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3 Money Management Tips for Doctors

3 Money Management Tips for Doctors

It is rewarding to become a doctor, both personally and financially, however there might also exist challenges as well. Some obstacles that a physician may face include managing money, taxes and financial lives. To keep successful for both short and long term, new doctors should pay attention to managing their finances in addition to managing their practices and patients.

1. Account for taxes.

Some physicians work as small-business owners or independent contractors, and in this case, they should account for taxes on their own. As a doctor, you should remember to put aside sufficient money for paying taxes. By setting aside money for taxes, you can make sure that you don’t need to withdraw money from your investments when the tax deadline is approaching. Sometimes a doctor needs to file tax returns quarterly, hence putting aside a fixed amount of money every quarter is a great practice. The money for tax should be kept at somewhere safe such as a saving account or some money market funds.

2. Fund your retirement.

Physicians working for hospitals or large practices usually have the access to a 401k plan, while for those who work independently, they need to fund their retirement plans on their own. No matter which one is your case, you should ensure that you set money aside every year to supply the funding of your future retirement plan. No matter the retirement date is decades away or just a year away, a doctor has to invest steady money to fund his comfortable retirement. A best practice to make you comfortable about retirement is to invest a consistent amount of money every month. Regularly investing equal dollars, also known as dollar cost averaging, can effectively help smooth out the bumps and raise the possibility that the invested money will grow significantly in the future.

3. Manage the student loans.

It is not a secret that medical school is very expensive, and a lot of new doctors have to emerge a big fortune from tens of thousands to hundreds of thousands from their residencies into the student loan debt. A sound money management plan of doctors must manage to address the student loan obligations. One of the best ways to pay the loans off while not impact your lifestyle is to set aside a portion of income off the top. A new doctor can start with a small percentage like 5 percent, and then work the way up slowly.

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