22-08-2022 |
Being a doctor is not just a profession; it is a lifestyle. Long working hours, persistent work-related stress, working with patients suffering from various infections, and various other factors expose them to a lot of risks. Hence, doctors need to create a financial plan that helps them achieve their short-term goals like taking a vacation, renovating their home/office, etc., and long-term goals like retirement planning, higher education of children, etc., with ease. In this article, we will offer some tips for financial planning for doctors in India.
As a doctor, your professional journey begins with the internship after you complete medical school. While students receive a stipend, the amount is usually very low. In the medical field, experience begets a better paycheck. Hence, as you gain experience, your income can increase exponentially.
Many doctors wait until they reach the apex of their salary graph to start saving and investing. However, it is important to remember that if you start investing at a younger age, then you give your money enough time to benefit from the compounding of interest.
Financial Planning Tips for Doctors
Here are some tips for financial planning for physicians and doctors.
- Clear your education loan
This should be your first step in financial planning – clearing the loan that you took to get the medical degree. Many students opt for education loans to manage tuition fees, hostel expenses, and various other costs associated with medical studies. Depending on the college, the cost of education can be very high. Therefore, a loan is a good option.
However, medical studies are time-consuming and don’t allow you the time or mental space to work alongside your college to start repaying the loan. Hence, when you begin your professional journey, you have a high education loan on your head. It is important to clear this as soon as you can so that you can start creating a corpus for various short and long-term goals.
- Talk to a finance professional
Doctors are hard-pressed for time. Hence, they rarely can find time to go through the range of investment avenues available and filter them based on their needs. Hence, it is prudent to avail yourself of the services of an investment advisor who can guide you to make investments based on your financial goals and risk tolerance levels.
- Buy a professional indemnity cover
Over the last few years, there has been an increase in the number of cases registered against doctors and medical professionals for negligence and other reasons. Such cases can dent your finances since the legal costs and compensation can run into Lakh of rupees. Hence, it is important to purchase professional indemnity insurance for doctors, which allows you to protect your savings during any such litigation.
- Create a budget
An erratic schedule and a busy lifestyle usually do not leave doctors with the time or energy to plan their finances. One of the fundamental requirements of financial planning is budgeting. Without a budget, it is easy to lose track of your money and spend it on unnecessary things.
Hence, make sure that you find time to create a budget and stick to it. Your monthly budget should have three broad segments – essential expenses, non-essential expenses, and savings. Choose a percentage that you want to dedicate to all these segments.
- Always have an emergency fund
Doctors understand the unpredictability of life more than others. However, medical emergencies are only one part of the uncertainties. You can have a financial or family-related emergency too. This can also impact your ability to continue working. Hence, it is prudent to create an emergency fund to manage any such periods without breaking the bank. Usually, doctors create an emergency fund that can help them manage three-four months of living expenses with ease.
- Create a retirement plan
Usually, there is no retirement age for doctors. Most of them work until they are physically fit. This gives them the flexibility of retiring early if they want, provided they have a sound retirement plan. While there are different types of retirement plans in India, you need to ensure that you talk to an investment advisor to help you with your retirement financial planning.
Tata AIA Life Insurance offers a range of retirement and pension solutions to help ensure that you earn money even after you stop working. Based on how you perceive your post-retirement life, you can choose a plan and get started at as young an age as possible.
- Create a diversified investment portfolio
There are many investment avenues to choose from, including stocks, bonds, gold, real estate, etc. Each of these asset classes has certain risks and is known to offer returns within a specific range. The markets are highly volatile, with no assurance of the direction the price of an asset can take over time. Hence, it is prudent to create an investment portfolio that is diversified across instruments and asset classes to minimise the impact of such volatility. Also, make sure that you have adequate life insurance coverage.
Conclusion
These tips for financial planning for doctors can help you get a better grip on your finances and create a plan to fulfil your future goals. Remember, your job as a doctor can be time-consuming and highly stressful. Without a solid financial plan, you will expose yourself and your loved ones to unnecessary risks. Hence, make sure that you the financial advice for the doctors specified above and create an investment plan that helps you create a financially stable future.
L&C/Advt/2022/Aug/1837