5 ways to create better money habits

Money can be one of the hardest things to manage.

Many people have developed bad habits, have fears or concerns about money, or stress so much about it that they’d rather not think about finances. Unfortunately, not having a financial plan in place can be enormously costly to your practice and can put your personal financial health in jeopardy.

Having the right financial habits, in contrast, can prevent the negative outcomes that come from using money incorrectly.

Keep reading for five changes you can make to help accelerate your practice finances.

1. Use cash and avoid loans (when possible)

Interest rates cause non-cash purchasing methods such as loans and credit cards to dramatically increase the prices you pay for what your practice needs. If you can, use cash instead. It’ll reduce your costs and may even score you some discounts with your vendors.

Paying in installments can seem like an attractive option, but you usually wind up paying much more for the same product or service that way after you factor-in interest and fees.

One alternative is to try negotiating for an interest-free credit line with your vendor or a payment plan that gets you what you need (like equipment) without charging you an expensive interest rate.

2. Plan your spending with a budget

Having a careful budget for your practice—ideally an annual or quarterly budget for everything based on your income—can help you avoid bad spending habits. A spending plan frees up practice resources for what really matters and helps you save up for what you need or what you want.

If what you really need is a raise, it can help you find better margins and more cash to pay yourself with.

Creating a spending plan also helps you identify your true priorities. If it’s not important to your practice, then it shouldn’t be in the budget. It’s that simple.

3. Automate your expenses, payments and investments

If it’s absolutely necessary that a particular bill or expense be covered on a regular basis, it needs to be automated. Automation can help you make sure your practice’s money is going where it truly needs to be. What’s left can then be placed elsewhere in the budget or can be set aside.

4. Organize your billing and watch it carefully

Don’t let your billing become disorganized and lost. You don’t want to have large numbers of unpaid accounts and past-due bills from patients or insurers. It’s important to keep track of your billing and watch to make sure nothing is slipping through the cracks.

If some of your claims are stuck in limbo and you’re waiting on payment, it’s best to know about it quickly and be prepared to address the problem.

5. Have a solid accounting method and manage your practice finances correctly

Managing your practice’s finances properly may mean that you need a professional accountant or bookkeeper. And the right accounting or practice management software system can keep your practice on track financially.

Whatever you do, make sure you’re keeping good records and managing everything according to the relevant regulations and best practices. Don’t be afraid to enlist a professional’s help if you’re not sure what to do or where to start. Accuracy and compliance are key—and an accountant may help you get there.

A big part of managing your money correctly is keeping your personal and business finances separate. Don’t mix your practice’s money with your own. It’s too challenging to separate the two when tax time comes along.

It’s never too late

Even if you’ve been following some bad money habits so far, it’s never too late to begin transforming your clinic’s finances. Not sure where to start? Just start small. Make one change first and see what happens.

For instance, start setting aside a small amount of money in your budget if one of your goals is to have a safety net for unexpected expenses.

Sources

Fawcett C. “3 good financial habits for doctors.” Kevinmd.com. https://www.kevinmd.com/blog/2018/02/3-good-financial-habits-doctors.html. Published Feb. 2018. Accessed Sept. 2018.

PBMares. “10 habits to keep your medical practice in good financial shape.” https://www.pbmares.com/10-habits-to-keep-your-medical-practice-in-good-financial-shape/. Published Aug. 2017. Accessed