4 minute read
4 minute read
The transition from training to practice is a time of immense change for the new physician. Beyond the clinical considerations, there are financial and employment concerns that should not be ignored. Read on to learn the top four (non-clinical) tips for a successful transition to practice.
1. Protect yourself with disability insurance (before leaving residency!)
As you begin your career, your greatest asset is your future earning potential. While you may get a group disability policy through your new position, group disability plans must be offered to everyone. This means that the group policies have reduced benefits and increased restrictions. For this reason, you will want to get an “own-occupation” policy that specifically covers your ability to practice in your specialty.
There are major discounts available if you get disability insurance before graduating from your training program. Some of the major disability companies offer special packages that are available only to residents. These discounts can save you upwards of $100,000 over the course of your career!
Plus, if you purchase disability insurance as a resident and carry it into practice, your benefits will stack on top of one another. If you wait until you are already in practice to get supplemental disability insurance, your contracts will coordinate instead of stack. This leaves you with less protection.
Considering the amount of time, cost of education, and deferred wages you have incurred to become a physician, make sure you have all the protection of your future earnings that you can get. By working with an independent advisor, you can see multiple quotes at once and get the best policy for you.
2. Have your employment contract reviewed by an attorney
By getting your employment contract reviewed by an attorney who specializes in physician contracts, you will know exactly what you’re signing. Employment contracts are usually written in legal language that few speak, and are designed to protect the employer (sometimes at the expense of the physician). Don’t be startled to learn what’s in your contract only after you’ve signed it!
A physician contract review attorney will also be able to let you know how your contract compares with others that they have seen, which will give you a leg-up in negotiations. An attorney will also help you with contract negotiations, or even negotiate on your behalf. If there is less room for negotiation in your contract, it is still worthwhile to have your contract laid out so that you have no surprises later. Entering into a bad contract can cause you a lot of frustration and money, so better to understand it before you sign it.
3. Create a financial plan (and stick to it)
The first paycheck after residency will be a big change, but don’t let yourself get there without having a financial plan in place. So what do you do with all of that extra income? While it might be tempting to spend it, that won’t grow your wealth over the long term. In order to make the most of your money and secure your financial future, you should put together a financial plan (including a budget) and make your money work for you .
Most new doctors have an uncomfortable amount of debt after training. It can be difficult to strike a good balance between spending, saving, and debt payments. A good plan to tackle debt repayment will remove a lot of the stress that arises from being in student loan debt.
Investing is a great way to make sure your money is getting you the best return possible. If you didn’t have time to learn about investing as a resident, now is the time to learn or to assemble a good financial advising team. Between learning the difference between a backdoor Roth IRA or a 457 plan and finding the best ways to maximize your post-tax income, it’s time for a crash course in financial literacy. If you don’t feel comfortable setting up a financial plan by yourself or don’t have the time to do so, finding a good financial advisor who will help you develop the best plan to achieve your financial dreams is an excellent idea.
4. Don't neglect your savings and investments
Honestly, your balance sheet is probably pretty unbalanced right now. You may have a lot of liabilities and few assets (except for your future earnings). You may not have a lot of liquid assets, and probably little invested for retirement. As part of your financial plan, you should make sure that account for savings is an integral part of it.
Get into the habit of paying your future self first. Insufficient savings can force you to turn to debt, which is why you shouldn’t grow into your income. It’s much harder to cut back than to never increase your lifestyle in the first place. Before you start making big purchases, you should have a cushion in a savings account.
Beyond saving cash, safe investing can have a hugely positive impact on your financial future. Investing today, thanks to the power of compound interest, will have a huge impact on your financial health later. In 30 years, a $15,000 investment today at a conservative average 5 percent return will give you $67,225. A $30,000 investment will return you $134,450! Choosing the right investments is critical, so if you aren’t sure or don’t want to spend a lot of time on tracking the health of your investments, working with a financial advisor can maximize your returns.