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Rock Street, San Francisco

A typical example of self-employed professionals earning well but
just well oiled earning machines only, that is where the buck stops as they
usually won’t be doing any financial
planning. Because of an overtly busy schedule, they usually won’t be keeping a
check on how much they earn because of variability in the monthly earnings
(nothing is fixed in a private practice) and because of this usually, personal
and professional expenses get muddled up. They do not have time for investment
planning, tax planning etc. and end up making wrong investment choices at the
fag end of financial year in March on just a verbal advice, hearsay or free
advice or even worse, evade tax by hiding income. Many are so busy with erratic
working hours that they don’t have the time or inclination to spend time on
managing finances. Such medico/dental couples need to take certain drastic
steps like separating out personal and professional expenses, creating a budget
with a high insurance cover for both and kids so that personal goals and
professional expenses are taken care off in case of unfortunate events. Certain
realistic financial goals like children’s education, retirement plans have to
be worked out with the help of a financial
planner, if not by themselves and then have to realistically stride towards
achieving the same by investing properly and reviewing their investments
regularly. They have to take stern decisions of investment via financial
advisor if they are not comfortable doing this on their own. Dentists/Doctors need to be in tune with the current trends,
changes, to stay updated with the latest technologies and to keep updating our
skills, as we normally invest more than any other profession. Though we come
with an advantage that we can practice our profession throughout until possible,
we should not be negligent thinking that the career is long enough and
retirement plans should always be kept in mind, which most of us usually tend
to ignore. Due to late entry into income compared to other professions, we
usually invest for high returns resulting in lower than expected returns and
sometimes even losses.

Do’s and Don’ts for us – The Dentists / Doctors

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We, the health professionals are fond of giving instructions to
our patients as doctors or dentists, but when it comes to finance, we ourselves
have to follow a few do’s and don’ts or saying it other way, a taste of our own
medicine in matters of finance. We have to follow a few cardinal rules to
ensure that our finances remain in a healthy condition (similar to what we
expect in our patients). Some of the mistakes commonly made by us are:


1.     The temptation to splurge
should be curbed big time once we start earning the big bucks. This urge
basically stems from the so called ‘exile’ period we have spent in our so many
spent years as a junior student first, then as a senior student and then career
struggling etc. when we feel, we missed out on opportunities to have fun as we
started to earn well much later in life than our school, college or other
friends. The urge spills on to fancy vacations, new cars, eating out every
alternate day etc. This juncture is very important to keep a check on our
expenditure and concentrate on savings and investments. This doesn’t mean that
we totally limit ourselves to the above, but drawing a decent line somewhere
down the line does help a lot.

2.     Busy schedule and time constraint makes us more
vulnerable since we are one of the most hard pressed professions for
time and in the daily crushing of things, we tend to take a back seat in
managing our finances usually leading us to either invest in a very
unstructured and impromptu manner or the decision making is handed over to a

3.     Prime importance is to be
given to have good amount of life cover and disability insurance cover so that
financial needs of family and profession are taken care of in case of unforeseen
and unfortunate events.

4.     Wrongly made heavy
investments in Real estate is not a good idea for us as real estate is just an
asset class and totally investing in it might not be better for overall

In this era of ‘consumer is king’, when there is a patient
knocking on the doors of consumer court every minute, a good indemnity cover is
also a must. 

6.     Usually
our improper investments for tax planning because of our pre-conceived notions
that the
objective of tax planning is to minimize the taxes and ending up investing in
places which are not in our best interest. This blinkered vision often results
in unwanted loans, real estate investment sector and insurance in an unorganized

7.     For most of us, our
private practice is our biggest investment, so we have to know to nurture,
grow, save & ring fence the same.

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