As like any other professionals, physicians too think of financial stability in their life. Being an expert physician can be quite a lucrative career, but if you do not know how to act on financial planning and put the key components of economic protection, estate planning, and retirement benefits, financial management may become troublesome affair overtime.
Why is financial planning necessary?
Financial planning aims at ensuring all the primary and secondary economic resources are optimally utilized in the best possible way to route it to maximize return on investment over time. Financial planning is primarily the process of defining the best objectives by framing procedures, policies, programs, and budgets related to financial activities of an individual or a business.
Proper financial planning with the help of an expert advisor will ensure effective investment practices. Financial planning will enable you to:
- Have financial stability
Proper financial planning will help individuals to ensure a fair balance between the inflow and outflow of funds to maintain stability.
- Ensure adequate funds when in need
Proper planning will ensure that you have enough money in hand when confronting an unforeseen situation with the immediate need to raise funds.
- Reducing uncertainties
Proper financial planning will eradicate uncertainties in terms of health and wellbeing, kid’s education, home construction and maintenance, and family finances. It also will maintain you at a stable position even with a highly fluctuating external market conditions.
Why financial planning for physicians is different?
Physicians do face many specific challenges when it comes to financial planning for their personal and professional life. Physicians do spend more than a decade for their medical college studies, specialization, residency, and fellowships. With this need, many of the doctors end up with serious students loans to be paid off during the initial phase of their practicing career. They tend to saddle between these debts and their unique personal financial challenges for a considerable duration before getting stabilized.
The primary question is whether physicians face any unique financial challenges when compared to other professionals? Do they need any special tools or financial vehicles to stabilize and secure their financial future?
Listen to what Dr. Brian J. Knabe says who is a doctor as well a reputed financial planner as “the individual challenges in terms of financial planning for physicians may not be same as for anyone else, but the combination of them surely is.” “Given the fact they enter into the workforce later when compared to others, there are many special expectations by them in terms of lifestyle and wealth as associated with the medical profession conventionally, which puts many physicians to live up to those social expectations.”
Significant components of physician financial planning
Majority of the financial advisors point to the fact that physicians should accurately plan for a unique set of protections and financial plans in order ensure financial success. Here some of the most critical components to be considered for successful financial planning in case of a physician.
- Disability insurance – Experts suggest that it is mandatory for healthcare practitioners to invest in some disability insurance to protect their future. It is a fact that an individual medical practitioner makes no equity overtime in a cash flow business. The value of his or her future earnings is the actual value of a young doctor’s assets. So, without disability insurance, one would be in deep trouble if something unfortunate happens.
- Healthcare malpractice insurance – One report of American Medical Association a couple of years back showed that more than 60% of doctors above age 55 are sued for some of the other medical malpractice. Even though about 70% of these sues get dismissed, still there is significant money involved if the claim gets into a trial. A good malpractice policy in place will save you from this risk at any point.
- General insurance – As like any other individual, a physician also should have mandatory protective insurances as personal care, family care, and kid’s coverage.
- A proper estate plan – Being a physician, it is essential to have your free will, living will, and adequate powers both in terms of personal assets as well as healthcare in place.
- The help of a skilled and reliable financial planner – It will be worth to pay out to a competent financial advisor who can offer you the best service and manage the financial planning on your behalf by understanding your unique needs and goals. Working under tremendous pressure in relation to their professional responsibilities, a good financial advisor cum planner will act as your best partner for a secured future.
It is also crucial to consider that the finances of a doctor may also affect the patient care. Financial stressors may lead to higher work stress and end up in job dissatisfaction in an otherwise stressful profession like healthcare. It is also a significant reason why the advice of an expert financial planner is suggested to practicing physicians.