Long arduous training period compels young dentists to start their working life late. Long erratic working hours restrain dentists to devote sufficient time to plan their finances. Dentists are at great disadvantage and some may not get proper financial advice.
Dental schools only teach clinical aspects of dentistry, absence of financial classes or fiscal understanding are other disadvantages to dentists.
Many of us dream about a big home and luxurious car as soon as we graduate and start practicing, the reality is quite different. We may be able to cut a prep with a 400,000 rpm handpiece in a couple of minutes. Yet the full restoration takes time and patience to build longevity. Similarly, it requires lot of patience and management at the beginning of career to be successful apart from clinical expertise.
Dentists should take care of themselves first as it is the most important financial asset.
The first thing to be done is to make sure to have health insurance. If we get ill, injured or cannot work, all our training becomes useless and the ability to earn a lucrative living is procrastinated. Yes, it is likely that we may be in a state of complete health, but as a part of our training, we know that unexpected accidents and unforeseen illness can happen to anyone at any time. Therefore it is prudent to first and foremost get ourselves insured. All our medical expenses are covered apart from having a small cash reserve to cover our emergency medical expenses.
In a profession like ours, it is mandatory to have an indemnity cover. It protects us against any threats given by a patient in losing their close one due to negligence or ill advice. Human error cannot be eliminated and we are always at risk. Such claims can pose a significant threat to the financial security of a practitioner. This insurance protects us against claims arising out of bodily injuries caused by error, omission, negligence and covers defence cost incurred while investigations, cost of representation and compensation cost to a certain extent.
Debts and Loans
Be smart and start to pay off all your loans and be debt free before starting to spend all the newly earned fresh money on tempting luxuries. Pay all your debts including credit card, student loan or anything else. It may seem to be an easy task but it is not simple in the present era of advertisements and the need to show off.
Advertisement allures us to the consumer brands that provide us with an identity. Our mind becomes captive to the appealing products and their features presented in a manipulated manner. The result increases in the amount of debt to buy every new product in the market in order to ‘upgrade our lifestyle or practice’ and failure to pay back and left with no savings.
One must remember that although it is very important to keep upgrading with advancements in the field of dentistry it is not necessary to buy every fancy instrument that our fellow dentists buy. All that glitters is not always gold.
Always pay yourself first at the end of every month. Use the remaining amount to pay bills. Excess incoming money creates an internal representation of an empty room which must be filled with purchases. By reducing this money for savings, we make this empty room smaller.
It is said that those who start saving their 20% income consistently at a young age have no problem retiring at an age of 60. This consistency is very difficult to achieve. There consistency which is mentioned in the following point.
Automate your Savings
Set up an automatic withdrawal of money from your earnings into your savings account. Make sure that this account is separate from your daily or monthly expense accounts. After all, out of sight is out of mind. Within a short span of time, you won’t think about reduction and will be comfortable with the available money.
Learn the rules
A little financial literacy can be a dangerous thing. All of the seminars that one attends on financial aspects teach us what to do without focusing on what not to do. This little learning gives us confidence to be more adventurous and take undue risks.
One must avoid falling victims to glossy investment policies. Be sure to take second opinion of a neutral third party before investing in any plan.
Learn where to find the best tax deductions, when investments can be made and how much can be invested and understand what kind of investment produce what kind of returns.
Being impatient and selling our old investments when not getting big profits in the first year and buying new ones will take us nowhere. Disappointments can happen with our investments as well. The market can crash, the company can get out of business. As in our field, we need to be ready to face investment casualties as well.
In the end, I want to conclude by saying that begin the planning before its too late and you might wish that you know who has a Time Machine for you to go back and change your mistakes.
Very useful post.. thanks for sharing Dr Zainab