As doctors and dentists, you work hard to put money in your pocket but is that money working as hard for you as it should be? I’ve compiled a list of 6 positive ways you can enhance your finances, so you can reach your financial and life goals. It is by no means exhaustive so you may wish to add yours to the list.
Budgeting is determining where your money goes rather than wondering where it went! There are lots of quotes that I love in this area of financial planning; such as…
“It’s not the size of your income that makes you rich, it’s the size of your expenditure”
You should have a good idea of where your money heads each month. Knowing the difference between your essential and discretionary expenditure helps you make informed decisions about further commitments, through to your holiday plans.
Often seeing your incomings and outgoings in black and white can help clarify exactly what money you do have – so why not create an Excel sheet? If you are not an Excel guru then there are apps you could use instead.
2. Over Stretching
This has strong links to the first point, if you have budgeting under control then it’s unlikely you will over commit. The most common ‘over stretching’ mistakes we see are around the size of the mortgage, car loans and school fees. This often leaves little funds to enjoy life and to provide for the future. If I asked you to add up your income over the last five years and ask what you have to show for it, could you answer? And would you be happy with the answer?
With a little careful planning and restructuring of your finances you could alleviate some of the financial strain caused by over stretching your finances.
3. Failing to plan is a plan to fail
I have recently been on a driving course (two wheels of course) and they harped on about looking ahead. If you get one turn wrong it will lead you to make a mess of the next three. It is a good analogy for financial planning. If you manage to put the right habits in place at an early age it can make a massive difference.
Arguably the most important aspect of a financial adviser’s role is to put the right strategy in place and keep it on track.
This leads me nicely onto my next heading…
4. Teaching (your children)
Teach your children the value of money early, not only how to deal with money, but yes, how to budget.
This may sound like parenting advice, which I am in no way qualified to do….BUT there is a reason I bring this up. Bank of Mum and Dad is a well known concept and more often than not it is where many children see their emergency fund being.
The earlier your children grasp the concept of how money works and learn how to save their money, the more likely they are to achieve financial independence.
It takes many years to build your financial wealth but it can be taken down very quickly! I always strongly advise clients to protect as they go along. This could include your ability to work, your health, family or the walls around you. Without an income or your health, none of the above is possible – your health and your ability to work are your greatest assets so make sure you protect them.
Not saving and not starting early. Einstein is supposed to have said:
“ Compound interest is the eighth wonder of the world, he who understands it, earns it…he who doesn’t pay it”.
It is in essence, achieving growth on your investments and that growth attracting growth. So, start saving early and allow for savings within your budget.
Finally, a few quick wins…
- Check your direct debit mandates. Do you know what they all are and most importantly do you still need them all?
- Renewals – car insurance, breakdown insurance, house insurance etc. It’s always worth spending some time discussing the ‘best price’ with your provider and getting other quotes to ensure you have the best deal.
- Mortgage – Are you on a competitive mortgage rate? Remember it’s not always the cheapest that’s the best, it’s all about the right strategy.
- Cash deposits are typically losing value being eroded by inflation. You need to make sure you have an emergency fund but could any surplus money be working harder for you?
I constantly endorse the importance of living within your means, planning for the future, and preparing for the worst – but ultimately it’s down to you! Our advisers are always available to help and guide you through any changes you may require to your ‘financial portfolio’ so please do get in touch.
Do you have any financial money saving tips to add to the list? Let us know by adding a comment below.