By Alex Markwell and Ashwini Amaratunga
- Live within your means – this could mean living like a registrar especially when you become a new consultant
- Extras are important – private indemnity insurance (i.e. you are a member of a medical defence organization such as MDA National or Avant); income protection insurance; salary packaging and sacrificing
- Seek professional financial advice regularly (unless you are an expert!)
As a profession, we seem to suffer from a curious form of selective denial – most of us don’t really want to talk about money. Of course we quite like having it, and spending it for that matter, but for many of us it’s a source of some unease. How much is enough? Is it really worth the effort of salary packaging and what on earth is salary sacrificing? Do I really need to pay even more money to other organisations in addition to the college, the medical board and so on?
I am absolutely no financial expert, and any advice or concepts discussed in this post should be considered general information only (and at time Australian/Queensland specific). I will try to outline a few key areas we should each consider, as part of a financial check-up, but mainly I’m just hoping to raise a few points that we should all be across.
I recently co-facilitated a small group teaching session with my emergency trainees where we worked through some case studies to explore some of these concepts. It was staggering how many of the participants had not previously considered the issues we discussed – ranging from salary packaging, training allowances and subsidies, income protection insurance and private indemnity insurance. As you would expect, there was a broad range of experience and views in the group but overall it was clear this is an area most of us don’t particularly comfortable about and moreover we often don’t really know where to start. Rob Orman recently interviewed Dr Jim Dahle (aka the White Coat Investor) on ercast. They covered some great issues to consider throughout your career from medical student to consultant (albeit with a North American focus), including a bunch of resources for those who want to know just a bit more. I’ve also included a document that our mortgage broker gave us which provides some similar general tips for the Australian context.
We would never expect our patients to self-manage their conditions without expert advice, nor would we ever hope to effectively represent ourselves in court without legal advice. Yet for some reason many of us are happy to just plod along hoping that whatever comes out of our pay and goes into superannuation is “enough” and then swearing under our breath when registration and membership payments are due. I strongly believe there is a role for professional financial advice with regular reviews to ensure you’re still on track.
When you first start working, this may simply focus on how to manage your study loans or the credit card debt you racked up before the first few pays rolled in. It’s probably a good time to think about income protection insurance, as generally this is cheaper the younger you are and hopefully you won’t have too many pre-exiting conditions to be excluded. That said, if you haven’t already got income protection insurance – get it now! Every year I hear about a friend or colleague who has had to rely on their insurance (or worse – needed it and didn’t have it). You might also want to explore the different options for professional indemnity insurance (PII) with the medical defence organisations (MDOs). As a junior doctor this is very cheap (or even free) and you may want to sign up to 1 or 2 and see which one you like best. As a consultant, it’s essential. Remember that MDOs want to reduce the chance you will have a complaint made about you, so they will provide extensive additional resources and training sessions to help you improve your communication and practice. They are also a wonderful source of support in the event you do have a complaint or incident notification. Registration in Australia requires that you have PII – if you’re only working in a public hospital then the state government will technically cover you, but the issue is their priority is to protect the hospital and limit their liability not necessarily clearing your name so many would argue it’s essential to have your own private insurance.
Salary packaging or sacrificing rules vary from jurisdiction to jurisdiction, as do training subsidies, and professional development allowances. Make sure you know what you are entitled to, and try to make the most of it. This is “money for free” as one of my registrars once told me.
Finally, working out your financial priorities and budget will really help you in determining your approach to how you manage your money. It might make great financial sense to maximize your employer contribution to superannuation at one stage of your life and career by chipping in extra, but perhaps not when you’re trying to pay down a mortgage. This is where a bit of homework and talking to your financial advisor comes in.
This topic is huge, so this blog is really just a prompt for you to think about your financial health and seek help if you’re not convinced you have it all sorted. The case studies (loosely based on true events) I used in the small group session, as well as our interviews may strike a chord for any skeptics out there!
Happy Wellness week!