Financial Planning Checklist for Dental & Medical Professionals

I can’t believe I’m saying this but, a new year is fast approaching! I don’t know about you but this time of year usually means getting my financial ducks in a row (it’s always a great time to do this). As 2022 approaches, let’s start to think about ways we can improve and be better for our future selves. One way to do this is to re-assess to finances. Here’s a quick checklist to follow:

Create and Stick to a Budget

Develop good financial habits early by setting a budget. There are several guidelines out there as to how an ideal budget should be set up. I personally follow the 50-30-20 rule (with some variation). Essentially this means, 50 percent of your money each month should go to essentials like bills and housing, 20 percent should go towards your financial goals like savings, investments, saving for retirement and paying off debt/student loans, and 30 percent should go towards wants like vacation, entertainment, etc. If you want to, you can switch the 30-20 around if that makes more sense for you. Of course, your budget sometimes need a little wiggle room but for the most part try to stick to this plan. Automate it so that you don't have to think about it.

Build an Emergency Fund

Make sure you have at least three (3) to twelve (12) months of funds saved up for a rainy day.  Personally, I think 12 months is a good buffer. This is where part of the 20 percent savings portion of your budget should go, and it's there in case you lose your job, become ill, or encounter an unexpected expense. Keep this money in a separate savings account at a separate bank from your checking account and forego a debit card for that account. Also, automate your contributions.  Ask your employer to direct debit a portion of your salary into your emergency fund account or you can do this yourself. You can also consider placing the funds into an account with high yield interest. Another smart thing to do is put this money in a short term investment vehicle where you can access it immediately if needed.

Create a Plan For Student Loan Repayment

The pandemic gave us a nice break from the pressures of repaying student loans every month. Hopefully we were smart about taking advantage of the 0% interest period as the end of that is fast approaching (after Jan. 31, 2022). Explore all the options for student loan repayment that is available to you and choose the best one for your situation. Look into options like public service loan forgiveness (PLSF), the different repayment options available through the federal government and/or take advantage of the benefits of student loan refinancing or consolidation. If you are still not clear about the best option for you, seek a professional help. I have personally used Travis Hornsby, The Student Loan planner and he was able to help me figure out a repayment option that fits my goals all while saving me money in the long run.

Pay Down Debt and Build Good Credit

All debt are not created equal. There is what we call good debt and there's bad debt.  Things like credit card debt are considered bad debt because it grows pretty quickly and doesn't help you in the long term. Interest rates are usually higher and can take much longer to pay off. On the contrary, student loans are considered good debt because it's an investment into your future earning power. Put as much money as you can towards credit card bills first starting with the with the one with the highest interest. Once that's paid off, prioritize the next highest interest debt, and so forth. Also consider automating the contribution to your debt payment so that you never have to worry about a missed or late payment.

Protect Your Paycheck

An injury or illness could limit your ability to practice. Ensure you have enough disability insurance coverage to cover you in case of sickness or injury. Supplemental insurance options are available specifically for health/medical professionals, but be sure you understand how the policy defines total and partial disability. Finally, remember to update this coverage as you grow in your career and into your practice.

Put Additional Protections In Place

As your career grows, explore the various life circumstances and get the right insurance to protect against potential impacts to your budget:

• Malpractice Insurance

• Life Insurance

• Renters/homeowners Insurance

• Auto insurance

• Umbrella Insurance

Save and Invest For Retirement

It is really important that you get on this early! It is vital that you prioritize creating and contributing to a retirement fund and take advantage of compounding interest. Compounding interest will do a lot of the hard work for you if you start early. Try to maximize your contributions and take advantage of any match system your job has to offer. If your job does not offer retirement options, you can do this on your own. Speak with your financial advisor and your accountant about the tax benefits.

Explore Attorney Assistance

Utilize attorney expertise to review employment contracts, help protect your assets from malpractice, maximize tax planning and discuss estate planning.

Start a College Savings Plan

You certainly know the value of a good education - and the cost of getting one. If you have a child or children and their education is a priority, start saving now. A 529 plan is a great place to start.

Talk To a Professional

Financial planning can feel overwhelming, but it doesn’t have to be. A financial representative can help you design a plan and implement strategies to meet your specific goals with confidence.

Getting your finances together means stability, security and dear I say it, freedom. It’s okay if you don’t have all this together just yet. The important thing is that you start, now. I will have the 2022 planner, budget and financial tracker ready in a few days so be on the look out for that. Let’s make 2022 the year we get our lives together. Our future selves will thank us for it.

Plugging Money Leaks

One of the most challenging parts of getting a grip on your finances is finding money “leaks” and plugging them. I speak a lot on saving/investing for retirement and tackling student loans. However, I must address the topic of unknowingly wasting money aka money leaks. The faster we figure out where all our money is going the better we will be able to plan and have more money to put towards saving, investing, paying off debt, etc.

