Hugh F. Doherty, CFP
People spend more time thinking about money than they do about any other single subject. The learning objective of this article is to transform your relationship with money into one of respect. Doctors work hard for their money, yet turning your money into future financial security is no easy task. It is made even harder by the misconception of the complexity of money caused by a daily bombardment from stockbrokers, accountants, and insurance salespeople. Their advice is often confusing, conflicting, biased, and poor.
Major money myths
You will hear people say, "Money won`t bring happiness" or "Money is evil." These are myths. Money has brought a lot more happiness than poverty has. Money is a warm, cozy home; it`s birthday presents and a college education for your children; it`s a trip abroad and the means to help older people like your parents who may be less fortunate.
Money is vitally important to any person living in a civilized society. Nothing will take the place of money in the areas in which money works. I am not saying that just piling up a lot of wealth is important. What I am saying is that money is important, because it is the only reward that is completely negotiable and can be used by everyone. That`s all there is to it!
Did you grow up with or without money? Did you consider your family affluent or poor? How you felt creates a big difference. The most privileged people can be raised in an atmosphere in which they feel they still don`t have enough, while the poorest can feel fortunate and blessed. No matter how you grow up, powerful messages about money are carried from childhood into adulthood.
The basic powerful message is, "Money is fascinating, but it can also be good or painful." As a child, you may have heard the message: "You are lucky to have as much as you have. Stop asking for more." Most of the doctors I know and have worked with came from hard- working, blue-collar parents. If this was your environment, you may have been "guiltily" aware of the sacrifices your parents made. so that you would have everything they didn`t. You may have picked up on the message that money is something that is not to be discussed.
The lessons that you learned probably weren`t conveyed in words, but children can read the clenched jaws of parents and the bickering that comes at bill-paying time. The single, biggest factor that can bring disharmony between parents is how money is handled. Unfortunately, in many cases, divorce is the end result. It is a hard, final, damaging solution for children to accept and understand. Whatever the message, little children have big ears, and they learn from these dialogues and experiences. One way or another, most people are permanently altered by what they have been taught during their early years about the meaning of money.
A problem for the future
The potential disaster is that, in your later years, you are burdened with excess baggage. Your burden is laden with quirks, myths, and preconceived misconceptions about money. For many doctors, it`s nearly impossible to go forward clear-headed about money in their personal and professional careers. The result is that most can`t deal well with their present money situations because of family histories. Such is the power of the messages that are absorbed from childhood.
One way to improve your financial future is to turn such lessons around - examine what you`ve learned, determine how the past has shaped your life, and then consciously decide to moderate its impact and to move forward in a positive manner. You must not let childhood fears about money keep you from growing up financially smart, literate, and intelligent.
What about you?
What is your money personality? What are your thoughts about money? How about your personal beliefs? How does money relate to your personal sense of worth? If you were meeting yourself for the first time, how much would you guess you were worth financially? You probably would make a fast appraisal based on your clothes, your jewelry, your car, and maybe your house or apartment.
So, here`s some big questions: Are you wearing clothes you can afford or ones you hope to be able to afford once you`ve made more money? Is the gold or diamonds your spouse is wearing on her wrist and fingers worth more than the mutual-fund shares in your retirement plan? What does your car and address tell the world about you? Do you suffer from the "M and M" (Mercedes and Mink) syndrome?
In other words, are you spending more than you can afford in an effort to suggest you are worth more than you are? This is not uncommon among doctors and their spouses. If this describes you, stop for a minute and think. It`s important that the messages you send through your financial behavior are the facts. Why? Because when you fool others, it`s at a higher cost to yourself than you may know. Bankable dollars come slowly and increase for those who control their money, instead of letting it control them.
For money to accomplish all the tasks it has the power to do - make you comfortable, provide pleasure, create security for you and others around you, allow you to give back to the world that`s given you so much - it must be handled respectfully, honestly, and consciously. The ability to be honest about money comes from knowing who you are and knowing that your financial condition is only one component of who you are. Your net worth is not and never will be a measure of your self-worth.
Servant vs. tyrant
All your false notions about money have one common flaw. Many people identify money as something external. It is something we all too often don`t have; something we struggle to get and something we pin our hopes of power, happiness, security, acceptance, success, fulfillment, achievement, and personal worth on. This perspective causes money to be your master, and you are the slave. Money is the victor and you are the conquered.
You must keep money in its proper perspective! It is only a servant and nothing more. It is a tool with which you can live better, see more of the world, and give your children the education they need for a good start in life.
