Bill Belichick. The name elicits a wide range of emotions and responses. Like him or not, his unprecedented success as head football coach for the NFL’s New England Patriots is worthy of some level of respect. He has compiled a 209-78 record at the helm for New England while amassing five Super Bowl victories. Five. That’s more than any coach in NFL history…and he’s still going at it. This incredible run has not transpired due to luck or by default. Coach Belichick is notorious for his preparation. He famously started analyzing game film obtained from his father (also a coach) at the ripe old age of seven. Practice, games, the draft, staff meetings…he understands as well as anyone that failing to plan is essentially planning to fail. No one piece of the puzzle is more or less important than another. If one area breaks down, a domino effect ensues.
Financial success hinges on that same need to adequately prepare. No good coach truly believes their team can just show up at game time and perform their best with no advance preparation. No good surgeon truly believes they can walk into an operating room and provide the very best outcome for their patient with no prep work. The same holds true when it comes to retirement. As investors, we cannot just wake up the morning after our retirement party and expect everything simply work out the way we always envisioned or dreamed. The only way to increase the probability for success is to prepare WELL in advance. Time can be an ally or an enemy based on how early one initiates their financial planning efforts. We’ve all seen the charts that evidence the power of compounding on money. We’ve all heard the horror stories of successful physicians who pass away all too early and leave their family to fend for themselves. We’ve all heard or experienced the daunting college bills that come with children pursuing post-secondary education. We’ve all seen the amount of tax being paid as incomes rise. Financial challenges await…if they’re not already here. Failing to plan is planning to fail. Things you can do now, if they’re not already in motion:
- Surround yourself with trusted advisors and consultants that will look out for your best interests:
- CPA who is proactive and an idea-generator on tax mitigation
- Attorney who is an expert in the area(s) where you are employing them (estate, business, etc.)
- Financial advisor who is a fiduciary. As medical professionals, you are subject to being solicited for all manner of financial services. Be sure to work with someone who is legally obligated to serve your bests interests, not simply sell you something.
- Insurance specialist who will advise you on what is needed for risk protection, not just what you have the ability to pay for.
- Build an emergency cash reserve that equates to three to six months of actual living expenses.
- Identify and address life and disability insurance needs.
- Eliminate debt aggressively, not just according to the repayment schedule provided by the lender. Once out of debt, do your best to avoid acquiring more.
- Maximize retirement plan contributions and start building investments in non-qualified (after-tax) account(s). Stay diversified and keep costs low.
- Use 529 college savings accounts to save for and/or cash-flow college expenditures for children or other family members.
- Draft and implement your estate plan.
Everyone’s situation and goals are different, but these items are the building blocks that hold true for anyone seeking long-term financial security and independence. As a medical professional focused on being the very best in treating your patients, do not feel obligated to also be an expert in managing your wealth. Know your situation. Know what’s most important to you. Document your assets, liabilities, and goals. Understand your cash flow. Surround yourself with a team of experts that will help you execute the building blocks. Prepare well in advance. Leave nothing to chance. You can do this now. You should do this now. Don’t wait for tomorrow. Stay diversified.
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