Building and maintaining financial stability

What does it mean to be financially stable in the current economy? What can you do to improve your personal finances? Which areas will have greatest impact on your financial situation? We discuss these and other important points…

Financial stability will mean slightly different things to different people. Generally speaking, it can be defined as the ability of an individual to cover their living expenses as well as essential irregular costs without a struggle or getting into debt. Given the economic turbulence experienced around the globe in recent years, this stability has been more elusive for more people than it was previously.

The good news is that there are things everyone can do to improve their financial situations. To assess your own circumstances and consider areas that could be improved, it is helpful to begin with the following areas:

Income

Every financial assessment starts with income. Consider all sources of income from your monthly wages/salary, to bonuses, dividends and any other places from which you receive money.

Increasing income is often much easier said than done and how you achieve this will depend on your position within the dental practice. For associates, consider increasing efficiency and productivity to see an extra patient each day. Alternatively, you may decide to provide more private dental services, or focus on treatment areas that afford a high return in order to grow your income. For practice principals, it is important to review how you take income from the business and look to optimise your tax-free earnings with the right combination of salary, dividends, director’s loans and expenses.

Outgoings

When you know what’s coming in, it’s essential to review what’s going out. From here you will be able to calculate the disposable income leftover once compulsory bills are paid.

It can be difficult to reduce outgoings, especially with regards to mandatory expenditure. However, shopping around for low interest rates on mortgages or utility bills can help to minimise outgoings as much as possible. Budgeting for food, travel and entertainment can also make spending more predictable and therefore more controlled.

For business owners or those in the higher earning brackets, it can also help to seek financial support when it comes to paying taxes and other major bills. Being smart with your money could significantly reduce how much you have to pay back each year.

Savings and investments

For those who can afford to do so, allocating a sum each month or year to save or invest is an excellent way of maximising your income in the long-run. High interest rates might mean there are some excellent deals to be had on savings accounts. There are also some great opportunities available for investment. Whether you have a couple of hundred or several thousand to put away for a rainy day, investing in anything from shares to property could reap substantial financial rewards. Of course, it’s important to understand the level of risk you are prepared for and to seek support if you are new to the sector or looking to invest a large sum. Another investment in yourself is your pension – be sure to pay into an appropriate scheme that will adequately support you when you stop working.

Protection

Financial stability is often the result of careful planning – and no plan would be complete without some form of protection. There are various insurances and policies available for dental professionals to consider, including life insurance, income protection, critical illness cover and more. Each offers something slightly different so it’s important to really understand which is most suitable for you and your current situation. It’s then necessary to review the small print of any policy you are considering to make sure you are gaining the protection you need.

Secure your future

No matter how long you have been working as a dentist, which area of the profession you operate within or what your role is within the practice, sound financial planning is crucial. This should include a comprehensive evaluation of all income and outgoings, as well as budgeting, savings and investment plans, and solutions that offer some form of financial protection for you and/or your family.

For the highest level of stability and security, consider working with money4dentists – our independent financial advisors have extensive expertise in all aspects of finance and can help you protect your future with confidence. Providing even more opportunities for dental professionals, the team recently merged with the trusted experts at Ruby Financial, expanding their already award-winning services.

To build a stable financial future, it’s important to really understand your current situation. Even just making small changes and commitments now, could create significant financial rewards in the years to come.