You need only so much food to enjoy good health - in fact, you really need only so much money to live comfortably, securely, and well! Money is the means to a happy, carefree retirement in later years. Money is necessary to life, but it must be kept in its place. Most doctors and spouses fail to perceive the serious impact of placing too much emphasis on money. It reverses the whole picture! Once again, I reiterate: Money can be a terrific servant or a tyrannical master.
Your primary aim
There is really only one consistently true statement that you can make about money that allows you to be clear, masterful, and powerful in your relationship with it: "Money is something that we choose to trade our life energy for."
Your life energy is your allotment of time here on earth ... the hours of precious life available to you. When you go to work in your practice, you are trading your life energy for money. This truth, while simple, is profound. You are the one who determines what money is worth to you. It is your life energy. You "pay" for money with your time. It is your personal choice how to spend your time.
Stop and give some thought to what has been stated above and then ask yourself: "What does `money equals life energy` mean to you?" After all, money is something you consider valuable enough to spend easily a quarter of your allotted time on earth accumulating, spending, worrying about, fantasizing about,.or, in some other way, reacting to. Yes, there are many advisers out there providing you with information regarding money. This information may be worth learning and abiding by, but, ultimately, the two most important things in your life are your family and your health. They should be your primary aim in life. As someone once put it so succinctly: "It`s good to have money and the things money can buy, but it`s good, too, to check up once in a while to make sure that you haven`t lost the things (family and health) that money can`t buy."
It usually comes as a surprise for most of us when we realize that our practices and money should not be the primary focus of our lifestyle activities ... that we should focus on ourselves and our families! Though it plays a significant, important role in your life, your practice is not your life. Before you determine what that role will be, ask yourself, "What kind of lifestyle do I want? What do I really want my life to look like?" With this introspection, I am quite sure that your responses will focus on your family and health.
From this point of view, the normal drama of working excessive hours in the practice, of getting ahead, of being rich and famous are all brass rings that we automatically and indiscriminately reach for. They can be seen as just one series of choices among many that may not be in the best interest of achieving the necessary balance of time spent between family and your practice.
Planning makes the difference
There are really only three amounts of money a doctor should need to decide upon:
* The yearly income you want to earn
* The amount you want to have in a personal savings and/or investment account
* The amount you want to save for retirement - whether or not you ever retire from practice
It is here that most people make a very serious mistake. They never decide on any of these amounts of money. The problem is that there is no planning done to determine these numbers. If you will decide on these financial goals, you will automatically place yourself in the top percentile called "winners." You will have taken the first step in developing a road map to achieve future financial security. It is invaluable! You will know where you are going - and, if you are serious about it, you most certainly will get there.
The basic foundation of personal financial planning is to determine each December your annual income for the coming year. This amount is determined through a developmental process called the Annual Practice Business Plan. When you decide on an amount for your salary, you no doubt will discover whether or not it is average or above average. My recommendation is for you to decide upon a figure that will be above average ... perhaps quite a bit above average! Think big - that`s good! Be realistic. Now go for it!
Since the amount of money you want to earn is more than you are now receiving, your part of the equation is to find ways of increasing the quality of your services for patients. You and your staff must spend some time thinking of ways in which you can increase those services. You will soon see opportunities in your treatment of patients whom you have never noticed before. In fact, you will soon discover that you are no longer the same person.
By your example, you will inspire your staff to do their jobs better. Knowing full well that you and your staff have only to manage and place patient care in a primary focus position, you will discover that the dollars coming into the practice will take care of themselves. Take good care of your patients and the dollars will take care of themselves.
How much is enough?
There`s a very interesting place, which, if you understand it, is the secret to a good financial life. An important part of the process of getting to this place is to identify for yourself a point of personal, maximum fulfillment. It provides the basis for transforming your relationship with money.
There is a name for this place. It`s a word we use everyday, yet we practically are incapable of recognizing it when it`s staring us in the face. The word is "enough." At this place of fulfillment, we have "enough" for our survival, for our human comforts, and even "enough" for little luxuries. Here, we have everything we need. There`s nothing extra to weigh us down, distract, or distress us; nothing we have bought on extended credit, or have never used and are slaving to pay off. "Enough" is a fearless place, a trusting place, an honest and self-observant place, a place to appreciate and fully enjoy what money brings into your life, and yet never purchase anything that isn`t needed and wanted.
It is very important that doctor and spouse take the time each December to determine the amount of money needed to live now, as well as in the important future years. It is a great starting point and one of my guidelines for the successful management of money. From here, you will know how much money you need to live and also how much money you will require to accomplish the goals you have established for yourself.
What successful doctors do!
