After last week’s mini-budget, chartered financial planner Thomas Dickson sets how the measures will impact dentistry’s finances.
The Chancellor’s ‘mini budget’ was supposed to jump start the UK Economy. But since last Friday we’ve seen an unnerving chain of events starting with a significant fall in the value of the pound, prompting the Bank of England to indicate another interest rate rise is on the way.
This, in turn, has lead to turmoil in the mortgage market, with deals being pulled and replaced by those at a higher rate.
Mini-budget offset by economic crisis
The promised tax cuts looked like they would benefit in particular, higher earning dentists and business owners. But in reality, any personal gain from the mini-budget is likely to be offset by the bleaker economic picture.
We are all affected by inflation, a weaker pound, higher interest rates and a volatile stock-market, but in my experience, dentists, as higher earners, are less exposed to these impacts.
The dental sector
The good news for practice owners, is the latest crisis doesn’t appear to have affected practice valuations. In terms of job security for associate dentists, nurses, hygienists, therapists and practice staff, the dental sector is proving to be resilient.
Feeling overwhelmed?
The key takeaway here is that there is very little any of us can do to impact the current state of the UK economy – these are all events beyond our control. So, I encourage anyone who is feeling overwhelmed by the avalanche of depressing headlines to take a step back, look at the bigger picture and if necessary, take control of your own finances.
We’ve been here before
Many of us have lived through recessions and numerous economic cycles. We’ve experienced the dot.com bubble bursting in 2000, the credit crunch in 2007-08, and more recently the devastating global impact of Covid in March 2020. Many of our retired dental clients talk of experiencing and living through inflation at 15%, and in the late 1970’s interest rates as high as 17%.
Steps you can take now:
- As higher interest rates take effect, you may want to consider paying down debt. This might mean cashing in savings, extracting capital from your business (if you own one), or even selling some assets.
- It’s also important to have an emergency fund available. If you haven’t managed to build any savings in the past, I would encourage you to start budgeting now, because we can be absolutely certain that this will not be the last financial crisis we’ll have to manage during our lifetimes.
- As regards to the stock-market – our advice is to remain invested for the long-term and to ignore any short-term knee-jerk reactions. The stock market has already priced in the current conditions, and it’s nearly impossible to time the market correctly and judge when would be the perfect moment to buy or sell. I like the old maxim – ‘When is a good time to invest? – Before sundown!’ You can read more about uncertainty in markets here: www.wealthwide.co.uk/blog/uncertainty-abounds-it-always-does
- Another really important area to review is your insurance – home and practice insurance policies, life insurance and income protection. If your finances are shaky and you’re nervous about the future, imagine the financial consequences if something happened to you, your loved ones or your business and you weren’t adequately insured.
Find out more
To read more about the mini budget – you can read here wealthwide.co.uk/blog/the-mini-budget-a-big-boost-for-dentists.
If you’re keen to know what impact all the above issues can have on your personally, you may want to consider a comprehensive financial plan.
This process helps you understand all your numbers and takes into account the lifestyle you want to have now and for the rest of your life – you can read more here wealthwide.co.uk/financial-planning-for-dentists.
Please be aware of the following investment risks:
- The value of your investment can go down as well as up. You may not get back the full amount invested
- When investing your capital is at risk
- Levels and bases of, and reliefs from taxation are subject to individual circumstances and may be subject to change
- The Financial Conduct Authority does not regulate taxation and trust advice.
