1. Live on Less Than You Earn – Aim to Save a Minimum of 10% of Gross Income
Use a reliable app to track your monthly income and categorise expenses. Understanding your cash flow helps identify areas for saving or reallocation. Pay yourself first – save before spending what’s left. This is key to financial planning for doctors.
2. Use Debt Sensibly to Build Wealth
Minimise bad debt by prioritising the repayment of high-interest debts like credit cards or student loans. Use a medical mortgage broking specialist who has access to packages that offer favourable interest rates and, most importantly, flexible terms and conditions such as:
- Long loan terms for investment properties (helps with cash flow)
- Offset accounts
- Interest-only terms for property investment loans
- The focus should be on the terms and conditions of finance options because when structured well, they set you up for the next financial step when you’re ready. This can supercharge property investing for doctors.
3. Use Offset Accounts to Build an Emergency Fund
Offset accounts on your home loan are excellent for saving interest and provide a buffer without being locked into the mortgage. Aim for a minimum of 3-6 months’ worth of living expenses in an easily accessible account to cover unexpected costs. This is an essential aspect that many brokers overlook when setting up home loans for doctors in Australia.
4. Plan for Life After Work
Maximise contributions to tax-advantaged retirement accounts. Consider employer-matching contributions and aim for a diversified portfolio. Seek out firms that provide exclusive investment management for doctors. Establishing long-term investments early gives your money time to grow. The longer you wait, the harder it becomes to achieve your long-term goals.
5. Plan for Disability
Your income drives your wealth growth, so it’s crucial to mitigate setbacks due to health issues. Given the physical demands of your profession, consider purchasing own-occupation disability insurance to protect your income in case of illness or injury. Get expert advice on income protection and insurance specifically tailored for doctors.
6. Review Life Insurance Needs
Take care of those you love by ensuring they are financially supported if you’re no longer around. Make sure you have adequate life insurance coverage, especially if you have dependents. Term life insurance is often a cost-effective option and can be funded within your superannuation, making it tax-deductible in many cases.
7. Consider a Comprehensive Investment Strategy
Diversify your investments across different asset classes. Work with a financial adviser who specialises in advice for doctors. It’s critical to understand how you’re progressing by benchmarking your wealth management against other doctors at similar stages in their careers.
8. Plan for Major Life Events
Housing security is not guaranteed, even with a great career. In many parts of Australia, it’s a key life stressor. Have a plan for significant milestones like buying a home, funding children’s education, or starting a practice.
9. Stay Updated on Tax Planning
Your biggest lifelong expense will be your tax bill. It’s essential to work with an accountant specialising in doctors’ finances. There are nuances specific to medical professionals that others may not experience. Don’t miss out on tax deductions available to you. Consider working with a tax adviser to optimise your tax strategy, including managing student loan interest and retirement contributions.
10. Regularly Review and Adjust Your Plan
Make sure you have a plan and the right team in place. Great advice is only useful if it’s put into action. Get started even if the plan isn’t perfect. Regularly review your financial plan to ensure it aligns with your current stage of life and goals. Adjust as needed when career, location, income, expenses, or personal circumstances change.
This checklist is intended as general information only and should not be relied upon to make changes to your personal circumstances. It is essential to seek personal advice before implementing any changes to your finances.
