Why Physician Families need Financial Planning
Physicians and their families tend to have a lot of things going on. Work often takes up most of the waking hours in a week, and time for home life and family is at a premium. Many don’t have much time left over for anything beyond the immediate tasks of managing the family finances. As a result, most physician families have not done much financial planning.
Financial planning is important for physician families because it allows them to set and achieve financial goals, and to have a plan for managing their finances while preparing for the future.
Budgeting for Family Expenses
Cash flow analysis and budgeting are an important step in the financial planning process. A budget is a spending plan that details your current and future income and expenses over a specified future time period. Having a household budget helps allows for guilt-free spending while ensuring that your savings are on track for the future.
Budgeting can keep you from overspending and can improve your spending habits. This will make you a better manager of your finances and improve your financial stability. Having a budget will also ensure you are saving enough, and that you can achieve your long-term financial goals.
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Planning for Future Needs
Planning for the future is the most impactful part of financial planning. This planning might start with seemingly small steps but over time can make the most difference. The future is uncertain; however, we can plan for events with the highest likelihood of happening.
The future will include retirement for all physician families, and for most it will include children attending college as well. The large amounts of money needed for these two situations make college education funding and retirement planning essential.
Other long terms goals will come into play for many retirees as well. Retiring early, owning a vacation home, and other “hopes and dreams” are all possibilities.
Saving and Investing
In order for physician families to ensure they will have enough money to fund their goals, it is essential that they save enough of their income. It is also essential that they achieve sufficient growth of funds they have saved.
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This requires an investment plan built to achieve long-term growth as well as shorter term liquidity. Successful investing involves not only what to invest in, but where (meaning what investment vehicles to use. For instance, many physicians have multiple retirement plans available to them, including 401(k), 403(b), 457, and after-tax retirement plan options.
Bringing it all together
With financial planning, there are many moving parts which overlap with each other. This is why financial planning should be done holistically, that is, with all the parts considered in each part. Also, for the planning to work, it must truly be about you: your needs, goals, concerns, hopes, and objectives.
At Blankinship & Foster, our Wealth Management process takes all of this into account as you plan for retirement, charitable gifting, insurance needs, estate planning and more. By identifying key issues, evaluating your options, asking the right questions, and creating a plan, physician families can move forward with confidence.
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