The money needed for present financial goals and future financial security will come from the production and profitability of your practice. It also is used to obtain services from others. Your income will be in exact proportion to the demand for what you do.
A highly skilled doctor is worth more money than a doctor who is not highly skilled. This is not to say that one person is any better or more important than any other person. The "winners" whom I have worked with take more continuing- education courses than the average doctor. Unless you increase your skills and knowledge, you never will know the rewards, the joy of accomplishment, the personal satisfaction, and peace of mind that comes only to a person of high achievement.
You would be amazed at the number of doctors who want more money, but who don`t want to take the time or trouble to qualify for it. Until they qualify for it, there is no way on earth for them to earn more of it! It`s like the person who wants a good-looking figure, but doesn`t want to change his/ or her eating habits.
With the Annual Practice Business Plan process, you are forecasting your expectations (practice financial goals) for the coming year. Unfortunately, only about 20 percent of doctors set up written practice and personal financial goals. The majority leave their future to chance and find out sooner or later - and to their sorrow - that chance doesn`t work. Too late, they discover that they have missed the boat.
"Winners" are proactive. They are responsible people who take control of their lives and their fortunes. They understand that their future is in their own hands. They plan for their goals. OWinnersO take far more interest in planning for everything about their personal and professional lives. When you set financial goals, you are demonstrating faith in your future. You can do the same thing ? and you can do it starting right now.
Forget the messages learned in childhood. If you were taught to expect that you would never have enough money ? and you fear taking risks ? practice telling yourself that you are strong and capable and always have had just what you needed to move forward. If you were brought up to feel guilty about having money, examine your conscience and try to substitute a conviction that you deserve what you have and will use it wisely.
Be realistic about your financial goals. As you reach them, you can then set higher goals. Trying to jump too far too soon often can result in confusion, tension, and worry. Take your growth in sensible, logical steps, remembering that the big thing is that you know what you want and that you realize your rewards will match the service you provide for your patients!
Respect your money
This is an attitude. The typical doctor has the income to be a good wealth-builder, but not the mind-set. Financially incorrect attitudes are the greatest deterrents to this happening.
Stay in control of your money at all times. When you are in control, you determine your destiny. Your destiny is no longer controlled by your circumstances. In this way, money isn?t something that happens to you. It is something you include in your life in a purposeful way.
For more information about this article and free forms to help you with your planning process, contact the author at (800) 544-9653,e-mail him at Drf[email protected], or visit his Web site at www.dr.hughdoherty.com.
Give me more, more, more!
Our national economy depends on growth to survive. We have absorbed that growth ethic into our own personal aspirations for our lives. If we have one car, we want two. If we have one suit, we want two. If we have two of anything, we want three.
With this attitude, you ignore intellectual, emotional, and spiritual growth. We get ourselves stuck by trying to continue to grow physically by adding more and more possessions. By name, it is defined as the "More Is Better" syndrome.
Keeping up with the Joneses
This malady of "keeping up with the Joneses" has affected many of our doctors and their spouses. The proximate cause of this impulsive, destructive, and financially incorrect action is best described as "immediate gratification."
We know the fallacy of the myth of more. More is like a mirage. We can never reach it, because it isn`t real. Rich is having more than most other people. John Stuart Mill once said, "Men do not desire to be rich, only to be richer than other men."
The "More Is Better" syndrome is further enhanced when doctors allow themselves to continuously and unreasonably have fears that they don`t have enough money. Crunching numbers in their head is a daily exercise:
* "Will I be able to meet the practice expenses?"
* "Will I be able to pay my personal bills?"
* "Will I be able to pay my taxes on time?"
* "Will I have enough money saved for retirement?"
Worse yet, doctors get lured into classic, financially incorrect "dead-ends" such as:
- Spending more than they make
- Buying high and selling low
- Not liking their profession
- Being so confused about money that they leave it to the "experts,"who, in turn, feed on the doctors` ignorance and misconceptions about money
Get your assets in shape
Financial fitness is just as important as physical fitness. Here is a financial-planning checklist to keep your assets in shape:
> Respect your money.
> Get your house in order.
> Prepare and update your financial plan annually.
> Set your lifestyle first.
> Emphasize net worth and de-emphasize income.
> Whatever your income, live below your means.
> Evaluate any behavior that costs you money.
> Keep your debt in control before it controls you.
> Save it, don`t spend it.
> Be a compulsive saver and investor
> Idolize tax-deferred investments
> When it comes to taxes, plan ahead.
> Prepare for your retirement at least 15-20 years before you retire..
> Challenge any and all advice you get.
> Prepare a financial emergency kit.
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Doherty, DDS, CFP online at