Budgeting for Doctors: How to Create an Effective One

Budgeting for doctors brings up more questions than answers. It can be a struggle for medical professionals because most of the traditional budgeting methods lack flexibility and they often don’t have space to fit in your personal aspirations and goals. Such budgets miss the point of why you’re working so hard.

What makes budgeting for doctors so different?

Upon starting your career, cash flow becomes more interesting. You may have a good income coming in but you’ll also have big expenses to cater to such as loans. There is a lot of money being earned and spent that you often miss out on accommodating your personal expenses.

Taxes are also significant expenses and smaller expenses such as phone bills can mount up to great expenses over time. This is where not having a clear road map (a budget in this case) can make it extremely difficult for you to manage your finances.

Create a budget that works for you

Your budget is a plan for your money. It’s an ongoing way for you to track your income and expenses so that you can stay on top of what’s happening in the world around you, whether it’s work or home life. A budget also helps with planning ahead by keeping track of what needs to be done first and how much time it will take.

In order to create an effective budget, there are some factors that need consideration:

  • What do I have? How much money do I make? Where does my money come from (e.g., salary/wages)? What expenses am I paying each month (e.g., mortgage payments)? How much debt do I have? Is there anything else going on (e.g., student loans)?
  • What do I want? Do any goals require more spending than expected right now because they’re planned out several months ahead; could that lead me into financial trouble later down the line when something unexpected happens like losing my job or having an emergency surgery at home without insurance coverage(?). 

How To Create A Great Budget

Know your Goals

Have clear, specific, and time-bound goals in place. Most medical professionals often skip this step but it’s essential to know what you want to achieve and when, to make a good budget.

writing down budget

There are two types of goals:

Short-term Goals

These are your goals that should be achieved in 6 months to a year. For example, paying off any personal debts, or buying new equipment. It could also be as simple as saving more money than you usually would.

Long-term Goals

These are your goals that should be achieved in 2 to 5 years. This could be paying off a loan, travelling around the world, or preparing a retirement fund. These are goals that you know takes time and will require long planning.

Review and Analyse your Expenses

Review your expenses. Before you cut back on your expenses, first understand where you stand. List down all the items you spend your money on, and keep track of all your income – whether it’s from your salary, or another form of business.

Using mobile apps, computer softwares, or a simple spreadsheet can make your life easier. Get all the information you need, and sit down to plan your budget. Consider grouping your expenses into different categories: bills, salary, mortgage or rent, and more. Make sure that everything is categorised to ensure that everything is accounted for.

Analyse your expenses. Once everything is in place, determine if the money you’re spending is aligned with your financial goals. For example, you’re trying to save money for new medical equipment, but instead you’re spending more money on coffee or eating out.

Create a budget

Once you have analysed your expenses and goals, it’s time to plan on how to make changes to ensure you achieve your goals.

Depending on your financial goals as a doctor, your income needs to be divided into three categories:

  1. A percentage towards your fixed and important expenses – these include EMIs, rent, subscriptions, utility bills, insurance premiums, and more.
  2. A percentage towards your variable expenses – these involve eating out, shopping, entertainment, and more. These are items that you’re not sure how much you will spend on.
  3. A percentage in savings – this involves paying off any loans, investing your money, putting it in a retirement fund, or putting it in a savings account.

Once you have determined your fixed expenses, you need to find the items that you can change. When you’re trying to create a budget, the first thing you need to do is cut back on unnecessary expenses.

For example, if you spend $100 on new clothes every month and they don’t fit well or last long enough for them to be worth it, that’s an easy way for your money to go down the drain.

The next time something comes up in your life where there’s a potential for wastefulness—whether it’s food or entertainment—think about whether or not this expense is truly necessary at all.

If not, try looking into cheaper alternatives instead of just cutting out entirely; sometimes spending less money will actually save you more overall in the long run!

Implementing these changes in every category can give you more freedom to spend better in the future.

Have the right level of insurance coverage

The right level of insurance coverage is critical to your budget. Start by determining what type of health care services are necessary for your practice.

As a doctor, you will need a full range of preventative measures in order to stay healthy and to prevent diseases, including regular checkups (medical), screenings (physical), drug prescriptions (prescription), treatment programs (inpatient) and surgeries if needed. 

If there are any gaps in these areas then you may need additional coverage; however this should be considered only after careful consideration because adding extraneous costs may reduce available funding for other services such as administration fees which can significantly impact overall profitability down stream

Seek help from Medical Finance Experts

If you are new to managing your personal finances, it can be overwhelming. You may find yourself asking: “How do I create a budget?” or “How do I know if my financial situation is stable?”

You may have built a budget in the past only to realise that it’s not easy to stick with it. Often the reason behind it is because you’ve made it keeping only your professional life in mind and have completely ignored the personal aspect. By including your personal goals and aspirations in your budget, you can create a framework that works for you.


A good budgeting for doctors will put you on the path to financial security, no matter your income bracket. It is the best way to establish financial security for yourself. If you don’t have one, it’s going to be difficult to start saving and investing in the best ways possible. 

A good budget will help you create a system that works for your lifestyle so that you can better manage your money on an ongoing basis.

If you need someone who has experience in helping people with their budgets and making better financial decisions, a good place to start is by talking to BloomWealth’s Medical Financial Advisors.

BloomWealth are specialist medical accountants for doctors and health professionals. We are qualified tax accountants as well as wealth creation advisors/financial planners. The monetary aspect of your medical practice and personal finances are handled by a competent and reliable expert.

Book in for a Free Financial Health Check or contact us to speak further about our full range of services.

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