7 Most Common Financial Mistakes Made by Doctors

Providing advice to doctors over the years has highlighted some recurring financial mistakes that keep presenting themselves. Below are the top 7 we’ve identified and how you can best navigate them.

7 Most Common Financial Mistakes Made by Doctors1 – Preparing your own tax return

The regulations and laws surrounding tax are constantly changing. For doctors with their own practices or with many income streams, navigating your tax return can be daunting. Specialist knowledge is required to ensure you don’t miss out on the opportunity to secure the best possible tax return. It is crucial that your tax return be completed by a tax specialist, ideally one with knowledge about the medical industry.

2 – Working with the wrong financial advisor

Everyone benefits from working with the right financial advisor, and for medical professionals with many assets and investments, this element of your wealth management is even more crucial. Over your career, you may outgrow your existing financial advisor or perhaps notice that you aren’t receiving a high level of service.

You need to seek advice from a medical financial specialist who is informed about the nuances of allowable deductions for doctors and medical specialists. They will also be able to inform you of the most tax-effective way to structure any trusts you may operate.

3 – Failing to save for the long term (and for tax bills!)

High income earners are often lulled into a false sense of financial security, and doctors are no exception. As they enter the workforce later due to the amount of time spent at medical school, doctors have less time to save for retirement.

The ideal saving ratio might be 20% – 25% of your total income if you intend to retire at 65. For optimum wealth management this should be combined with intelligent superannuation and tax strategies; this will include maximising your super contributions for the best possible tax outcome.

7 Most Common Financial Mistakes Made by Doctors4 – Not focusing on superannuation until too late

As many doctors are self-employed, superannuation contributions can often be pushed down the priority list. It is important to make regular, tax-effective contributions to your super from early in your career and to look to maximise the contributions as your cashflow situation improves over time.

5 – Investing in high-risk schemes

An abundance of disposable income can be dangerous without proper wealth management – just because your income is high, does not mean that you should be drawn into high-risk schemes. It is important to identify risk tolerance levels for your investments and manage them accordingly – your financial advisor will help you in this area. If you invest in a way that aligns with your risk tolerance level, you will be able to safely generate an additional income stream and grow your wealth.

6 – Having an undefined tax strategy

Everyone needs a defined tax strategy. It is particularly important for medical professionals as, while their pre-tax income might be satisfactory, they do not realise that their after-tax position may be drastically different. Intelligent wealth management considers each element of your financial situation and can lower your tax bill by implementing better investment strategies and maximising your superannuation contributions.

7 – Poor Non-Deductible Debt Management

High income earners, including doctors, can easily fall into the pattern of living beyond their means. This may involve credit card debt, personal debt and student loans and can be a significant issue.

The interest expense can take a serious toll on your everyday income and your long-term savings for retirement. Your overall financial position can take a hit and you will not be able to take advantage of tax-effective investments to grow your wealth. If you’re suffering from poor debt management, you need to act immediately.

You should construct a realistic plan that will see you go from making monthly repayments to making monthly savings instead. If you’re unsure how to do this, consult with your financial advisor to help you get back on track.

Ongoing Service

Ongoing advice is critical to the process as an individual’s wealth grows.  Endorphin Wealth recommends that you regularly review your strategy to ensure it remains in line with your desired lifestyle needs.

For an obligation free conversation about your financial future, please contact us on 03 9190 8964 or at Wealth Management Team

What our Clients Say

  • Robert Rich is a gun and has been a pleasure to work with, he spent a lot of time asking questions and listening to both my husband and I to get a deep understanding of our current financial situation of who we are and where we want to be. His advice has been comprehensive and easy to understand. The genuine interest and enthusiasm he has demonstrated has made the whole experience to date, fun and engaging (it has also been awesome to see some great financial results!). Rob is a great communicator and is always available to chat, meet up or respond to an email. We wish we had seen Rob earlier, and plan to have him as our advisor now and into the future, I have and will continue to recommend him and his services.

    - Ellen Bond

  • Rob has been fantastic helping us set all our financials in order. We didn't want to have to worry about any of this stuff day to day. Rob put together a set and forget strategy that will see us in good shape for the future. Good guy, good advice, great help. Thanks again Rob

    - Andy Wright

  • My husband and I had a wonderful experience with Rob. He is genuine and honest. He has done amazing things with our finances to ensure our future is set up the right way. He has gone above and beyond our expectations. I highly recommend Rob, he is an expert in his field.

    - Anthea Husing

  • love working with Robert. He is highly skilled, practical and empathic. Nothing is a problem and he goes ‘above and beyond’. I have no hesitation in recommending Robert as an excellent financial advisor.

    - Rebecca Carter

  • Robert has managed our finances over the last 12 months as if they were his own. He has an eye for detail and is incredibly enthusiastic. We have recommended him to all our friends & family.

    - A. Miles

  • Rob has handled our finances for some time now. He provided us with sound advice and options. I highly recommend his services.

    - Mathew Quinton

  • Robert Rich provided me excellent financial advice and assistance in finding the right insurance for me. He was incredibly patient, and I'd recommend him without hesitation.

    - Edward Murrell

  • Rob has been helping me with my finances for just over 12 months now and i couldn't be happy, he is a wealth of knowledge and is amazing at what he does.

    - Paul Scott Ray White

  • Phillip and the team provide quality advice. They carefully explain the available options and clearly set the client's interests as the priority.

    - Jon Sutton

  • Rob has provided fantastic advise and clarity to myself and clients

    - James Ruddick

  • Great guys! Amazing financial advice.

    - Jay Boston

  • I cannot say enough about their professional manner and would highly recommend anyone I know to seek their services

    - Heather B

  • Your knowledge of the financial market is up to date and your approach to my portfolio has been proactive

    - Michael S

  • Thanks to Endorphin, I am now on the path to that dream of mine

    - Jake F

  • The plan has definitely made a big difference to my lifestyle

    - Josie W

  • It has been quite exciting and very comforting to have Endorphin looking after my financial future

    - Susan A

  • They provided me with a sense of direction and security that I did not have previously

    - Michelle C