Written by Sarah Lim, CA Lic# 0M52397
The Most Effective Financial Planning For Today’s Busy Physicians
Doctors spend years managing their education and training in undergrad and medical school and then continue to internships, residencies, and fellowships. Once that is complete, it is then time to manage the health of patients. Many additional duties come with managing patients’ health, including coordinating with other physicians, keeping up with current medical research, and various clinical/administrative responsibilities. There are so many aspects of managing the health of patients that the physician’s financial health can easily be overlooked.
There are three main areas to focus on when trying to manage your financial health successfully. The first is critical care, which is creating a plan to achieve financial security while you are working as well as for when you retire. The second is maintaining your health and wellness by having regular check-ups and making necessary adjustments to maintain your health. The third and final area of focus is on specific lifestyle-related issues that you will face as you continue to evolve in your professional and personal life.
The first step in critical care is to gather the necessary and relevant information to create a plan to achieve financial security. The information required for this include income, expenses, housing, insurance, taxes, investments, family, and both personal and business goals. Over time, there will naturally be changes and adjustments that will need to be made, but the following are things that you will want to put in place early:
Set up a Savings Plan
o Figure out how much you SHOULD save as well as how much you can save,
o Decide on where you will want to invest your savings (trust account, retirement plan, etc.),
o Determine how you will set aside these savings based on your financial goals.
Establish a Budget
o Figure out your fixed and variable monthly expenses as well as emergency funds for unexpected costs.
Debt
o Include any school, mortgage, or credit card debt in your budget.
Assess the Risks
o Market Risk: Make sure your savings are aligned with your goals and invest in stocks and bonds. Stocks provide long-term growth and protection from inflation, while relationships help maintain financial stability through market declines.
o Business Risk: Malpractice and umbrella insurance are essential in protecting yourself and your business from any liability claims, which, without insurance, could wipe you out financially.
o Personal Risk: Make sure to have adequate life and disability insurance.
To maintain wellness, it is essential to review the following annually:
Investment Planning: Ensure that the allocation of your assets still matches up with your current level of risk tolerance and goals.
Retirement Planning: Americans are living longer, which means that a more significant amount of money and assets will be required to support themselves through retirement.
Insurance Planning: Review your current insurance policies and pinpoint any uncovered risks.
Estate Planning: Having a plan in place for how your assets will be distributed when you die and who will be given authority to make financial and medical decisions in case you are incapacitated is so essential and can reduce taxes on what you leave behind as well.
Tax Planning: Make sure your tax plan is lined up with your investment and estate plans.
Lifestyle Planning: Periodically review your housing, activity, and business goals.
Specific Financial Actions include the following:
Plan for how you will pay for long-term care: Will you use insurance or self-insure?
Choose the right financing for housing: Will you be up-/downsizing? Are you buying or renting?
Financial Planning for all generations – Make sure your patents are making the necessary plans for their later years as well as ensure your children are working toward financial independence as well.
To sum up, the following are the most crucial steps in managing your financial health:
· Begin planning and saving EARLY and know what your retirement options are.
· Cover your business, life, and disability risks.
· Assess your financial plan from time to time, especially after significant life events.
· Organize your retirement, investment, tax, and estate plans accordingly to ensure you meet your goals.
