Over the course of my career working with dentists, one theme comes up again and again, especially among younger dentists still dealing with student loans.
Anxiety.
Dentists are worried about their financial futures.
After talking with hundreds of dentists on this subject, I’ve come up with a strategy I want to share with you.
But first, a couple of disclaimers about the strategy:
It’s hard.
It’s like knowing you need to floss every day or eat your vegetables. It’s not hard to understand, but it’s hard to do.
It’s boring.
It’s like planting the perfect red maple tree in your yard. It’s going to look amazing and provide perfect shade…in 15 years. This strategy is short-term boring, but long-term exciting.
Still with me after hard and boring?
Then allow me to present: Brian Hanks’ Unexciting, Four-Step Plan to Be Rich Faster Than the Rest of Your Dental School Class!
Step 1: Know How Much You Spend
This could be a budget, but honestly, as someone who has done detailed financial plans for hundreds of dentists, very few rich dentists I know track a detailed, monthly budget.
If you’re an associate, this can be as simple as using Mint or YNAB to track how much you spend.
If you own a practice, you outsource this step to your bookkeeper and financial advisor. Tell your bookkeeper to give you monthly financial statements on your business accounts with commentary on where spending can be improved. Ask your financial advisor to calculate your average monthly spending at home on at least an annual basis.
Step 2: Fire Lazy Money
This is usually the hardest step. Just like you’d let go of a lazy assistant in a dental office, you should always be on the hunt for the money you’re spending that is lazy. Lazy money could be a subscription you don’t use often or a supply bill that is starting to creep up in your office.
As an associate, this step can be as simple as printing out credit card statements and going through each charge. As a practice owner, I’d ask my bookkeeper to recommend two or three charges every month she thinks could be spent more effectively.
Step 3: Make Saving Automatic
Create an account you can boost a bit every time you fire some lazy money. If you used to spend $100 a month on Comcast and just switched to a $10 a month Netflix bill, set up a monthly automatic transfer to your savings account for $90. You’ll never miss it!
Your 401k and IRA savings accounts should be automatic as well. The deductions should just happen without you thinking about it or clicking any buttons.
The key is to have the savings automated and to never allow the money you’re saving to sit in your personal checking account (where it will inevitably be spent!) for more than a day or two.
Step 4: Repeat
Over time, these dollars really add up. The key is to go back to steps 1-2-3 regularly and increase the amount you save over time. Part of the “automatic” part of step 3 can and should be outsourcing the job of finding and setting up the savings to others.
Sure, you could do it yourself and some are successful at that strategy. But what percentage of patients who sit in your chairs are flossing daily? I would bet the statistics are worse for automatically saving.
Go through the steps over and over and watch the money pile up. And consider paying others to automate as many of the steps for you as possible.
Easy!
But hard. And boring.
But if you do it, I can almost guarantee you’ll be rich faster than anyone else in your dental school class. Which maybe isn’t the noblest goal in the world, but it makes things a little more fun.
Thanks as always for reading,
-Brian
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I created a guide called “77 Questions to Ask to Avoid Buying the Wrong Dental Practice.”
Get the guide here for free (all I ask is a quick share in return).
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Read more below about how to buy a dental practice because good advice is important!
Three Reasons Not to Buy a Dental Practice From a Multi-Practice Owner
How an LOI Works in Dental Transitions + 2 Mistakes to Avoid
Five Common Mistakes Dentists Make with Their Student Loans
