Doctors are notoriously bad at managing their money. I know this, because I am one. So many of us pay little attention to our fortnightly salary, infrequently (if ever) checking our payslips. Unless a major problem occurs (like not getting paid at all, which does actually happen fairly commonly), we generally assume that the money coming in is what it should be. Doctors don’t go into medicine for the money and because this is not what motivates us we are often guilty of not taking any control or ownership of it.
This approach can be okay if you are working in a public health service, but if (or when) you venture out into private practice it is a very different story. By not paying attention from the beginning, many doctors set themselves up to fail in future.
There are many financial strategies out there, and I am definitely not someone to take financial advice from. But, these are 4 ways that I am certain will help.
In the words of Scott Pape (author of The Barefoot Investor)
“Don’t wait for the perfect moment to start managing your finances; start now and perfect the process as you go.”
#1 Check your payslips, every time
Get into the habit of checking your payslip. Mistakes are made all the time and believe me when I say that your employer won’t come chasing you if they have underpaid you. You might well be working in an organisation with hundreds or thousands of employees – if you don’t notice and report the error, they won’t either. They will however figure out if they have overpaid you and they will not turn a blind eye to that, even if it takes them weeks or sometimes months to tell you. So start taking some control back and check that the balance sheet does actually balance (or whatever it is they say in the money world!).
#2 Read up on your super fund and income protection
Most of us don’t read the fine print when we sign up to super. We get told that income protection is included in the payment, but often the terms and conditions don’t match up to our expectations. Unfortunately, most people don’t realise this until they actually need to use it and then they can get a horrible surprise when they find out they are not covered the way they thought. So check it now and if you’re not happy with what it says then ask questions and start looking around.
#3 Get an accountant
If you’ve made it out of salaried medicine and into private practice there will be a huge learning curve ahead of you. Understanding tax rules and filling out quarterly tax returns can feel overwhelming, but don’t worry, you can absolutely delegate this if it isn’t something you want to add to the “to learn” list. Ask around and then outsource to a recommended accountant who understands healthcare.
#4 Pay yourself sick leave and annual leave (and whatever other types of leave you might need)
I remember working as a GP and thinking it was so hard because I didn’t get paid sick leave or annual leave. Every day I wasn’t working was a lost day of earnings and that made for a pretty tiring headspace to live in. If I was sick there was always a bit of mental calculation about the lost finances and whether I was “sick enough” to justify it. The good news is, it doesn’t have to be this way. Work out what proportion of your income should be sick leave, annual leave, etc and split it into a separate bank account on the day you get paid (not a day or two after, that’s really important). Title the account accordingly and train your brain to see those accounts as “only if” accounts. “I’ll use my sick leave account, only if I’m sick”, “I’ll use my annual leave account, only if I’m going on leave”…you get the idea. This can take a bit of practice, but the results are worth it. This small tweak in your money management, and this large shift in your psychology, means that you’ll never begrudge taking leave again.
So, make a date with yourself (or your accountant) and sit down and crunch those numbers.
