Though the doctors (medical professionals) start earning approximately at the age of 30 because of their medical studies and intensive training. Most of the time, their initial earning spends in paying their education loans, setting up their medical practice, and starting their family. After that, they get so busy that they do not get time to plan their finances well, but they should not. They should also manage their finances so that they can use their hard-earned money in fulfilling their long-term goals without any hassle. Here we are providing a few tips for the medical professionals to manage their finances well:
- Maintain Monthly Budget: The first step towards savings is starting to track your spending each month. Maintaining a monthly budget helps to find out the places where you are spending extra. Knowing this will help you to make a budget for your requirements like transportation, food, education loan, entertainment expenses, etc. Following a monthly budget helps you to track your spending.
- Get an Insurance Plan: Being a medical practitioner does not imply that you do not require any kind of insurance policy. You also need a medical indemnity cover as others do, you also need a life insurance plan to safeguard your family against any unforeseen circumstances, moreover, you also need insurance to take care of you and your family in a situation of unemployment. Apart from these insurance policies you as well require malpractice insurance. These insurance plans also come under financial planning. So, start investing your money in these insurance policies as well.
- Start Investing in Long Term Investment Plans: Your career already starts late, so do not delay after that in starting investment in long term plans. There are many investment policies like bank fixed deposits, Public Provident Fund (PPF), mutual funds, etc that lock your money for the long term and accumulate a corpus for your future requirements. Even though all long-term insurance plans are the best but mutual funds provide higher returns if compared with PPF or FD. Therefore, it is recommended to research for various long-term investment plans before starting to invest in a few.
- Repay Your Education Loan Before Taking Other Loans: As soon as you start earning, start repaying your education loan. Get rid of this loan first and then only opt for other loans. This is because if you have so many loans to repay at the same time, you will feel pressure, and your monthly income may become insufficient in repaying them. So, plan wisely and start repaying your education loan first and then apply for other loans like loans for setting up your clinic or for higher education. You can opt for other loans after repaying a major portion of your education loan.
- Start Building Corpus for Major Milestones of Your Life: Financial planning is nothing but wealth building for meeting the expenses of major milestones of life like marriage, education of children, funding their higher studies, purchasing a home, and finally living a stress-free after retirement life. You can achieve such goals by investing in debt funds, equity funds, fixed deposits, etc.
- Have A Diverse Investment Portfolio: Diversification in the investment portfolio is one of the ways of wealth creation from it. However, before start investing, it is necessary to know the returns and risks associated with each investment option you opt for. This is because different asset classes have different returns and risks associated with it.
- Build Corpus for Your Retirement: Doctors do not have any specific age of retirement. They work until they are physically fit and this gives them the freedom to select their retirement age on their own. So, if you have a sound financial plan, you do not have to wait until you become physically down to get retired. If you have accumulated a good retirement corpus by the age of 60 or even 65, you can take retirement.
- Proper Planning of Taxes: To keep yourself financially fit, you should invest more and pay fewer taxes. For this, you should select those plans that will build a good corpus in the future and help you to reduce your tax liability. You can select debt mutual funds, shares, property for increasing corpus, and reducing tax liability.
- Take Help from Financial Advisor: There are finance professionals, who can help you to manage your finances well so that you can build more corpus and secure your future. Seeking help from one such finance professional can be helpful for you for achieving your financial goals. A financial advisor can advise you where you should invest or which loans you can take for expanding your clinic.
- Start Saving as Early as Possible: You may not start earning very well in the early years of your career, but it is suggested to start investing as soon as possible. A survey of some of the retired doctors of India clarifies that those who took retirement at an appropriate age have started earning in the early years of their lives.
The Bottom Line:
Because of lesser time and knowledge about finances and financial planning, doctors avoid financial planning, which in turn results in poor finances at old age or at the time of need. Therefore, it is suggested to follow the above tips and start investing in some of the suitable investment options so that you do not have to think twice about your future needs. Fixed deposits, mutual funds, etc are some of the top investment options. Moreover, you can take the help of a good financial advisor who can assist you to find out the most suitable options and build a good corpus for the future.