'Now I'm earning some money I'll buy myself an expensive car / gadget / TV'
Understand the difference between assets and liabilities - an asset puts money in your pocket, a liability takes money out. Unfortunately cars are a liability. Use your cash to build up your assets so that the income from them can help you afford the extra luxuries in life.
'I'll do my own accounts' or 'I'll manage my own finances'
It is important to invest time in your financial education so you can get the most out of your money. However don't waste time trying to become an accountant or a financial adviser. You might save a few pounds in the short term but if you get it slightly wrong you could lose thousands of pounds in the long term. Instead establish a group of professional advisers you can trust and outsource the work to them, freeing up your time to invest in your own career, family or other hobbies.
'I haven't got time to sort out the paperwork for my income protection'
Taking out this cover during your graduate year costs hardly anything - you can obtain discounts from 90-100% of the monthly premiums. And if you're planning on becoming self employed, then chances are you'll need to keep the plan going. So take out insurance now before you have a health issue that prevents you getting comprehensive cover in the future.
'I'll wait a few years until I start saving'
Saving money immediately is not possible for all graduating dentists as it is typical to have a significant amount of debt to repay and clearly you should repay this first, starting with the debt that is costing the most. However once you have the debt management under control, you need to start saving as soon as possible and benefit from the power of compound interest - '"he most powerful force in the universe is compound interest" - Albert Einstein.
This advice was provided by essential money who offer specialist independent financial advice for dentists. For more information visit essentialmoney.co.uk or email [email protected]
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