Do you want financial freedom? Well, getting there takes some time and effort. Sometimes getting there means not buying certain things, like the newest iPhone every time a new one drops. It shocks and saddens me when I see so many young, energetic entrepreneurs who are excited about their careers virtually throwing their hard earned cash down the drain.
An Aston Martin or a Cartier ring may give you short term satisfaction, but within a week or two, you may find yourself wondering why you bought the item in the first place.
You’re probably wondering who the hell am I and why should you listen to me? My name is Arun Mehra, and well, my advice is what has worked for me and all my clients. I have in fact been around the block a few times and just like you, I do like to enjoy what life has to offer, but never at the cost of keeping up with the Joneses.
In this blog post I have put together some financial tips for you to get out of this financial purgatory you’re in!
Financial Freedom For HealthCare Professionals
The key to serious financial freedom is investing in opportunities that build you a passive income, and not wasting money on pointless things that have no real impact on your life. Earning money is hard work, so why waste it so frivolously?
This blog post is all about what you should be, and shouldn’t be doing in terms of your money. So, here are my top financial tips for associate healthcare professionals.
Rule 1 – Don’t Compare
Who cares if your colleagues or friends have the latest car or the newest iPhone, don’t judge your situation on what they have or are buying. The real truth is that looks are only so deep, what you may spend years to save up for, others are financing monthly just to show off. Look at your own finances, and then make the judgement. Can you afford it? And if you can… what will it bring to you?
Rule 2 – Reality vs Social media
If we all believed what we saw on Instagram, it would appear that everyone is a billionaire, living the high life everyday.
They are not, it’s simply them trying to show off to others that they have made it. Some may have, but most haven’t. Remember, social media is a heavily edited highlight reel of people’s lives, it’s never reality. If there was any personal advice I could give you, it’s don’t flaunt your success, you can make your money behind the facade that is social media.
Ignore what you see people buying on Instagram, or better still turn it off. It is especially hard in this day and age but trust me when I tell you, do not believe the hype. Everyone’s social media is edited to perfection, do your research and take everything you read or see with a pinch of salt!
Rule 3 – Extravagant Cars and Designer Bags
What drives you? Looking like you’re rich or actually being rich?
Social media likes to portray the latest cars, phones and designer bags that you need to buy. I highly recommend you not to get tempted unless you are a serious car dealer as buying the latest flash car is tantamount to financial nonsense.
Yes, the cars look lovely but it is not a financial investment and once you have driven it out of the fancy showroom it will depreciate at least 20% from what you paid for it. Cars as well as designer items are investments that always lose their value immensely after you have paid for it.
I appreciate you may need a car, but does it need to be over £75,000 with all the trimmings? Probably not.
Rule 4 – The Curse Of The Taxman
Everyone thinks there is an amazing secret way to cut corners on your tax bill. Don’t believe the lies and schemes.
Let us put it clearly, you cannot drastically reduce or eliminate your tax bill. Over the years, I have unfortunately come across the remnants of many businessmen who have been easily persuaded to invest in various schemes over the years to reduce their taxes.
In truth, most never work, and be careful who actually advises on such schemes. Tax is something each and every one of us has to pay, and the smart thing to do will be to prepare and keep money aside for it. The great thing is you are able to prepare for this bill.
In reality, tax schemes very rarely work and often come back to bite – with a vengeance.
Rule 5 – Pay For Professional Advice
Most of us like to cut corners where we can but unfortunately, the truth is, to make money you need to spend money. That being said, I strongly advise you to pay for the best advice possible from the right professionals – if you are paying, you will get the right advice on most occasions.
I happily pay lawyers, tax advisors, surveyors and other professionals when I need them to ensure that I get the best result for whatever I am trying to do. Take it from me, you have your own expertise, you do not have to know everything, trust the professionals when you need to. If you need some support from our own in-house professional accountants click here
If you avoid paying for the necessities of your business and try to take shortcuts, it usually comes back to bite you.
Rule 6 – Ask Yourself, Can you really afford it?
The old Chinese proverb ‘cut your coat according to your cloth’ still stands today. If one tries to spend more than his income, it never really ends well. Look before you leap, analyse the consequences before you splurge.
Simply throwing it onto the credit card can turn into a very bad habit and will come back to bite you. If you cannot afford to buy it right now, it is a really good sign that you probably shouldn’t. Don’t get sucked in (see rules 1 and 2 above) and apply a degree of sense when spending your hard earned money.
Rule 7 – Save, save, save!
This is a rule that is always mentioned, and for good reason! Yes, I know it is very boring and interest rates are so low but always save something every month. Whatever your income level may be or what industry you work in, saving money for future needs is absolutely essential to maintaining financial stability.
The best way to do this is to set up a direct debit that goes into a hard to reach bank account so you cannot access it. It doesn’t have to be a huge, substantial amount every month. Just make sure it’s something rather than nothing. So if you ever need cash for an urgent situation or a deposit, you don’t have to go asking elsewhere for help, you will have all the funds you need.
Bottom line, start saving.
Rule 8 – The Property Ladder
If you can afford to and you have enough money saved, try and get onto the property ladder. Whether it is as a homeowner or an investor, buying a home is a sensible investment. Over time, assuming the market is rising, building equity in your properties will help you in many ways.
Use your income to pay off the mortgage, whilst regularly re-financing every few years seeking a better deal.
Rule 9 – Pay Off Debts
If you are a credit card user, be sure to pay the balance off every month. Do not just pay the interest, pay the whole balance off.
It is really easy to get into a situation where the interest keeps accumulating each month. As the interest rates charged are compounded each month, increasing the amount you need to pay each month, it all accumulates to a recipe for financial disaster. With such high rates, the financial situation can get dire. This is where rule 6 comes into play. If you cannot afford it right now, you will definitely struggle to pay it off.
Rule 10 – Tax Free Savings
Here’s another boring one that you probably hear all the time (it’s these ones that are the most effective). It sounds dull, but utilise your annual ISA allowance, it’s such a great way to save in a tax-free wrapper and you should try to use this every year. You will be amazed as to how much you can save in just one year.
Rule 11 – Buy Smart
This rule is a lot easier said than done, but over the years I have met so many healthcare professionals that have entered the profession with the goal to run their own practice. Although I strongly advocate becoming a business owner, nothing good ever comes from rushing a sale. It is also imperative to seek advice from the right people (trained professionals), who can help you achieve your goal.
Again, a lot easier said than done but keep your emotions at the door. It will be much better for you to make a sensible purchase rather than one that is based on the emotion of having to buy a practice at any cost. I have seen so many clients who regret buying at such a high price, don’t be one of them, get it right the first time and you will be one step closer to achieving financial freedom.
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