances.
Especially at present, with savings rates so low, it is far wiser to clear debts first, before making significant savings.
Clearing debts, not only helps psychologically tackle your finances, as nobody likes the dread of opening the credit card bill.
But also, credit rates of interest are generally high, therefore, you end up paying much more back in the long-term, which again only hinders savings and investments over the long-term.
First clear debts, as quickly as possible. Then look to invest the money into a good savings and investment plan to help your financial future.
Need help with financial planning? Speak to Darren
Dental & Medical Financial Services have been helping doctors and dentists with financial planning for over 25 years. Make it your new year’s resolution to seek the financial guidance you need.
Tel: 01403 780 770
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