Why Doctors Need To Plan Their Finances
Happyness Factory is a Goal Based Planning platform. We aim to spread financial literacy and help people make sound financial decisions.
02 Jul, 2018
A year back, Rajesh had a niggling pain in the back which he ignored and in a week the pain subsided. 2 weeks later the back pain was back with a vengeance. Rajesh ran to a nearby chemist and asked the chemist to give a medicine for back pain. The chemist confidently handed over a pain killer and a balm to apply on the back. The pain killers worked for a month and then the pain escalated to such an extent that Rajesh could not even bend or travel to work. He rushed to his family doctor who realised Rajesh needed a specialist for his back pain. He recommended a good orthopedic to Rajesh. Rajesh was diagnosed with acute spondylitis and his doctor chided him for not taking an expert opinion early on and just ignoring the pain. Strong medication and regular physiotherapy helped Rajesh immensely and he and his wife are thankful they consulted an expert orthopedic and followed his line of treatment.
Let’s be honest most of us behave like Rajesh when it comes to our health. As doctors you are often appalled at the way people ignore their health and self-medicate.
But do you realise when it comes to another major aspect of your life – Finances, you behave in the same way as Rajesh. Most doctors we meet tell us they don’t have time to look at their money and investments or they rely on friends and family and take ad hoc money decisions. In fact, 75% of doctors believe in self-medication when it comes to managing their own finances.
So why do doctors love self-medication when it comes to finances?
1. Simply no time – In 90% of the cases when both husband and wife are doctors, due to your busy schedules, money management is not a priority. As long you are making some investments, you feel you have planned your finances.
2. Limited knowledge –Most doctors tell us “I don’t understand finance and I don’t have the inclination or time to understand”. As a result, they either delay taking decisions or take ad hoc decisions.
3. Don’t know who to trust with your money – In the financial advisory world, the friendly insurance agent, the CA, the RM from your bank, the stock broker, independent advisors, doctor colleagues, patients, relatives– everyone claims to be an Advisor. It’s difficult for a doctor to evaluate and know the difference. Most doctors have therefore been taken for a ride in the past and have lost their wealth at the hands of the so-called advisors who peddle products based on the commissions that they receive!
4. Aversion to pay fees for advice – In today’s world when information is available at the click of the button, doctors loathe to pay a professional fee and hire a financial planner. Think for a moment- if you are ill, will you go to a free charitable dispensary or to a medical professional who has his routine charges?
Doctors often have these thoughts when it comes to financial planning and investments and thus end up making many financial mistakes. Despite these thoughts as doctors you require financial planning because –
- You start earning late in life compared to other professionals and take time to establish yourself. Thus, in your early 30s while you have just started earning you also have increased expenses as you are starting your own life and family
- Unlike other professionals you do not have allowances and pensions and hence you must plan properly for retirement, contingencies and unforeseen events
- You need capital to set up your own practice or purchase your own equipment
- You wish to purchase your own house or car
- You need to provide your children a good education and simultaneously provide for your own retirement
As you can see, despite not having time and knowledge, financial responsibilities will always exist. While most doctors claim that they don’t have time and knowledge for financial planning, the irony is that most doctors do financial planning unknowingly and in an unstructured manner. So, if you are making financial decisions, why not do it in a structured manner?
Ask yourself the following questions and you will realise that you are self-medicating and taking ad hoc decisions when it comes to your finances –
- What are my financial goals?
- How do I plan my finances?
- How much time do I devote for my financial decisions?
- How do I make financial decisions?
- Do I have a written financial strategy?
When you think of these questions you will realise most of your financial decisions involve no planning.
Setting financial goals is the heart of the financial planning process. When you keep in mind your life-cycle and your unique financial requirements in each phase you can plan your finances better. Read more about the 3 phases of a Doctor’s life and how to plan for each of these phases.