Create a Financial Plan for the Life You Want
Physicians want to know how to create a financial plan and do it with so much confidence that they’re riddled with pride! That’s the plan, right? Be confident, be energized and know what the heck you’re doing with your money?
Well lucky you…
We’ve got something special pulled together.
PT Money joined me in tooling a 14 day jumpstart to your financial residency.
Physicians will specifically learn how to create a financial plan that makes the most sense in their situation.
Let these ultimate money nerds guide you in your financial future.
Are you ready to jumpstart your financial residency in 14 days? Let’s get you started.
(Oh, and stay tuned for the bonus!)
What You Will Learn
- 1 Create a Financial Plan for the Life You Want
- 1.1 Day One: Feed Your Financial Brain
- 1.2 Day Two: Create Goals for Your Money
- 1.3 Day Three: Know Your Assets (and Net Worth)
- 1.4 Day Four: Get to Know Your Monthly Expenses (Create a Budget)
- 1.5 Day Five: Save for Emergencies, Travel, a New Home, Etc.
- 1.6 Day Six: Sell Your Excess Stuff
- 1.7 Day Seven: Save on Auto Insurance
- 1.8 Day Eight: Reduce Your Debt or Reduce Your Interest Rates
- 1.9 Day Nine: Reduce Your Tax Burden
- 1.10 Day Ten: Adjust Your 401k/403b/IRA etc.
- 1.11 Day Eleven: Get (or Renew) Life Insurance
- 1.12 Day Twelve: Review (and Fix) Your Credit Report
- 1.13 Day Thirteen: Shop Smart with Lists
- 1.14 Day Fourteen: Stop the Junk Mail
- 1.15 BONUS: Organize and Protect Your Financial Records
- 2 Journal Club – Sidehustlescrubs.wordpress.com
Alright, alright, alright.
Day One: Feed Your Financial Brain
If you are reading this, we can guess that you are a growth-mindset individual. You are not interested in becoming stagnant—you want to increase your knowledge and wealth.
For that purpose, spend some time daily developing your financial knowledge by subscribing to the podcasts or YouTube blogs that will help you, develop you, and change you.
Finding good books on building your financial literacy is a snap.
As you read the books and listen to the podcasts, you are surrounding yourself with these conversations and their combined financial wisdom. As you absorb the financial concepts, it becomes easier to make good decisions.
Day Two: Create Goals for Your Money
Now that we’ve fed our brain, what’s next? Well, we look forward to where we want to end up personally and financially. During a show, my wife and I, talked about the questions to ask yourself to beat the path of an ideal life:
- What are our goals?
- What do we want to do?
- What is our direction?
Then we make a road map and write down the goals that are actionable and measurable. PT started with a savings goal and a debt reduction plan.
Writing down your goals is an important step in the process. People tend to move toward the goals they’ve put on paper.
Then we prioritize our goals by deciding how important they are to us. Creating goals for your money is a critical step for the next twelve days—and the future!
Day Three: Know Your Assets (and Net Worth)
An important question to ask yourself is: Where am I financially? This is the time to figure out your net worth. It might help to think of yourself as a business. I did a show on how to manage your personal finances like a business that you might want to check out. Your net worth is your liabilities (debts) subtracted from your assets.
Now you have a visual picture of where you currently stand.
That might be scary, but this is the metric to measure, so don’t become discouraged if you don’t like where you are today. The important part is where you end up in the future!
Day Four: Get to Know Your Monthly Expenses (Create a Budget)
The purpose of this step is to help you answer the question: Where is my money going?
It’s time to find out by tracking your monthly spending.
Once again, you need a visual on this. You can track spending on paper, or with the tools mentioned earlier Personal Capitol or Mint. This will allow you to see the areas that you can control and cut back on.
Take the stress out of budgeting by knowing where you’re spending your money.
Are you dining out too much?
Buying too many lattes from Starbucks?
Analyzing your spending is an indispensable tool for creating an effective budget.
As a disclaimer, several experts on our show have recommended Personal Capital software; however, they will contact you if you load a limited amount of assets, for example 100K. They will want you to enroll in their investment platform where they charge assets under management. You are not obligated to participate in this service, but don’t let that dissuade you for using the killer software!
