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doctor financial mistakes

8 Mistakes Doctors Make With Their Personal Finances


Nov 5, 2019


As a doctor, you work hard to solve other people’s problems and most of the time you earn good money doing it.

But a large salary doesn’t always guarantee financial security. Like many other doctors, you’re at risk of major financial problems.

Based on our extensive experience working with medical professionals, here’s eight of the biggest mistakes that high-earning doctors tend to make so that you can avoid falling into the same financial traps.

1. Not paying attention to finances.

A career as a medical professional can bring a false sense of financial security. Simply earning more money doesn’t always mean that you’re free of money problems. More money often means more money problems.

Too many doctors make the mistake of assuming that they’re all set and can spend their money however they please without any plan or budget in place.

If you don’t pay close attention to where your funds are going, however, you’ll quickly lose control of your spending. This will have long-term implications on your ability to save money, build wealth and retire comfortably.

2. Not understanding the tax obligations of doctors.

The government expects high-earning professionals like doctors to pay them a portion of their earnings that reflects their sizeable salary. Doctors who aren’t on top of their tax often pay more than they should. Sometimes, they don’t manage their obligations well and end up with a painfully large debt.

There are many little-known ways for doctors to qualify for tax breaks. Getting proactive with your tax will ensure that you’re compliant while still holding onto every hard-earned dollar possible.

3. Taking out the wrong amount of personal insurance.

Despite treating patients who suffer from a variety of unexpected illnesses and accidents, many doctors assume that they themselves are immune to accidents or personal tragedy. This thinking can lead them to neglect their own insurance needs.

Even if you are a very healthy individual, you can never be too careful; sufficient insurance cover is absolutely essential for doctors. This should be in addition to the basic insurance that you’re required to have as a medical practitioner.

Some doctors end up paying way too much for insurance cover. This could be through paying for cover you don’t need or not getting the best possible deal.

Take the time to understand exactly what your personal insurance needs are and work with your advisor to review your policies from time to time to ensure that they are accurate and not excessive.

4. Ignoring important investment and wealth generation opportunities.

Many doctors rely on their superannuation to build their wealth and set up for retirement. But there are many more viable options out there.

In fact, investing in diverse options is likely the best way for you to build wealth that will provide you with passive income throughout retirement.

You need to talk with an investment expert to find out which opportunities are ideal for your current situation and long-term financial goals. Don’t just limit yourself to the basic offerings. Otherwise, you could be missing out on valuable wealth creation opportunities.

5. Not structuring property loans correctly.

In this area, too, doctors are prone to making mistakes. Some jump on the offers of loans that are way beyond their capacity to pay off and end up burdened with debt. Others fail to get the best possible deal on their finance. Doctors with multiple properties are at risk of structuring their debt poorly. Another big one is cash flow – mismanaging loan repayments can cause doctors to have to restrict their lifestyles, or worse, force a fire sale of an investment property.

6. Focusing on super too late.

It’s never too early to start increasing contributions to your super, beyond the minimum requirements.

Doctors who hold off for too long before focusing on their superannuation savings and contributions won’t be able to afford the lifestyle of their choosing in retirement.

7. Falling for risky investment schemes.

Medical professionals are prime targets for those who market risky investment schemes. To avoid falling victim to an investment scam or dodgy ‘opportunity’, make sure that you know exactly what you’re getting into. Don’t let yourself be won over by sensational promises of “guaranteed” returns. Consult an investment and financial adviser before making any commitments.

8. Not having a long-term financial plan.

Lastly, many medical professionals make the big mistake of not having any concrete financial plan. They simply expect that a large salary and super will guarantee their comfort for the rest of their lives.

In reality, doctors, just like everyone else, need to have a plan with clear goals to ensure that they get the most out of their earnings.

Get advice

To maintain control over your resources and grow your wealth, talk to the experts.

Contact Nitschke Nancarrow, specialists in accounting, financial planning, loans and finance, investment and business for medical professionals. We operate in Adelaide, Sydney, Melbourne and throughout Australia. Managing partner Kym Nitschke is available for a free initial discussion about your situation. Call us on (08) 8379 9950 or send me an email.

– Kym Nitschke

The information contained on this web site is general in nature and does not take into account your personal situation. You should consider whether the information is appropriate to your needs, and where appropriate, seek professional advice from a financial adviser.

Taxation, legal and other matters referred to on this website are of a general nature only and are based on Nitschke Nancarrow’s  interpretation of laws existing at the time and should not be relied upon in place of appropriate professional advice. Those laws may change from time to time.

Nitschke Nancarrow specialises in accounting, tax and financial advice for superannuation. Contact us now for a no obligations discussion about your needs.

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