A financial plan is a written road map that takes you from today, to where you want to be in the future. It identifies your financial gaps, and makes recommendations on how to overcome the gaps.
5 Things Residents, Fellows and Even Attending Physicians and Surgeons
Can Do to Save Money This Month
By Katherine Vessenes, JD, CFP®, RFC
The year I started MD Financial, I put myself on a strict budget. After all, I wasn’t sure it would work. By the end of the year, as I reviewed my spending, I noticed three things:
1. I had only eaten dinner out two times the entire year—both times for dinner meetings.
2. My entire clothing budget for the year was $169. This covered the cost of one new pair of jeans, as my old ones had holes in unfashionable places.
3. I discovered some penny pinching ideas that could help our clients stay on a budget.
No matter where you are in life, there are steps you can take that will put you in a better financial position by the end of the month. Here are a few of the things I do for my own personal penny pinching plan that will work for doctors, too:
1. I make my own lunches. Each Sunday, I spend about 45 minutes chopping vegetables and making salads. I put the dry veggies in a quart jar, starting with cucumbers, bell peppers, scallions, cherry tomatoes and other goodies, and then topping the jar with the greens on top. Wet ingredients, like my protein source and salad dressing, I put in a separate container. At lunchtime, I invert the glass on a plate, top it with the protein and dressing, and I have a great salad. This helps me get to my goal of 7 servings of veggies a day; keeps my weight down; saves a lot of time heading to a restaurant, or cafeteria; and saves money.
2. We rarely eat dinners at restaurants. I will freely admit this took some time to change a bad restaurant addiction. There was a time in my life when I enjoyed eating out—I was too tired to cook or clean up. Gradually I began to see that I really didn’t enjoy spending an hour or so in a restaurant, sitting down, waiting for service, getting mediocre food, when I could be out doing things I really enjoyed. In fact, it was more draining for me to eat out than have my own dinner at home.
Fortunately, I married a great cook. So during the summer months, while I am making our salads for the week, my husband Peter is grilling our proteins for our weekly dinners. Yesterday he did turkey and pork bratwurst and chicken breasts. Last week it was turkey breasts, hamburgers and roast chickens. We make these for the week and then freeze half of them. On weeks that he is out of town, I create a couple of crockpot dinners of chili, stew or soup. When we come home tired from work, it never takes longer than 10 minutes to pull the dinner out and heat it up. By the time we have finished eating and done a quick clean up, we are ready for a fun evening, in the same time it would take us to reach the restaurant!
3. I buy my clothes at resale shops. As I am writing this, I am wearing a new summer weight jacket. Retail price: About $179. My cost: $28! Yes, it still had the tags on it. Most of my clothes are purchased at upscale resale shops. One of my biggest finds was a couture suit that was probably about $2,000 at retail. I paid a whopping $90 and I always feel like a million dollars in it. Peter has found Louchassie boots that would retail for $500 to $700 for $65. If we had small children at home, I would get all their clothes at children’s resale shops. I feel like I am saving the environment by keeping good clothes out of the dumps and saving money at the same time.
4. Credit Card Purchases are immediately paid off. We do use credit cards, partly for security purposes and partly for the loyalty benefits. However, I hate seeing a balance on the cards each month. As soon as I get home from making the credit card purchase, I log onto our checking account and do a transfer to the credit card to immediately pay the recent purchase off. This means I won’t have to pay a carrying charge on the credit cards, and it will immediately show up in my bank account as a reduction.
This reduced bank account balance is important to my pinching pennies plan, because I check it every few days for fraud and for the balance. If there is a sizable balance, then I know we can do the special vacation, buy furniture, or go to the spa. If the balance isn’t high enough, those activities can wait until next month.
5. Save Every Month. All of our doctors know how important we feel it is for them to save money. Yes, even the residents and fellows. We have some fellows who are saving $300 a month. I am so proud of them. Sure they have high student loans and aren’t making much money, but it is important to get into the habit of spending less than you make and setting money aside for a rainy day or a brighter future.
