The choice to pursue a medical profession is typically a personal decision, having more to do with making a contribution to the world than making large amounts of money.
Being a doctor, however, can be a lucrative profession. You need to protect the wealth that you have worked hard to accumulate. As a doctor, there are unique aspects of your profession that make building wealth different from other professions.
Here are some tips specifically for doctors regarding wealth management:
Becoming a doctor is a lengthy process which requires many years of school and residency. During these years, candidates typically incur a great deal of debt before they even reach their earning years. If you begin your career with debt, then the first step toward building wealth is managing and eliminating your debt.
You can do this by minimizing your spending. When you make large purchases such as homes or cars, make sure that you take not only your earnings into account, but your debt repayment as well.
Set a goal of repaying your undergrad debt over a certain amount of time with monthly payments that you impose on yourself. While you are repaying the debt that you incurred as an undergrad, don’t make purchases on credit cards and accrue more debt on top of the debt that you already owe.
Though you may be tempted, as you transition from “Underpaid Resident” to “Well Paid Doctor,” to treat yourself to luxurious purchases. This will compound your debt situation and make it difficult to climb out of the hole, even with a substantial salary.
Acquiring Wealth – Avoiding Common Pitfalls for Doctors
Because of the salary associated with being a doctor, it may seem easy for doctors to build wealth. There are some pitfalls for doctors, however, and building wealth is not always as easy as it looks.
Doctors can acrue many expenses like staff salaries, office space, equipment, insurance, and many other expenses that come with running a practice. You need to make sure that you have a handle on all of your numbers, the income and the expenditures, so that you know the total profitability of your practice.
Exit Strategies for Doctors
Another potential pitfall for doctors is the exit strategy. In other types of businesses, the owner can build a valuable business over the course of a career, and then sell it for a large profit to fund retirement. However, much of the value of your practice comes from you.
When you retire, you take your skills with you, taking value from your practice. Selling a medical practice is not the same as selling another type of company, so you will need to plan for this and acquire funds for your retirement in other ways.
Being a doctor can be a lucrative profession, but it is also a career that leaves you with a limited amount of free time. With the time it takes to treat your patients and run your practice, do you have time left over to become an expert on your own wealth management? Is there time to learn about investment avenues, insurance options, protecting your assets and planning for your retirement? Probably not!
Just like you would recommend that sick or injured people seek medical care, you should seek assistance from a wealth management professional if you want to make the most of the money that you earn. You work hard for your compensation, so let an expert help you protect your wealth and keep you financially healthy.
If you would like to further discuss how you can build your wealth through your profession, please contact us and we’ll be happy to discover the right strategies for you.
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