Balancing Spending Across Your Lifetime

Doctors and dentists tend to be high earners. But the extensive schooling and professional training they go through to earn those valuable degrees can also plot them on unique $Lifelines with significant financial challenges at every stage of their careers.

Of course, the basics of sound financial planning still apply. But tweaking these four principles can help medical professionals make the most of every hard-earned dollar and keep their money aligned with their overall financial goals.

1. Eliminate your debt ASAP.

According to the American Medical Association, the average medical student leaves school with around $200,000 in loan debt. A CHG Healthcare survey found that over 50% of doctors spent six years or more repaying their loans. New doctors and dentists are also carrying, on average, around $5,000 in credit card debt from their student days

Even low-interest debt will continue to compound if you’re just paying the minimum every month. Crunch the numbers and figure out a realistic schedule to pay down your debt in ten years or less. And make sure any necessary new debt – like a car or, perhaps, a mortgage – fit within your monthly budget and your overall debt plan.

2. Pay yourself first every month.

Retirement benefits for doctors and dentists vary depending on where you’re practicing. But aim to contribute the maximum allowable amount every month, especially if your accounts feature an employer match. Your bank, custodian, or employer probably have options for automizing these contributions, as well as deposits into brokerage and savings accounts. Just picture the doctor or dentist you hope to be at 60 or 70 and feel good about how you’re securing that hard worker’s retirement.

3. Set short-term and long-term financial goals.

The sooner you establish concrete money goals, the sooner you can integrate them into your overall financial plan and start working towards them.

New doctors might want to buy a house in the next five years. A flourishing dentist might be eying a second vacation house.

Are you hoping to start a family? Or do you need to get serious about paying for your teenager’s college tuition?

You might also have entrepreneurial goals for the later stages of your career. Establish monthly deposits into a savings account you have earmarked as for starting your own practice or continuing your education.

4. Set a budget and avoid lifestyle creep.

Now that you’ve taken care of your debts and your future self, you can use the rest of your monthly paycheck to cover your expenses, make additional investments, give back, and, yes, have a little fun. After all those extra years of study and working as a resident, you’ve earned the right to enjoy your money. No one – including your financial planner– will hold it against you if you buy a new TV or treat your spouse to a surprise weekend away.

Just don’t make a habit of straying too far outside your budget regularly, especially if spur-of-the-moment purchases sit on your credit card for more than a month.

Young medical pros also should steel themselves against “keeping up with the Joneses.” Personally and professionally, you’re likely to move in circles that feature very successful people. But it’s doubtful that the surgeon who’s taken you under her wing bought that beautiful yacht with her very first paycheck.

When it is time for you to make some larger purchases that could transform your lifestyle, your Life-Centered Financial Plan will help you balance your short-term goals with your long-term security. No matter where you are on your career path, working with our Licensed Financial Planner can help you chart your money needs over a $Lifeline that will fulfill you every step of the way.