As a busy mom myself, one of the phrases I hear most from others (and think often to myself) is “I don’t have time for this.” It is natural instinct to “push things to the back burner” if they do not require your immediate attention. However, making a financial plan while in dental school and after should receive the same attention as practicing dentistry. This can be difficult when you are prioritizing a career that you have invested so much time and money in. However, if you do not prioritize your finances along with your dental practice, you may find yourself quickly approaching an inflexible financial situation when you least expect (or least need) it. Making a financial plan may not come naturally to you, as you have focused years on dentistry and not finances. Most dental schools offer very little (or nothing) in the way of financial education, which makes it even more important for you to be financially proactive yourself.
So what does this mean to you? This means that upon looking for positions post-dental school, you evaluate not only the job itself, but how it will impact your finances. For example, if you graduate with $400,000 of school loans, you may have less flexibility than someone who graduates with $100,000 of loans. Your monthly expenditure toward paying off loans will be much greater. Consider the cost of living in your desired city as well. A position that will pay $150,000 in Chicago will not get you as far as a position that pays the same in Milwaukee.
Once you find a position that you are comfortable with and that can help repay your loans, it is also important to track other expenses monthly, allowing for some unexpected expenses, like car repairs or traveling to visit friends in other states. These “non-recurring” expenses add up quickly and will put a dent in the income that you have left to pay for other necessary expenses, like rent/mortgage, food and transportation. In the first few years of practicing, your student loans may impact much of your life and will likely limit your flexibility until they are paid off. This lack of flexibility makes things like disability insurance and emergency funds more important than ever. With an idea of the monthly expenses that you MUST pay each month, you will be better informed as to what you have “left over” and what types of coverage you will need to get you through a potentially difficult time. As long as you are keeping up with fixed expenses monthly and starting to contribute to retirement accounts, make sure that you are also keeping a liquid savings account (or something similar) with at least three months of living expenses saved. If your disability policy has a waiting period before making payments, this emergency fund will be critical in helping you make ends meet in the months before benefits begin. Financial sense and awareness as you begin your career will keep you on track throughout your career, as income increases and $100,000 cars stare you in the face.
How do you currently track your finances? Do you keep track on any budget apps? What are your favorites?
~Megan Mathers, J.D., Mathers Law
About Megan Mathers
Megan is an accountant and tax attorney with Mathers Law, a firm focused on providing accounting, tax, business advisory and legal services to the dental and medical communities. Megan earned her Bachelor’s Degree in Accounting from Marquette University and her law degree from Loyola University Chicago School of Law. Megan’s practice focuses on tax compliance, tax planning and wealth and estate planning.