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At the end of each year, we take time to reflect on what we’ve done over the past twelve months and what we want to do better next year. One of the most common New Year’s Resolutions we see doctors make: Save more money. Whether the funds are for a big trip, education, paying off debt, retirement or just in general, we’ll cover some of the best ways to save a little extra this upcoming year.
Saving money can feel impossible for doctors who have student loans, credit card debt, car payments, mortgage, family expenses, education costs, and more chipping away at their income each month. Because of this, we here at MD Financial want to give you seven tips proven to help you save up for whatever it is you want.
Seven Tips
Number 1: Prioritize
Take a minute to write down the top financial things that are most important to you. It is easy in the moment to book that trip to Tahiti, but when it comes down to it, maybe getting your student debt paid off is more important or making sure your kids have the option to go to private school. This list will help you make decisions that line up with your values.
Keep this list in mind at all times, and it will help you overcome instant gratification.
Number 2: Create a budget and stick to it
Remember that all-important list: What’s important to you? Let’s start by saving for those things first!
Next is deciding how much you’d like to put away into savings accounts/brokerages/529s/etc..
Subtract out monthly payments on loans, home payments, things you can’t change. These are largely fixed expenses.
Then add in flexible spending items like transportation, groceries, eating out, concerts, gifts.
Hopefully you will have money left over.
We do this exercise with each of our clients—even ones who think they have a handle on their finances. We are always finding gaps and places where money is slipping through our clients’ fingers.
Number 3: “Money Smart Doctors” limit the amount they spend on restaurants/take out
Let me share how we got this number down in our household:
I bring my own lunch.
We make all our own food from scratch—healthier and cheaper.
Meal prep on the weekends to make grabbing a lunch cheaper and easier.
Money is more valuable than time. I would rather eat dinner in 30 minutes at home than spend 1.5 hours waiting to be served and driving.
Bring your own lunch to work, have your kids bring bag lunch to school.
Maybe only eat out once a month or on special occasions/birthdays/anniversaries.
Save eating out to when you are on trips/vacation.
When you do eat out, here are some ways to keep the bill down:
Rarely order wines or cocktails, even sodas add up.
Skip appetizers and work on the main dish.
Skip desserts.
Try take out instead of dining out to save money on drinks, city parking, etc.
Number 4: Be economical and ecological and buy used/recycled items
Shop consignment stores
Don’t shop for clothes for full price, make sure they’re on sale or from second hand stores. You’ll be doing something good for the environment and saving a lot of money too.
Furnish new spaces/homes with second hand furniture or outlet/surplus stores.
Number 5: Pay off your credit cards immediately
Some card companies begin charging interest the day of the purchase, so don’t be fooled into believing that paying off your credit card at the end of the month will leave you with $0 in interest.
Some credit card points can be redeemed for cash, and you can use that to pay down debt or buy something fun and frivolous.
In fact, many cards let you use points to pay down balances and apply the equivalent dollar amount to your statement. Consider doing this to help chip away at bills.
In the event you do get a late fee, try calling and asking them to waive the fee. Most credit cards will do this one (or more) times per client.
Number 6: Set up a mad money account - It stops a ton of marital arguments!
This is money that you don’t have to account for to your significant other.
Use this for the fun things: new furniture, trip, your poker games, or something else frivolous.
Easy budgeting: when you have money in the account, buy the new sofa or go to Italy! If not, wait until you do.
Number 7: Save/invest every month every month
Pay yourself first. First checks should go to savings and investments/anything that will build your net worth.
Set up an automated draft for payday- the money will be in your savings account and out of your checking before you even have a chance to miss it.
Saving isn’t just about putting money away, it’s about adjusting your budget so you never even notice it’s gone.
99% of our clients don’t track their spending every month, but if they are saving first, it doesn’t matter—they have their high priority expenses covered and can freely spend the leftovers without worry!
Conclusion:
A few small adjustments can make a big impact on your financial future, so make sure your highest priorities will be covered first, and the rest of your budget will fall into place. Set up a mad money account for fun items, this will leave you happy with your budget, and have a way to motivate you to save for the fun things.
If we have done a budget for you in the past, email us at Info@mdfinancialadvisors.com to get a copy of the budget. If you are new here, know that we offer complimentary consultations, feel free to set up your appointment today: Book a consultation here.
If you found this helpful, please forward it to colleagues and remember to follow us on social media. We’re always accepting questions/topics for future episodes of our podcast, so write in or call with your suggestions. Finally, you can reach out to us directly for a second opinion on your financial health, by emailing us at Info@mdfinancialadvisors.com.
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CONTACT US
1-888-256-6855
Katherine Vessenes, JD, CFP®, is the founder and CEO of MD Financial Advisors who serve 500 doctors from Hawaii to Cape Cod. An award-winning Financial Advisor, Attorney, Certified Financial Planner®, author and speaker, she is devoted to bringing ethical advice to physicians and dentists. She can be reached at Katherine@mdfinancialadvisors.com.