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If you are a medical professional, it is essential to plan your finances to achieve your goals and to utilize the resources in the best manner. Medical professionals or doctors start earning when they are almost 30 because of the intensive long training period and medical studies. Their initial earning phase involves paying education loans, credit card debts, starting a family, or setting up a practice. They don’t have enough time to plan their finances well so that they can retire comfortably. Proper financial planning is the only way that could help them achieve long-term security and a comfortable lifestyle now and after their retirement. Below mentioned are some of the financial planning tips that might help a medical professional to plan his finances.
- Maintenance of daily cash register : Usually, the cash flow in a medical profession is very high. So, it is crucial for doctors to maintain a regular cash receipt. Doctors are liable to show their banking history as income proof when applying for a loan. Doctors could deposit the daily cash received in a bank or can ask the patients to make payments by debit cards to create a corpus of funds, which will help them create a banking history and get loan approval.
- Plan a monthly budget : You won’t be able to save any money until you keep track of where are you spending it each month. You need to break down your monthly expenses and note down where are you paying. Knowing that would help you to create a budget for your necessities like food, transportation, student or education loans, entertainment expenses, or any other kind of debt repayments that you owe. Following a spending plan or a monthly budget would also help you to stay out of debt always.
- Plan your insurance : Being in medical practice, you would need several kinds of insurance coverage against your financial protection. Having a proper insurance plan is beneficial, which will take care of you and your family in case of unforeseen events. There is an extensive list of risks that you need to consider, like health, life, unemployment, disability, and malpractice insurance. You can take advantage of this medical insurance in times of emergency. For example, if you are a dentist or surgeon and get a hand injury while your medical practice due to which you are not able to work for a long time. In such a case, disability insurance can help you have an additional income while you recover.
- Invest in long term schemes : As doctors receive a higher cash flow from their profession, it becomes essential for them to think about investing these funds into such market schemes which promise higher returns. Some of the schemes in which doctors could invest their hard-earned money are fixed deposits, mutual funds, PPF accounts. Mutual funds would be an excellent option for doctors to consider for investment as they offer high returns as compared to fixed deposits or PPF accounts. So, it is better to research for all such long-term and short-term investment schemes before sticking to any one of them.
- Plan your taxes : If you want to remain financially secured after your retirement, it’s a great idea to maximize your savings and reduce your tax liability. You can invest in debt mutual funds, bonds, shares, property to get better tax-adjusted returns. Remember, you should be very cautious while choosing the right investment option to grow your wealth and to reduce your overall tax liability.
- Manage your debt : Student loans, credit card debt or any other kind of financial obligation possess the most significant threat to your future goals. However, you can reduce the load by keeping track of your expenses and monitoring the finance available to you after repaying the debt. It would be advisable to pay high-interest loans first and try to cut down the unnecessary costs to save more. Remember, the money you will save now will help you in the future to meet your daily living expenses or any emergency.
- Seek help from a finance professional : Many medical professionals are not aware of financial terms, so they find financial planning a very much complicated affair. This is where a finance professional plays an important role who could help them to understand and plan finances in a proper way. A financial advisor may help you advise which loans you can apply for if you are planning to get one to expand your clinic and what will be the most suitable investment option to grow your wealth further.
The Bottom Line : Due to lack of time and adequate knowledge, doctors find it difficult when it comes to planning their finances. They are not aware of financial terms or anything about taxation. In such cases, they seek help from financial experts to get financial tips related to loans like doctor loans to help expand their medical business and investment schemes like fixed deposits or mutual funds to grow their wealth. These financial tips would help them to make a better and informed decision and ultimately in saving a considerable amount of tax.