You have slogged it out at University for many years, survived days without sleep, countless unpaid placements and the internship years. Finally, you have started (or finished) your residency placements and the real dollars are starting to flow in to your bank account.
Many Junior Medi
cal Officers & Dentists start their careers with a base income of around $80,000. This then moves quickly through the hundred-thousand dollar mark, and finally into the vicinity of several hundreds of thousands of dollars per year once specialist training is complete. After years of training, massive HELP debt and student loans, it can be an easy first choice to plough these hard dollars back into repaying debts or buying your first house. Whilst these are important steps for any new Doctor or Dentist to take, it’s also imperative to consider the plethora of other financial decisions that will make your life easier or more financially prosperous in the long term.
Step One – Source a specialist medical Accountant and Financial Adviser
It’s easy to attend to your tax returns once a year at the closest or cheapest franchise accounting or advice firm that you can find. As a medical professional, your needs are a great deal more complex than the many hundreds of different professions that those firms see each year.
By engaging a specialist medical Tax or Financial adviser, you can ensure that appropriate tax planning can be put in in place for you, to work throughout the taxation year. When the bell rings on 30 June, it is simply too late to implement a strategy to contend with that burdensome letter from the ATO, the planning must be done in advance.
If you are consulting, contracting or setting up your own practice, it is also exceptionally important to setup the correct business structure from the outset. All too often medical professionals attend our office with the wrong business arrangements in place or non-tax deductible debt arrangements in place, which can lead to hefty tax burdens, increased litigation risks and a giant headache (and in turn a giant bill) from your Accountant when it comes time to prepare financial statements and accounts.
Step two – think about how you can meet your financial commitments if you can’t work
As a newly qualified Doctor or Medical Professional, you know more than most how freak accidents or unforseen illness can befall anyone, at any time. When you’ve just come out of medical school and are working 80 hours plus per week, the last thing on your mind is “how will I pay my bills if I can’t work?”
In Australia, the take up of car insurance, house insurance, health insurance and even mobile phone insurance is astronomical. So many people sign up to protect these small material items, but don’t think about how they would afford to keep paying for these things if they were removed from the workforce; either temporarily or on a long term basis.
The cost of personal insurances will be a tiny proportion of your income, and in some cases can be tax deductible. There are a great deal many important considerations in obtaining insurance for a medical professional and it’s important to seek specialist insurance advice from a qualified professional who knows the medical industry rather than buying an off the shelf product. As with the health insurance industry, no two policies are the same and you must ensure that the policy you buy will provide for your needs.
Step Three – Think about your financial future
When you’re working hard, you often only think about short term financial needs such as paying for your mortgage or rent, or saving for an upcoming holiday. We see many new Doctors and Medical Professionals who don’t have a financial map in place for the future.
Setting up a financial plan for your future can be as simple as putting together a budget with an allocated amount each month to savings, short term expenditures, long term expenditures and ‘fun’ money, or you can start an investment plan that helps to save for the future and manage or minimise your tax at the end of the year.
Either way, it’s important to setup this roadmap for the future as soon as possible. Tracking a budget for a few months using one of many online tools available, or seeing a specialist financial adviser for budgeting and planning assistance is a sure fire way to start you on the road to success.
Step Four – Superannuation, why does a young Medico need to think about it now?
When you have just graduated from your studies, the last thing on your mind will be superannuation. For many new Doctors and Medical professionals, retirement will be thirty years away and will remain a distant concept for many decades. These many years are the reason that new Doctors should be thinking about superannuation now; many years allows the power of compounding interest to take effect.
It’s vital to review your superannuation early, and ensure that it meets your needs and goals. For those who take the decision to work within the public medical system, you may not have what is called ‘Superannuation Choice’ for your hospital contributions, but this does not mean you don’t have options for your super. See a qualified superannuation specialist for advice on the best options for you.