According to our survey of Ohio-based dental practitioners, dentists are stressed about their finances. Consider that of the 42 Ohio-area dentists we surveyed:
- 47% of dentists working with a financial planner cited being stressed about growing their practice compared to 70% of those who didn’t utilize financial professionals.
- 38% of dentists who worked with a financial professional report being stressed about cash flow compared to 60% of dentists who aren’t working with a financial professional.
So how do you create an effective financial plan that helps you achieve financial independence, retire at a set retirement date, and decrease overall stress? First perhaps is understanding that comprehensive financial planning is different from investment management. Comprehensive financial planning means systematically addressing your entire financial situation, including goals, objectives, taxes and anything that affects your financial situation. Simply put, comprehensive planning brings an assurance that all your goals are being considered while your resources are being optimized to meet your goals. Financial planning helps you envision the future you want for you and your family, so you can better align all your resources.
Think of financial planning as developing a game plan for your life. It establishes short-and long-term budgets, helps manage and reduce risk and taxes. Financial planning helps you to limit the financial impact of unexpected events, such as disability or long-term illness. It helps you determine your retirement date, and to make sure your family and your business are taken care of in case your family survives you.
A financial plan should be personalized to take into account many factors that deserve customization, including:
- Goals that are specific to you and your family, such as when you’d like to retire, planning for your children’s college education, or paying for weddings.
- Coordination of all aspects of your family’s finances and anything that affects your family’s finances.
- A target date for retirement so that you can have a planned transition for your practice in order to maximize its value
- Contingency planning to protect you and your loved ones when life presents unexpected or unwanted events
- Monitoring and updating your plan as your situation and goals change.
As one pre-retiree told us, “financial planning provides you with confidence that you are on the right track.” Done right, a comprehensive plan can put you back in charge of your life, and help reduce stress.