How Doctors Can Boost Their Savings

Are you looking to boost your savings in 2022? If so, you are not alone.

It is the time of year when many people plan their resolutions for New Year, including financial goals. Whether you are looking to focus on saving for the first time or just need to refresh your focus on saving after the holidays, you are in good company. According to a recent Bank of America survey, the top financial resolution in 2022 – for over 40% of Americans – is to increase savings.

Often, the most challenging part about saving money is getting started. However, there are some simple steps you can follow to help increase your savings without cutting back on everything you love.

7 Ways to Help Your Savings Soar

1. Track Expenses

One of the easiest ways to know where your money is going is to keep a log of your monthly cash flow, income minus your expenditures. Much like a food diary when trying to cut back on what you eat or eat healthier, writing down your expenses may open your eyes to where you are spending unnecessarily instead of savings. As you start this process, you may want to try a budget app that tracks your spending.

2. Create a Budget

When you better understand what comes in and goes out every month, you can start to organize your finances into a workable budget. Your budget or spending plan can help you prioritize some financial goals over others. It should include how your expenses measure up to your income so that you can plan your spending and limit overspending. Don’t forget to factor in regular expenditures, but perhaps not on a set schedule, like HVAC maintenance between seasons.

Tip: To focus on saving, add a savings category to your budget and aim to save somewhere between 10% to 20% of your income each month depending on your financial goals and situation.

3. Find Ways to Cut Back on Spending

After creating a budget, you may realize that your monthly expenses are so high that you cannot save as much as you want to. If this is the case, it may be time to cut back. Find and identify items or services you can spend less on, including entertainment, eating out, and extras.

Below are a few ideas for cutting back everyday expenses:

• Restrict online shopping. If the item you put in your cart is not an essential item, hold off on purchasing it until it is.
• Cancel subscriptions and memberships you don’t use. It is easy to get caught up if they renew automatically.
• Institute a cooling-off period, like waiting 24 hours, when tempted to purchase any nonessential items or services.

4. Establish Savings Goals

As with all goals, you want to set specific yet realistic goals of what you can save for the year. For example, it may be that your goal is to save more for your retirement or to pay off your medical or dental student loan debt. Whatever it is, determine how much you need to save each month or year to achieve your goal. Also, make sure you have these goals in your budget.

5. Increase Your Contributions

It cannot be emphasized enough that you do not want to miss the opportunity to save smartly if you are able. These vehicles below can help you build and protect your money. Work with your financial planner, accountant, and other key financial or legal advisors to determine the best path for your specific situation.

Here are a few places to consider increasing your contributions as you map out your plan:

• Retirement Plan, IRA, and Roth IRA – try to max out your contributions each year
• Supplemental retirement plans through their employer – find out if this is an option your employer offers
• Backdoor Roth IRA
• 529 Savings Plans – if you have children, college savings plans allow you to save money for their education
• HSAs – those enrolled in a high-deductible health plan can opt-in to have a health savings account (HSA), which permits annual tax-free contributions.

6. Map Out Major Purchases

What are your priorities for the year? First, make a list of all the purchases you need or want to make this year. Once you do that, prioritize which items or services are the most important to you and your family. After you re-order the list, figure out what has to be taken care of immediately, like faulty car brakes, versus what can be put on hold for several months or even longer. If possible, you may even want to time your purchases of appliances, electronics, furniture, and other significant expenses to annual sales periods. For example, many retailers have a sale on televisions before the Superbowl airs each year. Finally, you can map out when each of these planned expenses takes place and budget accordingly.

7. Use Automation

Chances are, if you take the work out of saving, you are more likely to do it. In this day and age, almost all banks and other financial institutions offer automated transfers. You can set up (and forget it) a reoccurring transfer of money from your bank account to your various savings tools or even split your direct deposit so that a portion of each paycheck goes directly into a savings account. If you don’t have to think about moving your money, it generally reduces the temptation to spend it, and by automating the transfer, you will never forget to do it.

Watch Your Savings Soar

Take a moment to review and check your progress each month. Taking this last step will help you stick to your plan and help you identify and correct problems quickly. When you understand how to save money, you are better prepared to meet your financial goals and create new ones.

By starting to save now, you are on the road to reaching your financial goals. As a dedicated doctor who takes care of others helping them focus on creating healthy habits, you should also dedicate time to planning for your own healthy financial future, which includes creating solid savings habits.

At Spaugh Dameron Tenny, we specialize in helping physicians and dentists create personalized financial plans that meet their specific financial goals. Connect with our dedicated team of financial advisors to get started today!

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