“Medicines cure diseases but only Doctors cure patients” – Carl Jung
Being a doctor is one of the most respectable job titles you could hold.
But medicine isn’t like most careers.
It is a super competitive and rigorous field.
As a doctor, you must spend tons of your time, money, and energy on your training to keep yourself up to date in your field.
Table of Content:
- Late Career
- Career option – Job or Setting up Clinic or Hospital
- Lack of financial literacy in doctors
- Strenuous workload as a doctors
- Repaying the education loan
- Insurance Cover
- Build emergency corpus
- Financial goals
- Diversification of investment
- Building the nest eggs
Why do Doctors need to review their Financial Health?
Becoming a good doctor is not something everyone can easily do. It is a challenging process since it involves years of hard work.
Only after completing 5.5 years, of course, you will be awarded the MBBS degree. But it is not sufficient to start a successful career.
A post-graduation or a course on some kind of specialization either in India or abroad is an added advantage in building a long-spanning career.
Overall it takes at least 8-9 years of coursework. This will push you as a doctor to start earning properly only after the age of 28-30 years which is very late compared to other professions.
Career option – Job or Setting up Clinic or Hospital:
After completing your studies in medicine, you have two options to choose from to build your career. You can either start practising in a corporate hospital or set up a clinic or hospital yourself. Each option has to be analyzed in terms of which one best would suit you as a career in the long run.
You might start your career working in a hospital. Because there is a guarantee of a stable cash flow that will help to pay off your educational loan or to meet any of your other personal goals.
Over time, this experience might get you significant recognition in your respective field. Switching from job to practice is a transitory phase where there is a huge need for cash outflow for setting up a business along with an unstable cash inflow. In the development stage of setting up your clinic, you might seek to establish your business first.
Lack of financial literacy in Doctors:
All doctors are incredibly dedicated and perfectionists in everything they do in their profession. But when it comes to handling finance, they just tend to follow their peers.
As a doctor, you might be an expert in your respective field. However, financial investments might be new and confusing when you are a complete beginner. This lack of knowledge could potentially lead you to fall prey to scams. In that case, it would be wise to seek advice from a financial advisor who as a professional can better guide you in this aspect.
Just like how prescribed medicines work much better than the medicine you get over the counter, it is exactly how seeking financial advice from a professional would get you better results than following every other financial tip out there on the internet.
Strenuous workload as a Doctor:
Due to the heavy workload and hectic schedules which might hardly leave you with any time for your personal activities, it is doubtful you might have any time left to spend on planning your finances.
But it is crucial to dedicate at least some of your time to think about your financial goals. A proper financial plan with an appropriate mix of various asset classes will help to achieve your financial goals.
Key points in financial planning for doctors:
1.) Repaying the education loan:
To fund your degree which might’ve been really expensive, you might have opted for an educational loan.
Once your course got completed and you have started earning, you should start setting aside a portion of your earnings to steadily pay off your debt over time.
As soon as you are done with paying off debts, the next step would be “Wealth Creation.”
Also paying off debts on time is an added advantage as it will help you get any other loan required, for example, setting up your own clinic or if you want to upgrade your skills, etc.
2.) Insurance Cover:
Life cover: Get yourself a pure term insurance cover, so that your personal goals are protected in case of unfortunate events. Buying term insurance early will help lock it at a lower premium.
Indemnity cover: It is an insurance plan to safeguard medical professionals against legal costs & claims for compensation by patients in the case of any litigation. It is imperative to have a professional indemnity as this would take care of the financial implications you might face in the future.
Health cover: Being a medical professional, you would understand how important health insurance would be to you and your family. It would be wise to get a family floater policy to protect you and your family in case of any medical emergency.
It is crucial to have a health cover as the absence of a health cover will burn out your investments quickly with just one incident due to how expensive medical treatments have grown to be.
3.) Build emergency corpus:
Building an emergency corpus is a crucial part of building your financial plan. You can;
- Budget your monthly expenses which will give you a clear framework of your overall savings & investments.
- Estimate 6 months of your total expenses, patiently let it accumulate & set it aside as your contingency fund.
4.) Financial goals:
Make a list of all your financial life goals & categorize them based on your personal timeline such as your short-term goals, medium-term goals & long-term goals.
While listing your financial goals, make a separate list for your professional financial goals. This will help you in earmarking any existing investment & in giving a direction to your future savings.
Personal financial goals: This might include;
- Buying a home/car
- Funding your kids’ education
- Marriage expense
- Other personal goals
Each financial goal should be clearly jotted down with the approximate required amount. While estimating the amount required, always take inflation into consideration.
Professional financial goals: This might include;
- Setting up your Clinic / Hospital
- Funding for your higher studies / new technology.
Continuous learning will keep you on top of the line in your respective field. Apart from the initial cost of setting up a hospital, funds are also required to upgrade the hospital with the new age technology machines & facilities which should also be considered while planning for your professional growth.
5.) Diversification of investment:
To achieve your significant personal goals, prudent investment in various asset classes is crucial. Having a diversified portfolio is an added advantage in your wealth creation process in the long run.
But you should be aware of the risk & return associated with each asset class such as equity, debt, real estate, gold, etc.
The majority of the people, especially in India have a higher exposure to gold and real estate as investments. Is that the case with you?
Through the lens of wealth creation, it is wise to view Investment in real estate & gold as for personal use like buying a residential home or buying gold as jewellery. Having a well-planned, diverse portfolio in other asset classes such as Index and debt funds will result in better risk-adjusted return.
6.) Building the nest eggs:
A disciplined approach towards your savings & investments will help in building your financial nest with golden eggs early on in life.
As the retirement age for doctors keeps on fluctuating over time, securing your financial life would give you an extra boost of confidence in your sunset years.
Having a sound financial plan will help you to build your retirement corpus early and retire fast.
Financial health & physical health are interrelated. A better financial practice helps to achieve both financial well-being & physical well-being.
If your profession demands a lot of time & energy, then you may find it difficult to pay attention to your financial health. In that case, it will be wise to outsource it to a finance professional.
A certified financial planner will give a holistic approach to insurance planning, investment planning & tax planning. As a doctor, you would know that prescribed medicine works better than over-the-counter medicine.
How long have you been postponing your financial Health check-up? Do it right away!