Olivia Miller, specialist financial adviser at Wesleyan Financial Services shares her insights into financial planning for the young dentist.
Financial planning after dental graduation – what needs to be addressed first?
Following graduation one of the first areas of financial planning to broach and something that really underpins everything else is income protection.
The newly qualified dentist has worked incredibly hard, having invested into several years of study, hard work and dedication. An unexpected illness or injury could render them unable to work for a period of time, affecting their ability to earn.
A situation like this leaves a lengthy period of around 45 to 50 years of uncovered income until a state pension kicks in, without a plan in place. This could have devastating consequences.
What comes as a surprise for young dentists in terms of financial planning?
There is an awful lot to think about for young dentists. They have just come out of university, often with a large amount of debt. Now they are going into a job with a regular and more disposable income – and thinking about how to use this in the best possible way. They may be considering mortgages with the aim of moving away from rental accommodation. There are several associated costs that come with this, and the earlier preparation begins, the better.
What are good habits to get into as a young dentist?
I would recommend short-, medium- and long-term goals and planning.
For short term, this involves looking at what’s in the immediate spending. For medium term, things that are coming up over the next three to five years. Then for long term this would perhaps encompass retirement plans and saving towards them.
This is challenging, as each pot may have a different risk appetite. It’s about trying to discipline yourself to save money into the right pots, and making sure the correct amount is going into the correct pot and building that in from the start.
Something is always better than nothing when it comes to savings. We see compounding effects over time. These can be beneficial over the long term, helping towards achieving goals. However, this is always highly individual and depends on the personal goals and aspirations of each young dentist.
How far ahead should dentists be planning in their early career? Is following graduation too soon?
Personally, I believe it is never too early to start planning. Having a financial platform beneath you, with the plans you’ve put in place to support your career decisions, can enable you to live your desired lifestyle and to retire when you want to, as opposed to being forced to make decisions based on your finances and obligated to retire at a set time.
What are the main differences in terms of financial planning between private dentistry and NHS?
This is highly topical at the moment, and something we are hearing about across multiple different platforms. Working in NHS dentistry offers a wide range of benefits including a gold standard pension.
When working privately these benefits are significantly reduced or not there at all. This make it important to build in the cost of replacing them yourself. This is something that’s not always fully thought about. I would highlight that it can incur significant cost.
Is there anything else you think needs to be considered for young dentists?
I would say that awareness is a key consideration. Speaking with an adviser early on can really help the young dentist be aware of all aspects of what they need to think about and what should be put into place and planning this for the future.
By having regular meetings and concentrating on what’s important, the young dentist can prioritise the different stages of their career and make sure that whatever is important to them is in place at the right time. It is all too easy to put this type of to-do list on the back burner.
However, having regular meetings with an adviser can help to highlight future goals and ensure that the necessary plans and foundations are put into place at timely intervals in order to achieve this.