Whether you’re fresh out of uni or medical school or have many years of medical professional practice behind you, making smart financial decisions is critical to build wealth for now, and into the future.
Kym Nitschke, who specialises in medical accounting in Adelaide, Melbourne and Sydney, shares seven of the best financial moves you can make as a medical professional. The following tips will ensure that the money you worked hard to earn keeps on working for you
Few people are as busy and under as much stress as doctors. And most medical professionals are paid accordingly.
You chose a career in medicine to help people and make a difference in your community, but it’s also important to ensure you’re maximising the financial rewards.
Earning a large income doesn’t mean you can afford to throw away money. Smart decisions regarding tax, investment, retirement and more will help you enjoy a comfortable standard of living, worry-free, both now and long into the future.
So how do you, as a medical professional get your finances humming?
1. Set a purpose, plan and goals
Vague and short-term goals won’t lead to fulfilment.
You must determine now (if you haven’t already): what do you hope to achieve in your lifetime, both personally and professionally?
Do you want to secure your children’s education and comfortable lifestyle? Fund your personal mission or dream? Retire debt-free?
After determining your purpose, set realistic goals which will help you wisely use your money to keep you on-track. It is best to work with an experienced medical accountant and medical financial planner on this, who understand your needs and can help you plan accordingly.
2. Budget Carefully
Budgeting doesn’t mean living cheap – it’s about living within your means. You don’t have to deny yourself too much, either.
Set aside a portion of your earnings to pay yourself with each month and then budget out the rest towards paying important bills and so on. A budget will help you keep a steady stream filling up your savings account.
As a medical professional, you have to be on guard against some of the pressure your peers and family are likely to put on you. You might be pressured to live a lifestyle that reflects your significant income. You may be expected to take lavish holidays, drive the latest cars and take out a loan for the nicest home.
Caving to this pressure can force you to go into debt and take on unnecessary stress.
Whether you are a med student or long-time professional, living by a budget will help you resist such pressure and keep a strong grasp on your finances.
3. Invest Early, Invest Over Time
As a medical professional, you’ll discover there are almost limitless opportunities to invest. Investing is a good use of your wealth and can help you build a diverse portfolio. Your job, however, is to be wary of shady schemes and investment plans that could cause you to lose capital.
Wise investments (like property and taking advantage of compound interest), on the other hand, will help your pennies add up over time. So you want to get started as soon as possible.
The same is true of your retirement. Medical professionals, in particular, have a late start-time when it comes to saving due to years spent studying and incurring education-related debts.
Start saving for retirement now. Resist the temptation to spend the majority of your earnings on luxuries for the present. It’s never too early to make a plan and start adding to your super fund. Pay out as much into your super as you’re allowed. You’ll thank yourself later!
4. Keep a Cash Fallback
You just never know what life will throw at you. Doctors and other high-earning medical professionals are rarely out of a job. But it’s still recommended to have something set aside to get you through a few lean months, or if you or a family member were struck by illness or injury (fingers crossed that doesn’t happen!).
5. Manage Your Tax Carefully
With a large income can come a big tax bill. But it doesn’t have to be this way. Work with your medical accountant to find opportunities to save on tax.
But again be cautious about those suspect investment schemes that lure professionals in with the promise of big tax incentives. You may end up losing more money than you would have paid out in taxes! Get professional help in easing the tax requirements on your income.
6. Pay Attention to Your Finances!
Once again, because of having a higher income, it’s easier to let money slip away from you. Tracking finances is important to healthy wealth management. Make it a daily part of your routine to check your bank account online. Check your credit statements. Set reminders on your calendar for important financial deadlines such as bill payments.
Ask your medical accountant about expense tracking apps and software that can help you with this. Staying on top of your finances will help you always know what you’re working with.
7. Contact Specialist Medical Accountants (Adelaide, Melbourne and Sydney)
You may be easily overwhelmed by the sheer number of financial decisions in front of you. What’s the right move in your situation? How do you determine your priorities and set goals? What should you do with your money? Where are you going to find the time to figure all of this out?
All these questions, while you’re trying to do your job as best you can!
There is expert help within reach.
Talk to the experienced medical accounting Nitschke Nancarrow team, who have spent years helping medical pros keep finances under control and successfully build wealth.
– 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.