It’s no secret that doctors make a lot of money.
But with so many hats to wear—physician, administrator, business owner—it can be difficult to take advantage of the perks that come with being in such a high-paying profession.
So before you spend your next paycheck on a new sports car or just squander it on fancy dinners every night, here are some financial tips for physicians:
1. Save early and often.
You may have heard the term “compounding interest.” It’s a powerful concept explaining how money invested early can grow over time, especially if reinvested.
For example, if you invest $100 at 5% interest compounded annually and withdraw nothing from your account for 25 years (the average physician career), your investment will be worth $1,549.
If you wait until age 65 to begin investing and withdraw nothing from your account for 25 years (the average retirement), then at age 65, your investment would only be worth $1,103–a difference of nearly $450!
This means that saving early and often can make a big difference in what you’ll have saved up when you retire or need emergency funds later on down the road.
2. Review your insurance coverage and benefits.
As a physician, you’re likely to have a lot of different types of insurance: medical, dental, vision, and even life insurance.
The first step in understanding how to manage these policies is knowing exactly what they are and what they cover.
You should also be aware of any limitations or exclusions that apply to your coverage so that when something happens (like an accident or illness), it doesn’t come as a surprise when you receive treatment bills from providers who aren’t part of your plan’s network.
3. Consider combining life, disability, and health insurance.
Life insurance is a no-brainer for most physicians. If you have dependents, it’s important to have life insurance in place to pay for their care and expenses if something happens to you.
But what about disability insurance? This coverage will help replace some of your income if an illness or injury prevents you from working full-time.
The cost of buying this type of policy can be prohibitively expensive for some people; however, there are ways around that problem:
Consider combining your disability and health coverage into one plan (if possible).
This will lower the total cost while providing more comprehensive protection against unexpected events that could affect your ability to work and live comfortably without income.
4. Stop working for free.
You are a professional. You deserve to be paid for your work.
If you’re working for free or for low rates, you may think that it’s okay because “the experience” is valuable. But in reality, this mindset can be damaging to your career and finances in the long run.
It sends the message that you don’t value yourself or your time–and other people will take advantage of this knowledge by offering even lower rates than they would otherwise pay an inexperienced physician assistant or nurse practitioner (NP).
Working for free also takes away precious time spent with family and friends or pursuing hobbies that bring joy into our lives!
Obviously, there’s no harm in providing some advice to friends and family, but keep that circle small and for the rest, just tell them to make an appointment, and you’ll see them in the office.
5. Find ways to increase your income.
It’s important to remember that the amount of money you make is not the only factor in determining your overall financial success. In fact, it’s likely not even the most important factor.
Rather than focusing on earning as much money as possible at any cost, focus on increasing your income in a sustainable way that aligns with your values and keeps you mentally and physically healthy.
The best way to ensure that your professional life provides all you need in terms of income and benefits is to get it in writing through your employment contract.
Granted, these lengthy documents can make you feel like you need a law degree to understand, which is why many physicians find a trusted financial and legal team to handle their employment contract review.
Physicians are among the highest-paid professionals in the world, but that doesn’t mean they don’t have financial struggles.
On the contrary: There are many challenges facing physicians today, from rising healthcare costs to a shortage of jobs. However, with a little diligence and planning, you can ensure your practice is well-funded for years to come!