I find when doctors have the funds automatically taken out of their bank accounts at the beginning of every month, they seem to subconsciously adjust their spending to live on the rest—they never miss it.
As you are creating your own penny pinching plan, remember what the Brits say: if you watch the pennies, the pounds take care of themselves!
©2018 Katherine Vessenes. No reprints without permission
Katherine Vessenes, JD, CFP®, RFC, is the president MD Financial Advisors, the personal CFO for busy doctors. A Medical Economics top Advisor for Doctors, she also received the multi-state, multi-year 5 Star Advisor award. The author of three books, Katherine works with over 280 doctors across the country. You can reach her at Katherine@mdfinancialadvisors.com and www.mdfinancialadvisors.com
Changes in health care are impacting all physicians, it has never been more important for doctors to carefully review their new contracts before they sign them.
There has never been a contract that was not negotiable and improved in some way!
Liquidated Damages: Although I have only seen this in three contracts in the last year, this clause is becoming much more common.
Liquidated damages is a legal construct that allows the parties to state up front, in writing, what the damages will be if the contract is breached. Parties agree in writing if the doctor violates the contract in any way, even if something as simple as not giving proper notice about leaving, the doctor will owe the employer the amount specified in the employment agreement, payments can exceed several hundred thousand dollars.
Tip: never sign an agreement like this without consulting an attorney. It is definitely important to remove it from the agreement if the employer is agreeable.
Tail Coverage: It is always nice to have your new employer pay for tail coverage if you leave. This can be quite expensive if you have to pay for it individually. If you don’t see it provided in your contract, use this as a negotiation point.
Tip: Make sure that you have tail coverage and that you don’t have to pay for it.
Tip #2: The most power you will ever have with your new employer is before you sign the agreement. Make sure you use this time to negotiate a contract that is fair to you, and protects you, too. Don’t hesitate to work with an attorney.
These should be clearly spelled out. Learn the details and make sure they are achievable. Make sure you ask “Of your recent hires that are similar to me, how did their bonuses pay out?” Specifics not needed, but need to know how to plan for the future. Or could ask “What is it going to take for me to qualify for your bonus program?” Make sure you know how they are computed.
Types of Bonuses:
Staring bonus – gets paid after you start, encourages you to stay w the firm
Retention bonus – if you stay past a certain time period, you are paid for staying on longer (i.e. 1 year)
Sign on bonus – should be paid when you sign the contract but often won’t receive the money until you start or even after the first year
Production bonus – depends on how many patients you see per hour or how many RVU you bill etc. These are becoming more common.
Tip: if you don’t see bonuses offered in the contract this could be a negotiation point especially if your employer won’t negotiate on the salary
Commonly see failure to negotiate, unfortunately more commonly seen in the female population. Negotiations are expected and if you don’t you are leaving money behind.
Overall “he who has the gold makes the rules”. Remember you have gold too, we are currently in a physician shortage!
Know how in demand you are for your specialty and your location
He who speaks first loses. If you offer concrete terms the negotiator will latch on to that and the risk is that they may have been willing to offer more. Be sure to include pauses and don’t rush to fill the void, give your employer an opportunity to make you an offer
Negotiations should be done in person or at the very least over the phone. You need the opportunity to assess body language etc. during the negotiation period
Never agree on the spot. Take time to review, do research, review with your advisors. Don’t respond to time pressures by your employer.
Go in with a list of questions and then have a second list of your priorities that perhaps can be improved upon in your favor to “sweeten the deal”
Use role play or mental rehearsal to prepare yourself for the negotiation.
Your negotiation period is the honeymoon phase so make the most of it!
Katherine has helped hundreds of doctors to improve their financial situations over the years. Over the course of her career, she has discovered that woman doctors need some extra help with their financial future, due to 5 big money mistakes they are making, influenced by fear.