Doctors and other Medical practitioners are slowly discovering that they must pay close attention to their fiscal as well as physical health. “Doctor, your books look chronically ill,” is not a diagnosis a medical practitioner wants to hear from an accountant. It’s true though, and we are sad to report that many doctors are finding too much month at the end of their money.
Calling All Doctors
In this article, we introduce you to a new Gavrilov & Co niche: accounting for medical practitioners.
Doctors are demanding more than just help with this year’s coming tax season. They need business advice and tax strategy. Many medical professionals like doctors, dentists, and physician’s assistants are too exhausted, too busy or too in debt to seek out assistance strategizing their finances. We are here to help.
This blog is an official invitation to medical professionals. Come have a visit with the executive accountants and tax professionals at Gavrilov & Co Accounting and Tax Services. We’ll give you a big dose of fiscal reality, financial strategies, and a plan to overcome that sinking feeling you might be facing at the end of every month.
Calling Dr. H.E.N.R.Y:
We would like to politely inquire, in the style of famed medical blogger, KevinMD, “If you are a doctor, why aren’t you rich?” In a recent article for KevinMD, Dr. Cory Faucet, a doctor himself, revealed the answer. He states that “Rather than becoming wealthy, many doctors today are H.E.N.R.Ys.” He defines his acronym: High Earners, Not Rich Yet.
Dr. Cory Faucet states, “Many doctors feel the need to spend all, or more than all, of their income.” At Gavrilov and Co, we have seen this syndrome in other professions. But it is rampant among doctors with high educational standards, long years of training and heavy work schedules.
Why This Syndrome is Affecting Doctors
As we have stated, in the 20th and 21st century, our physicians and other healthcare professionals scrimped and saved to get through their training. What’s more, most of them did not train for business. They trained for the practice of medicine. After all that hard work, we know they must feel like it’s time to gather the benefits. They want to spend their hard-earned cash. And spend they do. “They are the “working rich,” written about in the blogs of KevinMD.com. They only appear rich as long as they are working. If they were to stop working, they would be broke.
Calling All Doctors to Study the Money beyond the Medicine
Now, we are certainly not bullying doctors about their economic disabilities. There are only so many hours in the day, and they spend them in the noble arts of medicine. They are saving lives. Still, we feel compelled to help them, just as they help us when we exhibit symptoms of illness.
Doctors and Dollars: The Serious Case of Dr. XYZ
We recently gave some serious business counseling to a doctor who had been earning $550,000 a year. Yet he had no net worth. How could this happen? In one word “lifestyle.” We examined the doctor’s Symptoms: Number one was a luxury lifestyle. Then, we saw that Dr. XYZ simply spent everything he made.
Why did this happen to Dr. XYZ? Research shows some doctors do this because of the years of sacrifice during their education. For a long time, as a pre-med student, medical student, and intern, Dr. XYZ made very little money. Then, he finally established a lucrative medical practice as a specialist. The money started rolling in, but he had no idea how to handle it. He was busy with his patients. And he neglected to take the time to learn how to save or to invest his money. His lifestyle was extravagant.
Our Diagnosis for Doctors Living Month to Month
While the doctor was busy with the intricacies of anatomy and surgery, he missed out on his financial education. Dr. XYZ needed to start at the beginning. He needed the basic guides found in such books as Eric Tyson’s Personal Finance for Dummies. Such lessons include “budgeting, saving, getting out of debt, making timely investment choices, and planning for the future.”
It was not too late to save this doctor. His case was chronic but not critical. We began his fiscal cure by explaining a simple but golden formula.
The Golden Formula for Doctors and Their Financial Health
And this formula has been around for generations. Undoubtedly some of you have heard it before. It has existed for so long, we do not know who to give the creative credit for it. And it comes in three steps:
1. First and foremost: spend less than you earn.
2. Secondly, and very basically: save and invest the difference.
3. Thirdly, and this is the most difficult step: Continue to do it for a long period of time.
This Golden Formula is easier said than done. Did you know that, according to statistics, physicians earn plenty of money to become millionaires? And yet, not that many of them become millionaires according to Chris Hogan’s new book, Everyday Millionaires. His research shows that 69% of today’s “millionaires attained their millionaire status on an income of less than $100,000 a year.” And the moral of his research is “If all it took was money to become wealthy, then the average physician, who makes $200,000 a year, should have no problem reaching millionaire status.”
Obviously, true wealth takes strategies, budgeting, savings, tax planning, and guidance. It takes doing with a little less today in order to plan to have enough for tomorrow. Teachers, engineers, and accountants are the top three professions with the most millionaires. Doctors did not make it into the top group, in spite of their apparent wealth.
Medical Practitioners and Timepieces
According to Dr. Cory Faucet, we can compare doctors to watches. One type of physician spends time on a pathway that “leads to becoming wealthy (Dr. Timex).” Other doctors, like Dr. XYZ, lead the luxurious life of a HENRY, which we mentioned previously: High Earner, Not Rich Yet.
Dr. Faucet refers to these doctors as Dr. Rolex. Their lives do not lead to wealth accumulation (Dr. Rolex). If you are a medical professional, which are you? If you are simply a Gavrilov & Co Blog reader, which of these types do you want to choose as your doctor?
Doctors and Dollars: Accountants Can Adjust Attitudes
So what does make the difference between Dr. Rolex and Dr. Timex? (As watches, they both tell time and they both have style.) As doctors, Gavrilov and Co thinks its attitude about money makes the difference.
“Doctors who accumulate wealth feel that saving for the future is not only important, but it’s a priority.”
- They seek out financial professionals to help them develop savings, tax and investment planning.
- They save for the future as a priority. Then they live on the rest of the money.
Sadly, the Rolex doctors expend all their money, week in and week out. They are never really wealthy, although they earn more and more money.
Current Therapy for Dr. XYZ: Financial Attitude Adjustments
In addition to adjusting Dr. XYZ’s ideas about wealth, we will help him with an adjustment to his attitude toward debt. Did you know the truly wealthy avoid consumer debt, second mortgages and car payments? So only a few doctors are hopeless cases, and with some guidance, we know all medical practitioners can be cured of financial ills.
James Dahl, author of The White Coat Investor puts it this way, “Doctors are highly-educated and extensively trained at making difficult diagnoses and performing lifesaving procedures. However, they receive little to no training in business, personal finance, investing, insurance, taxes, estate planning, and asset protection.”
At Gavrilov & Co, we specialize in teaching doctors and other medical professionals how to adjust their money attitude in terms of wealth, debt and investment. The benefits of our treatments include providing a better future for yourself and your family. Next week the Gavrilov & Co blog will bring you the top half-dozen money pitfalls that trap many doctors and medical practitioners. Dr. XYZ knows them now, do you?