Let me first say that there are a lot more than 5 things you need to do when you graduate dental school. Like get a job for example. But I’ll focus in on a few often-overlooked items I typically find when someone goes through my planning process.
- Create a spending plan – sounds so much more fun than a budget right? You should try to list out all of your fixed expenses. Make sure you budget for taxes if you are an independent contractor. Variable expenses are a little tougher to budget for. Try to make educated guesses at a minimum. And because things are hard to predict, it’s important to review the previous months expenses to figure out where your money went. This will help you keep track, it helps prevent money being spent by mistake (automatically renewed magazine subscriptions, etc.) and will help you meet your goals.
- Make sure you understand your student loans and all of your repayment options. I have seen too many students refinance without realizing there were government plans available to help. In addition, it’s important to stay on top of this. For example, the government just came out with a new repayment program called RePAYE. This program is most helpful for students that have graduated in the last 5 years but it illustrates the point that things are always changing and you need to be aware.
- Get insurance. I know, I know… boring. But it’s really important. And much of it you can’t get as a student, so necessarily, you need to adjust this immediately after graduating. Here are some specifics:
- Personal Liability – More commonly known as car insurance and umbrella coverage, you need to adjust your policies once you graduate. You have to remember that you are not dental student anymore. You have a lot more to protect as a Dentist. Also, many of you need are still on your parents policies and need to get your own. Talk to a professional about this.
- Professional Liability – Also known as mal-practice, this can be kind of tricky. If you get a job an employee, your employer will likely provide coverage. But you may need to have a policy for working interviews. If you end up as an independent contractor, you will need to have your own policy. The contract language varies by carrier so make sure you understand the nuances. I’ll mention one here. Make sure you understand the difference between claims-made and occurrence based policies. Some carriers offer only offer one or the other so if you don’t ask, you might not even know what you are buying.
- Disability & Life Insurance – Both of these types of insurance protect income. Life insurance protects the income of your dependents if you pass away prematurely and disability insurance replaces a portion of your income if you get too sick or hurt to work. Both of them get more expensive as you get older and more difficult to get if/when your health declines. While life insurance is mostly relevant to those who now have, or will have, dependents in the future, getting disabled is a risk every dentist could face and should plan for accordingly. Term life insurance is usually a good first step for life insurance. Disability insurance can be very complex so make sure you speak with an advisor/agent who has history of working with Dentists.
- Plow cash in your savings account – This will be the easiest time in your life to save money. You are used to living like a broke college student and I would encourage you to continue to do so 1-2 more years after you graduate (or as long as you can handle it). I like to see 6 months (~$25,000) of expenses in a savings account before you do anything else with your finances. So don’t go on a shopping a spree because some people find it really difficult to accumulate this money.
- Buy something nice – seriously, buy something you really want. Just don’t buy everything you want. You’ll find that as a dentist you can buy anything you want and a bank will be happy to finance you including a home with no money down. Just because you can, doesn’t mean you should. One of the biggest threats to your financial success is uncontrolled spending. You’ve worked hard, so do something nice, but make sure you exercise discipline.
Hopefully that gives you some things to think about that you otherwise may have missed. Good luck.
~Ryan Schulte, financial advisor, CFP®
Material discussed is meant for general informational purposes only and is not to be construed as tax, legal, or investment advice. Although the information has been gathered from sources believed to be reliable, please note that individual situations can vary. Therefore, the information should be relied upon only when coordinated with individual professional advice. This material contains the current opinions of Ryan Schulte but not necessarily those of Guardian or its subsidiaries and such opinions are subject to change without notice
Registered Representative and Financial Advisor of Park Avenue Securities LLC (PAS).OSJ: 750 B Street #2740 San Diego, CA 92101 ,612-746-2200. Securities products and advisory services offered through PAS, member FINRA, SIPC. Financial Representative of The Guardian Life Insurance Company of America® (Guardian), New York, NY. PAS is an indirect, wholly-owned subsidiary of Guardian. WestPac Wealth Partners, LLC is not an affiliate or subsidiary of PAS or Guardian. CA Insurance Lic. #0F03557 | Guardian and its subsidiaries do not endorse or have any direct or indirect responsibility with respect to this activity | 2015-11504 | exp 10/17
About Ryan Schulte
Ryan Schulte is a financial advisor who focuses his practice on Dentists. He works with young dental professionals that are transitioning in their careers and helps them manage their student loans, understand the insurances they need and how to design them, how to investment money without speculating and gambling, what it means to be an independent contractor and a business owner, understand their tax situations and a variety of other issues unique to dentists. Ryan lives in the mountains near Yosemite with his wife and 5 boys on 4 acres that they affectionately refer to as the “The Schulte Farm.” Ryan serves on a community development council dedicated to redeveloping an industrial zone in Madera County. He also coaches little league and enjoys hiking, brewing beer, playing softball and soccer. His contact info can be found at www.ryanschultecfp.com.