Last week in my quest to gather information of how doctors live I met a doctor and had a look at his annual cash flow. It almost scared me. Here was a doctor (for our story let us call him Dr. Pradeep married to Bhargavi a house wife). Here is his annual cash flow statement:
A doctor’s expense sheet
Gross Income 1,700,000
Pensions contribution 100,000
Cash Inflow per annum 1,350,000
School fees 100,000
Household exp 50,000
House EMI 400,000
Clothes etc. 70,000
Maintenance charges 16,000
Total Rs. 1,235,000
I was quite zapped when he told me that on an income of about Rs. 17 lakhs he has almost no surplus to invest for his retirement. He is not very old by doctor standards – he is just 43 years old. But wait a minute, when he came to me, he and his wife were about to upgrade to a car costing Rs. 15 lakhs (EMI Rs. 28000 per month) and a house costing Rs. 100 lakhs (differential EMI Rs. 25000 per month).
They were quite stunned when they tabulated their expenses and realized that one extra expense like a car or a house repair could create a serious cash flow crisis! Dr. Pradeep’s father (who retired as a clerk in BEST – Mumbai’s transport company) was living on his pension with his wife in another suburb of Mumbai. He had started a Public Provident fund account for Dr. Pradeep and made sure Dr. Pradeep contributed Rs. 70,000 to it annually. That was Dr. Pradeep’s only saving. He had no investments AT ALL. His life insurance (I estimated he needs Rs. 3 crores as a term cover – and that would cost Rs. 65,000 per annum) was also NIL. His medical insurance was NIL. His parents had a cover from New India for Rs. 300,000 for which his father was paying the premium.
Normally my alarm levels would have been lower – doctors earn for a very long period of time. However, Dr. Pradeep was a General Practitioner in a lower middle class area – and his clients ability to pay more fees was not certain. He had been in practice for about 12 years and his income had reached a plateau.
What can now be done? Want inputs from readers….!
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