It can be a bit overwhelming finding the time to organise your personal finances, particularly if you’ve set other New Year resolutions. Thomas Dickson, chartered financial planner at Wealthwide, provides a month-by-month guide to help you make the most of your money and simplify your life in 2023.
January – request your NHS Total Rewards Statement
This is the first step for dentists in the NHS pension scheme to understand what their benefits are likely to be at retirement. You need this to work out whether you’re likely to exceed the Lifetime Allowance of £1.073m.
You can read more about this here.
February – check all your direct debits
With inflation still at over 10%, and no sign of energy prices reducing in the near future, it’s important to look through your bank statements, review the services you pay for and cancel as many direct debits as you can.
It’s also relatively easy to check what apps you no longer use, but are still paying for every year. On the iPhone, it’s in settings, media and purchases > view account > purchase history.
March – maximise your tax reliefs
As the tax year end approaches (on 5 April), this is the month to make sure you’ve made the most of all the government allowances such as ISAs, pensions and capital gains tax allowances. You can read more details on these Seven ideas to help dentists save thousands this tax year.
April – simplify your banking
As many dentists earn a variable amount each month, it can be hard to know exactly where you are financially. One way to solve this is to have a separate account where your income is paid.
You then set up regular standing orders into other accounts such as your current account for monthly living costs, a tax account for your annual tax liabilities and short-term savings accounts for other significant expenses such as cars and holidays.
This helps create a structure, so you know what you can afford to live on each month and ensure you live within your means. This, by the way, is the key to financial independence.
May – create an investment strategy
If you’re keen to save for the future, you need to make your money work well for you. Here are some key steps to creating an investment strategy:
- Decide on the amount you want to invest,
- Establish what level of investment risk you’re prepared to take,
- Diversify your funds globally and
- Keep your costs low.
I explain more about investment strategy in this video.
June – organise your will
Many dentists assume their spouse inherits everything if they die without a will. However, without a will, if you’re married with children, your spouse would only inherit £270,000 plus personal possessions and half of the remainder – your children inherit the rest.
If you haven’t created a will, find a local probate solicitor and book a meeting. Arranging a will doesn’t take that long and typically costs between £150 to £300. I’ve written about the importance of wills here.
July and August – take a holiday
You’ve earned your money and paid your tax, now you can spend it.
September – review your insurances
Dentists have a unique set of requirements with regards to insurance and it’s important to make sure these have been set up correctly.
Crucially, to ensure any claims are accepted, check for the ‘own occupation’ small print on your Income Protection or Critical Illness plans.
Although you certainly want enough insurance to cover you for any unforeseen events, you don’t want to pay for too much insurance either. Take cover! You’re a dentist.
October – find a financial planner you trust
If your finances are getting complicated, consider working with an independent financial planner.
Former practice owner Jo Wirdnam explains how having a good relationship with an adviser who has your best interests at heart can be ‘life changing’. Click here to watch her powerful interview.
November – create a personal balance sheet
Add up your assets and subtract your loans and mortgages to establish your Net Worth position. You can then update this every year.
Provided you do this for at least a few years, you’ll hopefully see an encouraging pattern emerge, which will give you some re-assurance that all your hard work throughout the years is paying off.
December – review
It’s now time to make sure you’ve completed all the tasks you wanted, and create a new list for 2024.
I hope you’ve found these ideas useful. Feel free to complete them at your own pace and add your own ideas.
If you’d like to learn more ways to manage your money effectively or if you want some more ideas to add to the above ones, (or you’ve got some extra ones for us) please contact Wealthwide here www.wealthwide.co.uk or by email at [email protected].
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.
