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Why most doctors and dentists are unable to save any money

Every week we meet with new medical and dental clients, and the number one issue they want to tackle is their cash flow: how to optimise it, where they should be directing it (mortgage repayment, superannuation, investment, school fees, etc.), and how to create more structure.

To the outside world it appears that all doctors and dentists must be ‘rolling in money’, yet the reality couldn’t be further from the truth. Many healthcare professionals we meet are stressed about their cash flow: high income tax liabilities and ongoing commitments such as mortgage repayments and school fees take a serious chunk out of the after-tax, disposable income, and our clients are concerned that they are not actively building wealth. Often it feels like the money disappears more quickly than you have a chance to earn it…

We also addressed this topic in the following infographic.

The reality is that unless you take a very structured, goal-based approach to your cash flow, you will find it very hard to generate any surplus cash flow or savings capacity.

The result is that your frustration and stress levels will grow, as you rightly question why, despite your above-average income, you are unable to make any financial progress.

So how should doctors and dentists implement a better cash flow structure that will lead to long-term wealth creation and financial peace of mind?

1) Set meaningful goals

The first step is to set specific goals:

– How quickly do you want to pay off your mortgage? – Will you stay in your current home or will you be upgrading? – Do you wish to start a private practice, or expand your current one? – What amount of school fees or other financial support for your children do you wish to provide for? – At what age would you like to be able to make some lifestyle choices, such as working less?

These are just a few examples of questions you should be asking yourself. Once you have set meaningful goals, you will be more motivated to find ways to fund them.

2) How much funding do these goals require and by when?

Next you need to work out how you will fund these goals and in what timeframe, as well as what trade-offs you may need to consider. We assist our clients with this process by testing various financial models and scenarios.

3) Set up automatic payments

Now it is time to set up your funding mechanisms, and in our experience this is best done by setting up automatic payments, such as direct debits. This could be increased mortgage repayments, extra super contributions, savings to an investment portfolio or education fund, etc.

You will find that this leads to more discipline and quick results, which will further motivate you to continue with the strategy.

4) Micro-managing expenses

We are in the process of implementing a new service offering whereby we will be able to assist our clients with more detailed expense analysis, for those doctors and dentists who would like to micro-manage their expenses, or who are finding it hard to get their expenses under control.

There are also various online tools and apps available if you would like to manage this yourself.

5) Monitor and review

It is critically important to monitor and review you progress, as well as the various strategies you have implemented. Goals and personal circumstances change, as do legislation, investment markets, etc.

Unlike most financial advisers, we make cash flow management the centrepiece of our advice offering, as that is what our medical and dental clients are looking for. After all, your income is your biggest asset, so would you ignore it?

If you would like to do more with your money, we would be happy to offer you a complementary strategy session. Contact us 08 6160 5918 or

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