Unfortunately, there are some costly financial mistakes doctors make over and over again. In this article I have listed the 3 most common and also most costly mistakes.
1) Having a mortgage that is too big
If you do not have the cash flow to pay off your home mortgage in 10 years time, then you have borrowed too much.
There is a tremendous opportunity cost to taking longer than 10 years, as the interest on the loan balloons and it stops you from accumulating wealth for retirement – we call this the opportunity cost.
Living in a nice house is great, but consider the cost, as I have seen too many doctors in financial stress because of the size of their mortgage.
2) Focusing too much on saving tax
Paying too much tax is the main frustration for many doctors. However, often this leads to becoming over-zealous when it comes to saving tax.
As I have referred to in another article, tax planning and tax savings strategies only make sense when they are sustainable – you can read more HERE.
I am a firm believer that it makes more sense to focus on what you do with your after-tax money and making sure it works for you, rather than just being focused on saving tax.
3) Not planning soon enough
Doctors start earning money later in their career compared to many other professionals. This means that you miss out on some powerful compounding benefits and cannot afford to delay accumulating wealth. Yet, many young doctors want to ‘savour the fruits’ of their hard work and years of study, and develop an expensive lifestyle.
Quite often, financial planning and wealth accumulation does not become a priority until your 40’s or even 50’s.
My advice: start planning when you are young, so you can acquire the right financial discipline and knowledge.
If you would like to avoid these costly financial mistakes doctors make, we would welcome the opportunity to set you on the right path to financial freedom. Please contact us on 08 6160 5918 or firstname.lastname@example.org to book your obligation-free strategy session.
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