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5 Financial Planning Mistakes that Doctors should avoid making

  • Highlights

  • A sound financial plan for fiscal management

  • Preparing a detailed budget

  • Debt consolidation as a strategy

  • Insurance cover against uncertainties

Doctors usually spend most of their time taking care of their patients and are left with very little for themselves. In all this, their personal finances and the financial aspect of their practice (if they have one) often takes a backseat.

Here are the 5 most common financial planning mistakes that doctors should watch out for:

1. Lack of a Detailed Budget

It is important for doctors to have a detailed budget, that will help them invest better, meet future debt challenges, and find better wealth creation opportunities. A detailed budget would also help them save better to meet their future goals such as their marriage, children’s education and retirement. It requires a realistic estimation of their future financial needs and prudent investment to accumulate enough wealth to address these

needs. Medical professionals can also take an easy personal loan for doctors to meet all personal goals. These loans factoring in their medical qualifications offer quick disbursals, high loan amount at a nominal interest rate and a hassle-free loan application process.

2. Poor Debt Management

Doctors like any other professionals come across several expenditure decisions at various points in their career. While the launch of their medical career may involve substantial investment in the form of education loan, later, they may acquire debt for leasing, equipment purchases, practice management, etc. for their private practices.

All this leads to doctors being required to pay a lot of interest. In such a scenario, medical professionals may manage their finances better through a debt consolidation strategy. A personal loan for doctors can be the right tool to implement such a strategy as it helps you to amalgamate all your debts into a single manageable loan at a better interest rate.

3. Poor Tax Planning

Because of high financial remuneration of their profession, doctors are often subjected to higher tax burden. However, there are many tax deductions that doctors can make use of. It is important that doctors approach-chartered accountants/ tax planners that can help them take maximum advantage of these special deductions and plan their taxes accordingly. Additionally, making tax saving investments will also go a long way in improving their tax portfolio.

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4. Insufficient or Improper Insurance

Insurance is another aspect doctors need to consider as a part of their financial planning. They need to get themselves insured, along with their spouse and children. Moreover, they need to make sure that they have a good professional indemnity cover to protect themselves and their practice from the consequences of a case gone bad or a professional accident.

5. Making Incorrect Investments

Doctors need to educate themselves on the various possible investments out there to avoid being taken for a ride by their financial planner. It is important to understand one’s risk appetite and select investment products accordingly. A proper, diversified, risk-tolerant, investment plan will help them build their retirement corpus better and meet their goals.

Not diversifying one’s risks can prove to be a major mistake. It is always prudent to invest in a mix of fixed deposits, debt and equity financing to balance out one’s risks and maximise returns.

Avoid these common mistakes, can help doctors build a larger corpus much faster, and enjoy their retirement.

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