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5 reasons why doctors cannot be complacent about their finances

More than any other profession, doctors have the ability to earn a significant amount of money throughout their career. Why then is it that many doctors do not retire as comfortably or as soon as they should? The very fact that you earn a high income can also be your financial downfall – you may become complacent about the management of your financial affairs.

However, there are 5 reasons why you need to take control of your finances very early on in your medical career.

Late career start

Because you study for such a long time, you start your career typically much later than other professionals such as engineers and lawyers. As a result, in your late 30’s, early 40’s you may not be as well off yet as you would have hoped. Wealth creation and the power of compounding relies on the benefit of time – you can therefore not afford to delay your financial planning and investment

Student debt

Many young doctors also end up with significant student loans. I have seen debts totalling up to $100,000. This is not a great starting point, particularly as you will more than likely also have a big home loan. Both loans are non-tax deductible and represent a significant opportunity cost; it is typically better to repay these loans first than to invest, but to maximise your wealth you should ideally start investing as soon as possible.

Paying too much tax

Whilst you may earn a good income, you also pay a lot of tax, which may only leave you with a little bit more than half of your gross earnings. In a previous article I have discussed some tax planning strategies (click HERE), but they only go so far. Tax will remain one of the biggest frustrations throughout your career.

Lack of time and specialist skills/knowledge

Medical professionals are incredibly bright and have a keen interest in understanding financial strategies and concepts. However, one of the biggest impediments to having suitably organised financial affairs is your lack of time. Your time is best spent working with patients, rather than devising your own financial strategies. This is best outsourced – see my article on this topic by clicking HERE. In this article I also explain that in order to get the best results, you should be working with a specialist.

Inappropriate investments

Finally, many doctors also do not implement appropriate investment strategies. It could be that you are focused too much on the tax outcome, or go for investments that are a bit too ‘exotic’. The sad reality is that I have seen quite a few doctors lose money on investments that carried too much risk or were not very transparent. Given that you have a reliable, high income, you do not typically have to take a lot of risk – sustained discipline and high-quality investments will get you across the line.

About me

I specialise in managing and coordinating the financial affairs of medical professionals and have been recognised as one of the best financial planners in Australia. I am a Certified Financial Planner and member of the Financial Planning Association of Australia.

As I understand your time is extremely valuable and scarce, I am able to offer flexible meetings times, including outside business hours and during the weekend. I can even come and meet you somewhere convenient, or talk via videoconference on Skype.

My first consultation is free. I allocate up to 90 minutes to discuss your personal circumstances and to establish how I may best assist you. Where you already have an existing adviser, I would be happy to offer a second opinion. I always quote a fixed dollar fee before we start working together.

Please contact me on or call me direct on 08 9381 2704. You can follow me on Twitter @YvesSchoof or connect with me on Linkedin to receive new articles.

Disclaimer: Yves Schoof and Affluence Private Wealth are Authorised Representatives of Synchron, AFS Licence No. 243313. 
 The information posted is intended to be general in nature and is not personal financial product advice. It does not take into account your objectives, financial situation or needs. Before acting on any information, you should consider the appropriateness of the information provided and the nature of the relevant financial product having regard to your objectives, financial situation and needs. In particular, you should seek independent financial advice and read the relevant product disclosure statement (PDS) or other offer document prior to making a decision.

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