Day Five: Save for Emergencies, Travel, a New Home, Etc.
Are you ready to put together some specific savings goals? Because you want to create your financial plan, you must also have #goals that help you in the long-run.
Your first goal is creating an emergency fund that will mitigate the effects of losing a job or in case of a medical emergency.
This first goal will help to prevent future debt.
Then you can consider what your short-term, mid-term, and long-term goals are. An easy automated savings plan for future travel, Christmas plans, or a down payment on a house is an easy to set up. This hack makes costly events less painful. Start separate saving accounts for your upcoming life events ahead of time!
Day Six: Sell Your Excess Stuff
Do you need some quick cash, or do you want to fast track your emergency savings account? Look around your house for items that no longer benefit you or your lifestyle. Prior to moving, my wife and I watched videos about minimalism, which were about paring down your belongings to only the truly useful and important items. You can sell small items on sites like Gazelle.com. The larger items can be sold through Facebook groups, Offer Up or Craigslist. You might just lighten up your life and while loading your savings account!
Day Seven: Save on Auto Insurance
How do your interest rates compare? As you pass the important milestone of becoming an attending physician something you need to do is increase your deductibles or coverages. Afterward, every two years, it’s a good idea to comparison shop for auto insurance. Your life stages and changes affect the amount you must pay for insurance. Today is the day in our 14-day plan to look for a better rate. You might save a ton of money by switching companies!
Day Eight: Reduce Your Debt or Reduce Your Interest Rates
Do you want to build your assets? If you answered yes, you must get rid of your debt. Today you begin by making a chart listing your debts, their interest rates, balance and payments. You might need to look at your credit report to find out what accounts you have open. When it comes to debt pay-off strategies, PT recommends Dave Ramsey’s snow ball method. His method is to list your debts from in order from small to large. You put any extra income toward the smallest debt until it is paid off. Then, you move down the list with the extra funds now paying off the second debt. This works on most debt, but the snow ball method for student debt is not always the best advice, which is a topic for another show. Eventually all the debt will be wiped out!
Day Nine: Reduce Your Tax Burden
Do you understand what your tax burden is? It is SUPER IMPORTANT you understand how using your retirement accounts can reduce your tax burden. PT explains that at the end of the year, if you put a certain amount of money in a traditional IRA, you will have less of a tax bill. Basically, your tax burden is what you’ll pay on April 15th every year. The amount you will owe to the IRS is the result of how much you save toward retirement, which is an incentive to put more of your money in tax shelters or max out your 401K (or 403p depending on your employer). If you have a high deductible plan, check out the show we did a few episodes ago with Lively where we talk about the ins and outs of the ever popular health savings account.
Day Ten: Adjust Your 401k/403b/IRA etc.
Make a positive adjustment to your 401k or 403b by trying to max out the total contributions allowed per year, $18,500. If you’re currently contributing 7% of your income, bump it up to 9%. If you’re currently contributing 10%, consider bumping it up to 12%. Push yourself to get to the maximum amount every year. This would come out to a flat dollar amount contribution of $1,542.
While you’re at it, look over your investment selections and make sure you are contributing to investments that align with your risk tolerance. Be on the lookout for investments with high expense ratios. Employer sponsored plans are notorious for high expense funds, hopefully you will have some options that have sub 0.5% expense ratios.
To cap it off, increase your IRA contribution rate to the maximum allowed of $5,500 in 2018. The goal is to max out your 401k/403b and your IRA every year.
Day Eleven: Get (or Renew) Life Insurance
Is your life insurance enough for you? Life insurance is so important, especially for those with young children and a stay at home spouse. It’s not expensive, and it’s worth the time to get a quote for term insurance. If you have dependents, even a simple term policy is recommended. Getting a policy may take some time; however, there are some online tools that allow you to apply quicker.
For term insurance, Larry B. Keller is one of the best. For day eleven, check out the downloadable free resources for understanding term insurance and disability on our home page and reach out to an independent broker to investigate!