A money leak is simply any amount of money that you spend and are unable to identify what you spent that money on at the end of the month when you’re reviewing your bank and/or credit card statements. It can happen quite quickly and sometimes go unnoticed. For example, one week you may not have gotten a chance to prepare your meals and suddenly you’re eating out everyday for lunch, or you subscribed to a free trial of HBO to binge watch a season of one of you’re favorite shows and forget to cancel the membership. These seemingly tiny expenses add up and before you know it you’re wondering where all your money went.

I did a complete financial overhaul about a year ago and discovered over $6000 of wasted money. A big chunk of that was in cell phones bills - by switching providers I am currently saving roughly $4000/year! 

Here’s how to identify and begin plugging your money leaks:

Step 1: Print out your credit card and/or bank statements for the last 3 months and highlight all your set monthly automatic withdrawals, example: mortgage/rent, savings, Insurances, car note, utilities, etc. Now look at those highlighted items and see if there’s a possibility to cut or lower the cost of any of those items like a cell phone bill, cable bill, interest rate on a car note or even a credit card.

• Are your utility bills consistent? Cell phone and cable bills are terrible money leaks. Cable companies will sometimes increase monthly payments which can go unnoticed if you’re on automatic withdrawal. 

  • Do you need cable at all? Consider alternatives like Netflix or Hulu which are a fraction of the cost. 

  • Are you paying for more services than you need? Many of us no longer utilize a landline so why pay for it?

  • If your monthly data usage on your cell phone is, say 10mb or so then why pay for unlimited data?

  • Have you tried refinancing your auto loan? This would be a good thing to do especially if your credit score has increased since you initiated the loan.

  • Call your credit card companies and request a lower rate. If the answer is no, simply switch to another company that offers you a lower rate.

Step 2: Identify all the un-highlighted items and categorize them.

• Typically the miscellaneous expenses are date nights/eating out, emergencies, etc.

  • Save all your receipts and review them each week so that you can track your spending. By knowing that you have to review your receipts you may not be so apt to spend frivolously.

  • Use a budgeting app to help you stay on track. If you find it difficult to stay on top of your finances, consider tools like Mint or You Need a Budget.

  • Avoid leaky places and budget before you go. A simple night out with friends can turn into regret if you do not plan ahead. We all know how out of control things can get when we’re having fun, especially if drinks are involved. Have a ballpark figure in mind or a set amount that you want to spend on food and drinks and don’t go over that limit.

Needless to say, once you’ve found the leaks and plugged them you must decide what do you do with that “extra” money. Treat it like it’s a bonus from work or a gift from your generous grandma - no, do not spend it. Options for this money could be investing, saving towards your retirement, paying off credit card debt, or making extra payments on your student loan debt.  

Money leaks are poison to any kind of financial progress. If you have too many of them, it can make personal finance feel incredibly confusing and hopeless because it feels like all of your money is just evaporating. Take charge, use the above guidelines to get started and take control of your finances.

Best Money/Finance Podcasts for Young Professionals

On the path to becoming a professional regardless of the field you’re in, the focus has been getting to the place where we finally start our careers. We have been through many years of schooling - studying, passing classes, maintaining grades, matriculating, improving skills, applying for residencies and specialty programs. The remaining time was utilized to catch up on sleep, exercise and balance family and social life. Nobody taught us anything money or finance related. We lacked knowledge regarding taxes, refinancing/consolidating student loans, insurances, retirement, and investing.

I began listening to finance/money podcasts when I started my career as an Orthodontist. I went from having no income to a substantial salary that I wasn’t quite sure what to do with. I know I wanted to make smart financial decisions and improve my financial literacy but didn’t know what professionals to seek or even what types of questions to ask.

Undoubtedly my CPA and friends with experience have been invaluable but I wanted more. I wanted to learn all the financial terminology that I would often hear people speak of, words like index funds, mutual funds, compound interest, asset allocation, capital gains, amortization, differences between 401K, 403b, Roth and the list goes on. I wanted to learn more about financial independence, real estate investments, and passive income.

Books are usually my thing but podcasts have proven to be quite convenient and there have been a handful of podcasts that I listen to religiously and that have helped me tremendously over the last several months.

1. Afford Anything - This podcast is one of my favorites as Paula Pant is all about Financial Independence and is a big proponent to the FIRE movement. FIRE stands for Financial Independence Retire Early. She’s 34, retired, financially independent, has zero debt and makes a living through real estate investing, blogging and podcasting. She introduces listeners to different ways to build passive income and rid yourself of a 9-to-5 job.

2. Stacking Benjamins - I love this because the guys on this show drop so many financial gems but do so in a very lighthearted and fun way. Their humor and jokes may give the perception of lack of serious-mindedness but if you listen beyond that it is evident their focus is on helping their listeners build wealth.

3. Smart Passive Income - I’m all about passive income so naturally I gravitated towards this podcast. Pat Flynn is awesome! He frequently pulls in over $100, 000 per month in passive income. He gives his listeners different ways to go about setting up passive income streams and his podcasts are always inspiring.

4. The Side Hustle Show - I love this podcast because they offer great tips and business strategies for those looking for multiple income streams. If you want to perhaps keep your 9-5, supplement your income and have a few extra bucks here and there this podcast is certainly for you. It’s very informative and every time I listen I learn ways to improve my own side hustle(s).

