How doctors can review the health of their wealth

It doesn’t matter if it’s the end of the calendar year, financial year or any month of the year, it is always a good time for doctors to review their finances and wealth position.

While this is important for everyone, it is especially valuable for doctors who often have greater complexities such as a bigger income, more investments, more liabilities and tax obligations.

Understanding your finances is key to long term success, so doctors should review their wealth position with a medical wealth expert on at least a quarterly basis. This will particularly highlight your habits (good or bad) and any trends which need to change.

Here’s what to focus on when assessing the health of your wealth.

Your situation

You should be reviewing everything, from your finances, cashflow, expenses and investments to your wealth strategy and goals. Where do you currently sit financially and what needs to change?

Our lives are constantly evolving, so you also need to consider any recent changes or major events approaching in the short term future. Lifestyle and financial moves such as having a child, going through a divorce or buying a house will all heavily impact on your wealth, so the earlier you can plan for them the easier it will be to manage.

Your goals

Evaluate your financial goals and your progress towards achieving them. Are you steadily working towards your desired outcome, or has something gone wrong? If things aren’t going your way, start investigating what you can change to get back on the right pathway. If you’re on track, maybe consider if there is a more effective method of achieving your goals.

Frequent reviews also allow you to adjust these goals to suit your situation and even add new ones. With every goal you create, you should be establishing checkpoints and steps on how to achieve them.

Your expenditures

Your spending and savings will drive a huge portion of your finances. So, identifying any problematic habits will help you better fulfil your goals and portfolio.

An effective method is to categorise every single transaction you have to understand what percentage of your income is going towards essentials, bills, savings, investments and discretionary spending. If there is a poor balance between these areas – for example, your discretionary spending is high – then it may be time to cut costs, adjust your budget or even automate your savings.

Your investments

How well are your investments performing? Are you getting the desired return? While investing is certainly a long term game, sometimes you can also be caught carrying dead weight. So, rather than missing out on other opportunities, it may be time to sell, adjust, and look at new opportunities in the market.

Your debts

Debts will always drag you down, especially the bigger ones like a mortgage, car loan or credit card bills. So, evaluate how well you’re managing your debts and if you’re staying on course towards paying them off. If you’ve gone astray, consider restructuring your budget and repayment plans. Also keep an eye on the changes in interest rates and whether refinancing is an option for you.

Your risk management strategy

How well are your prepared for a crisis, life event or even a shift in the current global pandemic? You need to be constantly working towards minimising all of your financial risks, such as by growing your emergency fund or reviewing your insurance coverage.

It may not be the greatest of topics, but assessing your Will is another factor to consider. At the end of the day, you want to protect your estate as much as possible, even after death. So, eliminate the risk of validity challenges or family disputes by ensuring your Will is fair (where possible), legal and accurate.

Your team

The best way to really understand where you’re at is to work closely with a medical accountant and wealth expert, who not only has the skills and experience, but is also independent from your personal situation and knows your industry.

Contact DocWealth, specialists in accounting, financial planning, investment and finance, investment and business for medical professionals. We operate in Adelaide, Sydney, Melbourne and throughout Australia. Managing partner Kym Nitschke is available for a free initial discussion about your situation. Call us on (08) 8379 9950 or send me an email.

– Kym Nitschke
The information contained on this web site is general in nature and does not take into account your personal situation. You should consider whether the information is appropriate to your needs, and where appropriate, seek professional advice from a financial adviser.
Taxation, legal and other matters referred to on this website are of a general nature only and are based on DocWealth’s interpretation of laws existing at the time and should not be relied upon in place of appropriate professional advice. Those laws may change from time to time.
DocWealth specialises in accounting, tax and financial advice for superannuation. Contact us now for a no obligations discussion about your needs.

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