Dealing with your finances can be stressful. To understand financial management a little easier, here are some basic tips and information to help you.
1) Don’t spend more than you have (cash flow/budgeting)
A cash flow analysis is a perfect way to help you understand what’s happening with your money. It clearly shows you what you are earning and what you are spending.
By analysing your cash flows, you will see what money you have left over after expenses have been paid (surplus) or if you are spending beyond your means (a deficit).
A deficit means you should look closely at your expenses. You should try and reduce non-essential costs. Where as a surplus gives you options, like being able to go on holiday, clear some debts or buy a new car.
A cash flow can help you devise a budget and a plan. Having a Budget will help you develop a safe spending amount and a plan for when your expenses are due.
2) Know what expenses you can claim as tax deductions
A tax return reconciles how much tax you should have paid in a financial year. It is divided into two main parts, income and deductions. In simple terms, you pay tax on your income less your deductions (known as taxable income).
Income is money you receive from working or investing. A deduction is an expense that directly relates to your job, professional development or investments.
Knowing what deductions are available to you is important; it reduces your taxable income. This will either increase your refund or decrease your payable amount.
As a doctor you will have numerous expenses that are deductible. This includes registrations, training programs, conferences, equipment and reference materials.
3) Set yourself up before starting your internship
It is recommended you seek professional advice from someone who understands the medical profession and the journey you are on. This includes advice on salary packaging, your tax obligations, setting up super and appropriate insurances.
Salary packaging allows public health system doctors to earn a portion of their income tax free. This occurs by allowing them to package certain expenses. With the way the intern year is structured, a doctor could potentially package over $27,000 and increase their take home pay by over $8000.
Setting up salary packaging before starting work is important. It will ensure you have a plan structured around your rotations.
* The information contained in this site is general and is not intended to serve as advice. DPM Financial Services Group recommends you obtain advice concerning specific matters before making a decision.
