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Are 1 in 3 Doctors Spending More Than They Earn?

There was some recent media coverage around the fact that 1 in 3 Australians spend more than what they earn. It begs the question whether the same applies to doctors and other medical professionals? In my experience it does, and many doctors simply spend too much.

Further alarming figures from the Commonwealth Bank report indicate that about 56 per cent of people would not have enough cash to survive if they lost their income. Doctors rely heavily on their income to fund their lifestyle, mortgage and other financial commitments and often don’t have an appropriate safety net in place.

There are a few obvious reasons why doctors are so poor at managing their own money:

– We have come out of an era where credit was easy to obtain. Doctors in particular are still able to borrow up to 90% or even 100% of a property’s value. As a result, personal debt levels have soared, and now that interest rates have started to creep up, many doctors will struggle with increased repayments.

– Doctors have not been taught the fundamentals of money management, so how can you be expected to do this well? (Also see this article)

– Many doctors lack structure and planning when it comes to managing their finances. Human nature is such that we utilise the resources at hand. If there is money in your account, you will most likely spend it.

So how can doctors take control over their finances and build a financial buffer?

The best thing you can do is to simply take control, and analyse your cash flow. Take a good look at what comes in and goes out, identify where you think you can save some money and set up savings plan (via direct debit or automated payments) to fund your most important goals. This might be increasing your mortgage repayments, diverting funds to a school fee account, etc. These automated payments need to happen as soon as your income hits your account.

Next, make sure you have access to at least 3 months worth of living expenses (including mortgage repayments) in cash. This can be maintained in an offset account for example.

Finally, make sure you have appropriate personal insurances in place, in particular income protection. You can watch this video to learn more.

We assist our clients with all of these different steps and guide them towards a better financial future. If you would like to know more, please contact us on 08 6160 5918 or

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