5. Choose FI - The podcast is great! Here FI stands for financial Independence and the hosts discuss life optimization strategies that are possible when we decide to get off the hamster wheel.

6. Profit Boss with Hilary Henershott - I recently started listening to this podcast and it has been quite informative. It’s geared towards women who want to take charge and create success in their financial lives. It has been very motivating and inspiring.

So if you’re looking to improve your financial situation, gain financial independence, retire early, start a side business or have passive income then I definitely recommend the above podcasts. Listen to episodes during your commute, at the gym, while running, etc. The knowledge gained can enlighten your path and brighten your future. Feel free to give feedback on your experience.

Happy Listening!

Spring Clean Your Finances

Spring is not only a great time to put away the winter clothes and deep clean the house. It is also a good time to check in on your finances. Remember those beginning of the year goals like saving more, meal prepping and going to the gym (which by now may have tapered off)? This time of year is great to spring clean your financial goals and set yourself up for success the rest of the year.

Here are a few things to help with the Process:

1. Debt

One of your goals this year may have been to tackle debt. Check in on how you're doing with that.  Are you meeting your repayment goals? If not, what do you need to do now to get back on track? Identifying why you have fallen off track on debt reduction can also point to other areas that you want to refresh in your financial picture.

2. Savings

Now is a good time to check to see if you have established your emergency fund. Your emergency fund should be three to six months living expenses. If you haven't done so yet, this should be moved to the top of the priority list. You should also check into your other savings goals for the year: Are you planning a vacation, saving for a downpayment on a home? Whatever your goals are ensure that they are being met.

3. Budgeting

How have your spending habits been progressing? Are your expenses lining up as planned, did you overindulge or have an emergency happen? If so you may want to revamp your budget or try a different budget methodology - whatever works for you.

4. Taxes and Financial Documents

Review your taxes and other important financial documents. It is wise to keep tax documents for at least seven years, so make sure to file those away safely. It may also be a good idea to digitize your bank and/ or credit card statements and keep them in a folder on your computer. Make sure to have a back-up of this somewhere. 

Review your credit reports thoroughly! Check for errors and any indication of identity theft. While you're at it check your credit score.

5. Become Financially Savvy

Financial literacy is key and there are many ways to up your game in this department. Talk to a friend that knows more about a particular financial topic than you do, follow a few finance experts on social media, read books, listen to podcasts, subscribe to the Wall Street Journal or Financial Times, attend seminars. There is no excuse for being uninformed in this department. Information is out there, you just have to find it.

These are only small steps but they are very important ones. Having a solid financial plan will help you avoid pitfalls. What kind of financial spring cleaning plans do you have?

Get Your Finances In Order: The Basics

It's the start of a new year and with it comes the need to plan for the year ahead. This is the season for resolutions! So while you make your goals to lose weight, start that new diet, travel more and live your best life, one thing you should include is to become more fiscally responsible. It's time to get your finances in order.

Here are 5 things to get started on the right path:

1. Have a PLAN

Create a roadmap for your finances. What are your financial goals and what will you do to achieve them? Break your goals down into bite-sized action steps and work diligently to reach them. Put a timeline on each goal to keep yourself accountable. Make a plan for all the things that will require money. Consider hiring a financial planner/advisor that can give you personalized recommendations and keep you on a timeline. 

2. Create and Commit to a Budget

This will take some discipline. Consider adopting and applying the the 50-30-20 rule. Essentially this means, 50 percent of your money each month should go to essentials like bills and housing, 20 percent should go towards your financial goals like savings, saving for retirement and paying off debt/student loans, and 30 percent should go towards wants like vacation, entertainment, etc. Of course your budget sometimes need a little wiggle room but for the most part try to stick to this plan. Automate is so that you don't have to think about it.

3. Start a Retirement Fund

It is really important that you get on this early! It is vital that you prioritize creating and contributing to a retirement fund and take advantage of compounding interest. Compounding interest will do a lot of the hard work for you if you start early. Try to maximize your contributions and take advantage of any match system your job has to offer. Speak with your accountant about the tax benefits.

4. Keep an Emergency Fund

Make sure you have at least three (3) to nine (9) months of funds saved up for a rainy day.  This is where part of the 20 percent savings portion of your budget should go, and it's there in case you lose your job, become ill, or encounter an unexpected expense. Keep this money in a separate savings account at a separate bank from your checking account and forego a debit card for that account. Also, automate your contributions.  Ask your employer to direct debit a portion of your salary into your emergency fund account. You can also consider placing the funds into an account with high yield interest. 

5. Tackle your debt.

All debt are not created equal. There is what we call good debt and there's bad debt.  Things like credit card debt are considered bad debt because it grows pretty quickly and doesn't help you in the long term. Interest rates are usually higher and can take much longer to pay off. On the contrary, student loans are considered good debt because it's an investment into your future earning power. Put as much money as you can towards credit card bills first starting with the with the one with the highest interest. Once that's paid off, prioritize the next highest interest debt, and so forth. Also consider automating the contribution to your debt payment so that you never have to worry about a missed or late payment.