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5 Personal Finance Tips Every Doctor Should Know

Posted Sep 21 2012 1:41pm

Price fluctuations, global economic instability and uncertain markets characterize today’s investments .

With this in mind, how can you preserve and grow your money while keeping up with your hectic schedules and personal obligations?

Here’s a list of 5 practical financial tips for doctors.

1. Take Care of Your Debt

Start by seeking the help of a skilled and experienced consultant to provide practice valuation and financial planning.

Together, you can plan your payment schedules while you keep up with your daily expenses. But, if you are confident that you can do the debt management all by yourself, be sure to review the mortgages and different types of loans you owe.

Check which loan charges the highest interest and try to evaluate its impact on your finances. After that, strive to pay loans with highest interest rates, while also meeting the due dates for other outstanding loans.

2. Front-Load Your Savings

If you want to save over a million dollars in a few years, then you should start front-loading your saving now.

You can do it by setting your financial priorities straight. It may require some lifestyle changes and a shift of your expenses from pricey choices to basic needs.

Or you can live below your means so that you can save enough funds for student debt, funding your investments and retirement plan, and increasing your net worth.

3. Minimize Taxes

Don’t fall for ill-advised investments that guarantee tax cuts. There are many tax breaks that can save you a huge chunk of money like retirement plan, charitable contributions, continuing education and other expenses that you can include in the itemized deductions.

Familiarize yourself with the tax code to find legal ways to reduce your taxes. You can also get the latest news from IRS and take advantage of its most up-to-date tax-saving options.

Start early, because you can expect tax increases on dividend income and capital gains by 2013.

4. Have a Risk Management Plan

No personal finance plan is complete with a risk management strategy.

This includes indispensable insurance types like life, disability, malpractice and property insurance.

Some people don’t think twice about getting policies on their new car or computer. But hesitate when it comes to important policies that will protect your future.

Check out our risk management guide to run some calculations on how much disability, life, and long-term care you will need.

5. Choose Your Partner Carefully

There are two facts about divorce: it is stressful and expensive.

Stress affects the way you work and your ability to generate income. And the cost of divorce can drain your assets and increase your liabilities. Child support and alimony plus other related obligations can also deplete your future flow of income.

It’s important to plan ahead by signing prenuptial or postnuptial agreements. Or heed the age-old widsom: “prioritize your family and invest in your marriage.”

Doctors’ investment and financial management requires careful planning and practicality. Examine your finances and seek the help of a professional consultant to discuss your financial alternatives.

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