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February 23rd, 2018

Personal Finance: 3 Tips to Financial Freedom

You may experience a wave of emotions just reading the words “personal finance”—anxiety, boredom, exhaustion, confusion, frustration—don’t worry, you’re not alone. They don’t teach you this stuff in dental school, but the truth is, having a handle on your personal finances is one of the best things you can do to improve your life and your dental practice. At PDA ǀ Marketing Group, we care deeply about your professional success and take pride in the work we do for our clients, but really, we just want you to be happy and fulfilled!

We know money can’t buy happiness, but it can at least cover the down payment! When you take the stress out of your personal finances, the rest will fall into alignment—you will be in a better place emotionally, mentally, and physically when you feel secure and in control of your future, and in turn you will be able to provide better dental care for your patients and give back even more to your family, your community, and others in need. It’s a win-win-win!

So, let’s dive in.

1.      Here are the basic accounts everyone should have:


We hope this wasn’t an “aha” moment for anyone. At least 20% of your income should go into savings each month. Meanwhile, 50% should go toward necessities and 30% is left over for discretionary spending. This is called the 50/30/20 rule.

ROTH IRA or 401k

A Roth IRA is a retirement savings account that allows your money to grow tax free. You fund a Roth with after-tax dollars meaning you’ve already paid taxes on the money you put into it. In return for no up-front tax break, your money grows tax free and you pay no taxes when you withdraw at retirement.

A 401k is a retirement savings plan sponsored by your employer. It lets you save and invest a portion of your paycheck before taxes are taken out. Taxes aren’t paid until the money is withdrawn from the account.

529 (if you have children/dependents)

If the average parent opens a 529 account with $250 and adds $50 a month, the child should have close to $20,000 tax-free dollars to use for education at the age of 18. This might not cover everything, but it will certainly help!

That covers the basic accounts you should have, but what about investing?

2.      Indexed Growth Funds

Anything that sounds too good to be true is exactly that. Don’t try and time the market, it’s a fool’s errand! Keep it simple and predictable with indexed growth funds. Funds in this category tend to focus on large-cap stocks that have the potential for above-average growth.

How can I be better at saving money?

3.      The PDA Personal Profit & Loss Program

This program is designed to help you run your home just like you would a small business—specifically an S Corp. In a small business, you pay all fixed expenses with automatic bill pay and most variable expenses with an airline-miles accumulating credit card. In this case, you would treat the household as a business and members as employees—establishing ratios and thresholds that correspond to the budget and goals.

Why would I want to run my home finances like a business?

Simple: psychology

People—surely you can relate—aren’t very good at “saving” money. Why? Because they don’t like the word “save” or the idea of stowing away extra cash for a rainy day like a squirrel does acorns. But we do like the word “profits.” This program identifies “profits” as all monies beyond what it takes to run the household, including a “salary” for each member.

“Profits” are then rolled into a money market account for higher interest earning while maintaining a higher level of liquidity. Simply establish what the cap on the account should be and all excess funds should be transferred to a tax-deferred or retirement account.

See… easy as pie! (Although we’re sure all the pie makers out there roll their eyes at that expression—pie is not easy!)

At PDA, we’re all about helping doctors find balance, joy, and success—both personally and professionally. If you have any questions about personal finance, dental marketing, or anything else, we would love to speak with you.

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