It’s a known fact that doctors going into a new private practice often take pay cuts so that they can use every available penny to build the practice. However, having a financial cushion that covers a few months of personal living expenses is essential. If funds are low, having that savings fund will allow you to stay focused on the practice, rather than your own living expenses. Financial experts say that two-thirds of Americans don’t have adequate funds set aside to help them through the rough times – which we all inevitably have at some or other. So what is the basic rule of thumb when it comes to putting money into a savings account or “freedom fund”?
1. Single – up to nine months of personal living expenses
2. Married – up to one year of personal living expenses
3. With children – consider saving more
It’s never too late to start saving. Make a monthly commitment to pay into your savings in the same way as you would pay a utility bill. Keep the money in a bank savings account so that you have immediate access to the money. What you might lose in interest, you will gain in the freedom of assurance it will give you allowing you to put more energy into your biggest asset, YOU and your practice.