As a doctor and entrepreneur, you may find yourself working to improve the life and health of your patients. Similarly, think of your financial life and health too, and spend time to improve it as well. Doing this will help you make the most of your practice’s revenue, allowing you to expand quicker,fulfil family goals or plan for your retirement.
Here are 6 common financial mistakes doctors make, and how you can avoid them this year.
1. Poor debt management
When you use your credit card to purchase necessary equipment for your medical practice or have taken multiple loans to purchase your new clinic premises, you may have multiple debts. This may be difficult for you to pay off in a timely manner given your other priorities. But remember that unpaid debt is expensive and lowers your credit score too. So, take a debt consolidation loan to pay off all your existing debt conveniently and manage your debts in a more organised manner.
2. Insufficient savings
Your savings can be extremely helpful in taking care of unplanned emergencies, building your net worth and expanding your practice. Think of your savings to be your retirement allowance. Inadequate saving can affect your retirement period, which is why it is best to save while you are still earning through your practice. As most doctors get 30 years to earn through their practice, the period to make provisions for your retirement period may be even shorter, especially if you are planning an early retirement.If you do not take a part of your income to put towards savings each month, this goal might be difficult to achieve.
3. Inadequate tax planning
Poor tax planning can take a big slice out of your income on an annual basis. So, opt for various tax deductions specifically pertaining to doctors to save your income. You can amplify your savings by opting for presumptive taxation if you file as an individual and not a company. This is possible only if you have annual receipts of Rs. 50 lakh or less. It allows your income to be presumed instead of the actual profit being calculated for taxable income. If your profit exceeds Rs. 50 lakh you can report them and benefit from other tax deductions like travel and transport expenses, meeting and conference expenses, communication expense and assistant salary expense. Remember to maintain accounts to avoid penalty for non-maintenance of books of account. If tax filing becomes tedious, you can choose to hire a tax consultant for your convenience.
4. Expensive investments
It is likely that you may consider doing up the interiors of your clinic’s waiting room or adding facilities like a cafeteria for your patients and their families. While thinking about such investments, always consider the profit earned from such an investment first. Also, consider priorities first, like investing in upgrading your medical equipment or billing software. At the end of the day, your first priority should be to provide enhanced medical service before providing other benefits for your clients.
For an example, if you are a cardiologist, investing in the interiors of your waiting room will not be as profitable as purchasing much-needed equipment such as cardiac ultrasound machines,vascular ultrasound machines,stress test system, intra-aortic balloon pumps, etc. Remember that expenses like shifting your clinic to a better locality may come with many attached costs like increased maintenance charges.
5. Not having a written financial projection
Write down your financial plans to ensure you don’t forget about them and put them in order of priority. This eases the difficulty of meeting financial goals. Plan the expansion of your business accordingly. For an instance, if you think about growing the number of patients you consult from 10 lakh to 20 lakh annually, write down the necessary requirements of such a goal and pursue the same. You can also write down goals like purchasing new equipment or expanding the size of your clinic within a number of years. This helps you achieve goals and plan finances in a more organised way. You can opt for a Loan for Doctors offering funds up to Rs. 2 crore to take care of all your expansion plans.
6. Lack of insurance
Even doctors require insurance, so don’t put this off for later. A life insurance can help cover both you and your family. Professional indemnity insurance help cover legal expenses in any instance where a patient sues you for malpractice. Property insurance can protect your property from expenses due to damage or theft. This also covers your furnishings, interiors and inventory. Commercial vehicle insurance provides protection for your commercial vehicle used to cater to patients at their home.
Doctors need to pay keen attention to managing their finances to be able to pay employees on time, make the most of promising growth opportunities and to achieve personal goals. To do all this and more, you can assess finance via Bajaj Finserv’s suite of Loans for Doctors. They offer a high loan amount, Flexi Loan facility, lengthy tenor and convenient prepayment terms.
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