Day Twelve: Review (and Fix) Your Credit Report
When was the last time you looked at your credit report—if ever? Did you know that once a year you can get all three for free? Today’s mission visiting annualcreditreport.com and download your credit reports. The purpose is to check for accuracy. If you find a mistake you may request the mistakes be fixed on their online portals. PT recommends checking your credit score at Credit Karma or Credit Sesame. PT will tell you not to beat yourself up over your credit or credit score—move forward and bring your score up!
Day Thirteen: Shop Smart with Lists
Do you know what the third biggest expense in your life is? Would you be surprised to find out that the answer is food? This is not a fixed expense like a house or car payment; however, it is an expense that can be controlled. The trick is to have a list before walking into the store. Another trick is to order them online and pick them up. That will save you the temptations of any last-minute impulse buys!
Day Fourteen: Stop the Junk Mail
Are you drowning in junk mail? What about annoyed by time wasting phone calls from solicitors?
Stop all of that here:
- The government FTC website “do not mail”
- The government FTC website “do not call”
- Unroll me: attaches to your email
You’ll want to shut all these distractions down because you are going forward with a strong financial plan, and we’ve provided you with another resource to get rid of the chaff, so you can focus on what is important to your family and future!
BONUS: Organize and Protect Your Financial Records
You will also want to think about the safety of your important physical documents (birth certificates, passports) by investing in a home safe to protect them. On an institutional level, you may feel assured that your private documents are secure or use something like Dropbox, Google Drive, or Vault. You will want your spouse or some other individual to have access to your documents if something happened to you.
And that’s a wrap!
PT walked us through 14 days of valuable information for jumpstarting your financial future. You can check out his money story at ptmoney.com. There is also a great podcast Masters of Money, where you can hear additional money stories. To meet other individuals involved in financial media, try his website FinCon. There, he and other financial experts talk to people about their money. You will be able to see the keynotes of Rachel Cruz, who is Dave Ramsey’s daughter; Chris Hogan, his solutions person; and then Jean Chatzky from the Today Show. Once a year we gather with other people who are interested in talking about finance, digital marketing, content marketing, podcasting, and blogging.
There is a special rate of $99, on Finconexpo.com. Search for Fincon18, and fill out the community pass application. Fincon18 will be held from September 26th through the 29th, in Orlando Florida.
I will be speaking and doing a live podcast. PUMPED!
Journal Club – Sidehustlescrubs.wordpress.com
While you might think that this will be about real estate, it actually isn’t. In it, the author discusses (with numbers to back it up) the benefit of geographic arbitrage and how you might be able to take advantage of the salary, tax rate and cost of living in an area, making it easier to obtain or build wealth.
Their research showed, and I quote, “There is a $227,720 difference between being an emergency physician in Texas vs. Hawaii. If invested at a conservative 5% for a 25-year career, that’s an extra 10.8 million dollars in retirement savings. Somewhere in Maui an emergency physician is reading this right now and reexamining all the life decisions that led to this moment. Somewhere in Dallas there is an emergency physician swimming in a vault of gold coins a’ la Scrooge McDuck… You’re only as wealthy as the money you don’t spend. If you live in a high tax, high cost of living area, it will be much more difficult to achieve FIRE than if you live in a no tax low-cost of living area. There is also way less incentive to pursue work from home side hustles that pay the same regardless of where you live.”
That last sentence is quite powerful. So not everyone’s goal is FIRE (financial independence retire early) which is perfectly fine, however, the difference in salaries shown in their example was quite drastic.
What I like really about this article was the calculations and the map graphics that were presented in the article. In my experience, I see that the concept of geographic arbitrage is often overlooked when one is either looking for a new job or when doing a detailed analysis of one’s finances. It’s a common misconception that you need to move to a certain area forever in order to take advantage of it, which is simply not the case. My wife and I moved right after training to Las Vegas for a few years to really launch ourselves down a much better path financially. We were able to save a ton of money as costs were cheaper (housing especially) which jumpstarted our financial lives.
Side Hustle Scrubs, thank you very much for the well thought out article. Great job.