As we have already explored in previous articles, many doctors don’t make the most of their money. A lack of time and planning are often the biggest culprits for this.
But how do you recognize poor management skills? What are some of the symptoms you need to look out for?
Not knowing how much you spend
Doctors and money…it is quite interesting…you study many years to specialise in a particular field, you work extremely hard, and so you should know the value of money, given that it has cost you blood, sweat and maybe a few tears to get to where you are today. Yet, many doctors spend money way too easily or even recklessly and have no idea what their ‘bottom line’ is. Maybe you don’t want to know, cause it would shock you? I am not saying you should ‘spreadsheet’ every little expense, but you should know roughly what your average monthly credit card bill is, or how much cash you take out every week, what you typically spend on holidays. Without this information, you will find it hard to manage your cash flow.
Having too much bad debt
Doctors often fall victim to easy credit. Home mortgages, car leases, investment property loans, etc. The typical doctor’s balance sheet would carry a healthy/unhealthy level of debt. The main problem is million dollar mortgages – too many doctors succumb to peer pressure and want to live in the ‘right’ suburb(s). I see plenty of doctors in their fifties with mortgages that will take more than 10 years to repay. There is a tremendous opportunity cost, as due to the income tax rate you will need to earn twice the amount of your mortgage, and that is even excluding interest. As long as you have a big mortgage, you cannot build wealth in earnest.
Making ad hoc financial decisions
Doctors and money decisions don’t always lead to great financial outcomes. Maybe we’ll buy that holiday home, and hope it will be a good investment, or maybe we should act on that share tip, as the stock will surely triple in value. Doctors are incredibly smart, but not always when it comes to money. Ad hoc decisions often lead to increased risk and have the opposite outcome of what was intended – many end in significant financial losses.
Conclusion: Doctors and money
Many doctors are too reckless with their money and spend it too easily with little regard for the long-term consequences. Often the best medicine for this type of financial behaviour is some tough love from someone like myself – a professional adviser who is objective and strong enough to lead you in the right direction, for your own long-term benefit.
If you feel frustrated with your current financial position, then this is the type of advice you need. Contact me for your free Strategy Session on 08 6160 5918. I would love to assist.