Dentists always stress the importance of regular brushing and flossing. They give advice about good dental hygiene, but often fail to take advice on financial planning for dentists. As longevity becomes increasingly important, dentists’ and their families’ future well-being depends on solid financial planning.
If you have not started, here’s where you should:
Conduct a financial analysis
Be intentionally about where you are with your finances and where you want to be. Review financial documents from the past year to figure out your cash flow and net worth. Money left over at the end of the month—after paying bills— is your cashflow. Your total (liquid and hard) assets minus your expenses is your net worth. If either of these numbers are negative, you have work to do.
Write down measurable and attainable goals
Your first goal should be to find a way to reduce expenses or make more money. Those funds will go toward investing to reach future goals. Learning the difference between a goal and desire will help you be specific with any other financial goals.
Minimize your financial risk
The first step is understand what risks you are assuming by choosing to take action on your financial planning for dentists. Moving forward with building wealth means risking:
- Impacts of inflation
• Fluctuating interest rates
• Effects from market cycles
• Economic downturns
• Company specific affects
To minimize these risks, you must become familiar with the market and economy. You also need to work with a professional financial planner to diversify your investment portfolio. In other words, spread your eggs into several baskets. Some may have potential for high return with higher risk. Others may have lower risk, but also less return on investment.
Protect the assets you have
One critical portion of financial planning for dentists is to use available vehicles and strategies to protect what you have earned. Life insurance, health and disability insurance and even homeowners insurance are a part of protecting your assets. So is sticking to a spending limit and sheltering funds from increasing tax rates. A strong financial plan all comes down to wealth accumulation, protection, and risk management