Abstract
Being a dentist comes with a set of financial baggage. We might be earning well into high figures, but fixed operational costs, sometimes running student loans, the ever changing high-cost technology, along with figuring out tax woes and retirement savings needs to be managed on priority as the shelf life of a dentists’ peak years is less. All this can inevitably lead to stress. Dentists have a reputation of being bad with finances. The best way to deal with this is getting a financial advisor or training ourselves in financial planning. Financial planning is a must as it inculcates a habit of savings early and if maintained throughout the career can help avoiding stressful situations.
Why are finances stressful for the dentist?
There are a few aspects which would need a bit of monitoring to stress in dentistry due to financial factors. Let us dissect a few of them: 1. Heavy investment in education: Medicine and dentistry is a noble profession as doctors heal sickness, treat diseases, physical, mental trauma and relieve pain. So naturally acquiring this degree is not easy but a result of years of hard work in academics (with or without post-graduation) which additionally costs a fortune. Dentists need to keep updating their skills and educating themselves. There are specialized courses for dentists like dental implantology, rotary endodontics, lasers which take time and are expensive as well. Most of our childhood peers /friends are 22-23 years old when they finish their education and start earning a proper livelihood. In contrast, most dentists get free from education and training usually by 28-30 years of age. So compared to other professions, not only does a dentist invest a lot in his career, but he also starts earning properly much later in life - almost a decade later than the hoi-polloi. This lag of 10 years, where FOMO (Fear of Missing Out) becomes IAMO (I Actually Missed Out), is the first reason of stress. 2. Loans and debts: Loans and debts taken for study, new clinical set up or for expansion eat into a dentist’s income on a monthly basis. The need to invest heavily in the clinic’s high profile look and grand interiors can lead to more loans. Secondly, if we have loans and EMI’s running into several big thousands and we also suffer from poor debt management, it is like an icing on the cake! EMI’s take away from both, our day to day income/savings and any acquired extra interest. Loans can seriously jeopardize investment strategies and put a constraint on the retirement nest egg, thereby, reducing our ability to build a fortune. 3. Lack of financial teachings: Our current education system is broken which just does not prepare us for readiness in aspects of handling our clinics (management), record-keeping/documentation/consent (legalities) and finally, managing our money (finances). None of this is taught in dental schools as a part of the curriculum. 4. Lack of financial knowledge: A common thought is that dentists are often neglectful with their money. They stack up loans, usually spend out too much of what they earn and hardly save for their retirement. After years of studying, exams and struggling on a tight student’s life budget, they start being extravagant when they start earning well, be it nice vacations, expensive cars and a large house; sometimes, on even further loans. This arises primarily because of lack of financial knowledge, poor financial regimen followed and lack of vision of a long-term perspective. 5. Hesitancy to seek help: We as health care professionals are so used to being looked up to, that we find it difficult to seek out advice on anything. It is difficult for us to trust someone else as asking for advice appears to be a sign of vulnerability. Since we are supposed to be self-assured, it is hard for us to appear weak to someone else, like a financial advisor. In addition, there is a bit of a culture within Indian families where talking of finances at home gives one a reputation of being money minded, and hence even asking for help within the family is avoided.Tax deductions, Mutual fund investments, ITR - Terms we know but do not understand!
Ignorance isn’t bliss anymore. Dental professionals assume that we can make sound financial decisions just because we are qualified to save teeth, but this line of logic is faulty and due to lack of acumen in this area, we can land up in torrid and crunchy times! Tax regulations are changing all the time and for dentists with their own practice and with many income-generating assets, tax returns can be a minefield.Did you know that there are various ways and strategies which help in converting bad debt (non-deductible) into good (tax-deductible) debt? If we lack this knowledge, we can’t make use of tax-effective investments which ultimately serve a double purpose of growing our wealth and reducing our tax liability in the long term.On the investment side, we are usually over-awed by TV ads of mutual funds to put in monthly investment as SIP (Systemic Investment Plan), but which fund, which types, how much amount, we don’t understand! This is where we peep on our friends’ or colleagues’ investment portfolio without knowing their actuality of funds and tax structure and I must say; it is a very deep hole to fall in! As said earlier, there are two ways to do this - either do it ourselves by enlarging our knowledge database or seek the help of a genuine professional i.e. the financial consultant to get us back on track. Now, I must clear here that a chartered accountant (CA) and a financial consultant are usually two different professionals just like the Endodontist and the Oral Surgeon although both are primarily, dentists. I have seen colleagues take full investment guidance from their CA, who is taking care of their ITR. Dentists need sound financial advice just as much as anyone else, but they may be stumped about where to go to find it. We usually have many patients in the form of financial salespersons, but these people may not have our best interests in their mind. A realistic plan devised by a proper financial consultant can transform your monthly EMI’s to monthly savings instead. The biggest effect of this will be on the tax outcome.
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