Why doctors need to maintain accounts…
Doctors are almost mortally scared of accounts and accountants. They love money, but hate accounting – especially the details. Hey Doc, understanding a balance sheet does not mean you need to know HOW to make it. After all to enjoy an omlette you need not lay an egg!
First of all please accept that accounting is as much a part of your practice as is seeing a patient…then read on
When a doctor either sits by himself or goes to a financial planner, he is likely to ask the doctor to measure his personal finances and this measurement of what a doctor wants or needs, what he currently owns, and what resources he is willing to invest is very important. In fact for his how business there are some things regarding finance and costing that he needs to know too.
So, this is when they do their homework. After all they need to answer the following questions:
How much do they spend, on what, and whether this will change and if so, when?
What are their incomes and when will they stop? (Retirement planning)
Do they have any pensions and when will it start paying?
Any inheritances to come?
Will they downsize at, say, age 65?
What assets do they have?
What investments have they made?
Are they adequately insured?
Are there any policies or investments due to mature?
Effectively, the doctor is saying to the planner: we have told you what we want, and you now know what we have. ‘So are we going to run out of money before we die?’
The planner will have to think about savings, supporting parents, supporting children, investment growth, house price inflation, general inflation, to what age will the doctors live?
Will the doctor wish to gift to the children to help reduce the any tax liability? If so, how much and when?
Can you imagine, no matter how good your maths, trying to do this on the back of a bus ticket?! So the use of a robust system is unavoidable – the days of writing in a notebook are over. You will have to use sophisticated software program – to keep track of your appointments, customer relations, billing details and personal finance.
As it happens, it works out they can afford for Judy to retire early, even though they plan to spend Rs. 500,000 pa on holidays and travel. They are now very happy clients with the confidence to take the plunge.
Would they do this without the measurement to back it up?
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