6 financial mistakes you should avoid
Doctors are notorious for making mistakes when it comes to managing their money. We’ve looked in to some of the most common mistakes we make - avoid these 6 things to better enjoy your hard-earned savings.
1. Acting impulsively on a 'hot tip'
Doctors are used to working in a shared education environment, but as a consequence we can put trust in colleagues who are overstating their knowledge or information access, or have simply underestimated the complexity of the task they are proposing. This includes investing in your med-school friend’s health-based start up, or buying into that biotech company in Ecuador that your registrar knows a guy who knows a guy who works there. The effort and capital needed to make an idea into a functioning business is often woefully underestimated, the potential success of clinical products in trials is fraught with potential failure. Don’t dive in head first based on banter in the Mess. Do your homework, make sure you can afford to LOSE any money you might invest, and be prepared to make big sacrifices if you’re considering becoming partner in a bigger scale operation.
2. Failing to bill properly/keep track of payments
Particularly as a junior, but relevant to all specialist levels, is the avoidance to keep track of your payments. Especially in the public sector, you’re often asked to do those extra hours, clinics or shifts – but are you being reimbursed appropriately? Do you know how to interpret your time sheet? Do you check it each payroll cycle against your record of hours worked? If the answer is no, there’s a chance you’re being short-changed, or just giving up on claiming pay altogether. I’m pitching for a shameless plug here, because the digital time sheet feature and ‘My Shifts’ section of your Locum’s Nest app keeps all this information in a centralised digital space, allows for tracking of your payments, and an easy way to log those extra hours.
3. Not saving enough
You work hard, and perform selflessly most of your working hours, so treat yourself, right! Absolutely, but what if something happens that stops you from working? Injury, illness, family crises, though not likely, could cause a major issue if you don’t have a safety net. Financial advisors suggest as a ballpark figure to try to save 6-9 months worth of your income for those just-in-case scenarios.
4. Taking a time out
Taking a break from medicine might be a necessity if you’ve started a family, are sick or injured, or have unforeseen circumstances that redirect your time and energy from clinical work. It might be a lifestyle choice to travel, or just relax and recover from that Burnout Feeling. It is estimated that to recover losses from a 5 year career break, you have to save up to 30% more of your income once you resume.
5. Not learning about types of investments or investment strategies
As highly educated individuals, we doctors can get so good at giving advice to others, that we can convince ourselves to follow our own advice all too easily. There are so many aspects to financial markets and the economy that you just won’t understand by reading the Financial Review every now and then. Financial institutions are all too aware of the tendencies for doctors to practice beyond their means when it comes to their own money, making them a prime target for over-stretched loans, or sub-optimal investments. Give your money some of the effort you give your patients, and learn about the market before you hand over your hard earned dollars – here are some Titles to get you started:
The Intelligent Investor, by Benjamin Graham
Smarter Investing, by Tim Hale
The White Coat Investor, by Dr James M Dahle MD
The Truth About Money, by Ric Edelman
6. Getting emotional about your investments
BitCoin FOMO anyone? It can feel like financial markets and investment opportunities move so quickly now, and if you’ve ‘missed out’ on a previous investment that went on to perform well, it’s only natural that the next time around you’ll be tempted to take the plunge at the first whisper of The Next Big Thing. Try not to get caught up in the hype – as was seen recently with Cryptocurrencies, the mob mentality can cause carnage for the amateur investor. And try to remember, if it’s populous enough that you – a non-dedicated, toe in the water type investor – have heard of it, everyone else has too, so it’s probably not as time-sensitive as you think.