I don’t insure anything I can afford to replace like my phone, washing machine or even my beloved bikes. But I do insure the future of my family and myself – and unless you could afford your current lifestyle without your income then you need to insure your financial future.
Dragging myself up from a net worth of at least MINUS £85,000 when I graduated, to where I am now has been a hard journey of personal financial education for me. I’ve made many mistakes along the way. One of my biggest mistakes was not taking out income protection and life insurance sooner. I got lucky, but unfortunately, at Medics’ Money we are regularly contacted by doctors who have left protection too late and sadly got ill and either can’t get insurance, or the insurance is unaffordable. Read that again slowly, repeat it and then read Week 4 of:
“What medical school didn’t teach us about money.”
Every doctor needs an emergency fund
In the same way that a moat surrounds and protects a castle from attack, your finances need a moat. Most experts recommend having at least 3 months emergency funds – the cost of essential outgoings, saved up in cash to use in event of trouble. When I was a self-employed locum, with a young family, I had 6 months saved up. Once I secure permanent employment, I reduced this back to 3 months by spending the difference on a 2 month windsurf trip to Hawaii. Great memories, but a slightly difficult conversation with my financial adviser at our annual review and yes I ran the compound interest calculations on what that holiday would have earned us in 30 years, but YOLO right?
Inflation proofing your emergency fund
With interest rates for savers pitiful at present, it’s hard to store wealth as cash without its value effectively going down due to inflation. The gambler in me enjoys the mediocre returns offered by premium bonds and offset mortgages may be another option to store you cash emergency fund. Wherever you store it, the emergency cash just needs to be instantly accessible and you need to carefully calculate or take independent financial advice on the best option for you.
If the moat is your emergency cash fund, then insuring against illness or disability is the foundations of the castle itself. A moat will protect you for a short period but an often overlooked, absolutely fundamental, part of protecting your finances is to insure yourself against illness or disability.
You have worked hard to become a doctor and that is an asset that you need to protect.
After too many years without, read why a surf trip to one of the world’s most dangerous waves prompted me to take out protection.
https://www.medicsmoney.co.uk/income-protection-tom/
How much risk are you at?
This can help you run some calculations
If you’ve got protection already, well done, but did you get a good deal or did a salesperson sell you a policy that paid them the most commission? Read here to see how using a Medics’ Money Independent adviser saved two doctors over £10,000.
https://www.medicsmoney.co.uk/income-protection-for-doctors-getting-the-best-deal/
Our blog has a dedicated section on protection and I suggest you read it now.
https://www.medicsmoney.co.uk/medical-accounting-blog/?catname=protection
If you’ve left the NHS pension scheme, or are a locum Dr, you have likely given up valuable protection benefits. Have you consulted a suitably qualified financial adviser about replacing these benefits? If not, do it now. Its free to have a consultation with a Medics’ Money approved Independent Financial Adviser here.
https://www.medicsmoney.co.uk/find-a-specialist-medical-ifa/
If you don’t understand the difference between restricted and independent financial advice and want to know why Medics’ Money ONLY recommends independent advice read this.
https://www.medicsmoney.co.uk/independant-financial-advisers-ifa-for-doctors/
I already mentioned that taking out protection too late may have been my biggest financial mistake so far. I’ve thought about why I didn’t take out protection sooner. For me it boiled down to 3 things
- I felt invincible when I was young, I’m not sure why. As soon as I had kids I took out protection. But this could easily have been too late.
- I didn’t know where to get the right cover for the right price and I was suspicious of the salespeople who targeted my naivety at medical school and “free” lunchtime talks. This led to me being suspicious of all financial advisers. This was a mistake as there are many excellent advisers out there and we’ve gathered together the best on Medics’ Money.
- I’m frugal and like to minimize unnecessary expenses. Minimising my expenses by not protecting my income was a step too far and I’m so glad I finally listened to my Medics’ Money approved Independent Financial adviser and got protection.
Week 5 action points
Don’t be tempted to skip reading any of the links this week – it’s the biggest week of all. Not only do you need to think about protecting your financial future, you also need to understand how the financial services industry works. Until you understand how the industry works, you won’t be able to spot the salespeople from the good advisers. Good independent advisers like those featured on Medics’ Money can significantly enhance your wealth for a fair price. A big part of why we started Medics’ Money was to provide a directory of the “good guys” Independent financial advisers that have satisfied our rigorous criteria. Also be aware, that we reject the majority of advisers that approach us and ask to join our network. What really scares me, is that some of these advisers we reject are advising many doctors or have been recommended to us in good faith by other doctors.
Its free to get an assessment from a Medics’ Money verified financial adviser and you can book a consultation right here
https://www.medicsmoney.co.uk/find-a-specialist-medical-ifa/
We believe in absolute transparency and from day one our website has included the following text,
How is Medics’ Money funded?
Medics’ Money started because we wanted to help our friends and colleagues make better financial decisions. That ethos is the driving force behind Medics’ Money today. Our website is free for doctors to use. We charge accountants and advisers a small fee to appear on our site and for receiving enquiries, ONLY if they pass our rigorous verification process which is outlined here https://www.medicsmoney.co.uk/medics-money-approved/
Ed and Tommy both work as Doctors in the NHS and all profits are re-invested into improving the range of services we offer to doctors.
If someone else makes a recommendation of where to get advice, ask them what their conflict of interest is and what due diligence they have done. You may be unpleasantly surprised. If they won’t answer, proceed with caution.
