Doctors might have innumerable knowledge of improving one’s health, but one area where they lack the same is finances. The majority of doctors have little or no understanding of how to manage finances and end up being in high debt.
Some think that their excessive income can suffice all their luxury requirements. Hence, they lose control of their expenses and fail to come across funds during an emergency.
So, seeking finance for doctors becomes the only solution. Although availing financing is a viable solution, doctors must exercise caution when going for such options. Otherwise, they might add more to their existing debts.
Few reasons why doctors need help with finances are:
Prolonged education period
The majority of doctors start their careers after the 30s. Before this time, they don’t need to put much attention to their finances. However, the real trouble begins when they start their career.
Poor financial habits
Poor planning is one of the financial mistakes that doctors make largely due to their prolonged education period. Doctors usually start earning a high amount as their careers begin; this leads them to spend haphazardly and failing to manage their expenses.
Loan for higher studies
Finance for doctors is widely availed to fund their education. Before availing such loans, one needs to calculate the estimated cost for completing the education. Expenses will include institution fees, admission, accommodation, travel, etc. Such high expenses can be met with a loan against property. So, say yes to higher education with a loan against a property for doctors and stay tension-free regarding expenses.
Limited understanding of business financing
A business loan for doctors is one of the most viable options of finance for doctors. NBFCs provide these loans specifically made for doctors. These loans can be useful in various situations like:
- Purchasing/upgrading equipment.
- Purchasing inventory.
- Hiring staff.
- Funding various day to day expenses.
- Consolidating debt.
Doctors require a basic understanding of how these business loans work before availing them.
First and foremost, they have to fulfil the doctor loan eligibility criteria. The eligibility criteria differ with lenders and the type of consumer applying for the loan.
For instance, graduate doctors will require an experience of at least 2 years to avail these loans. Similarly, dentists require a post-qualification experience of at least 5 years.
Last but not least, the doctor loan interest rate also has to be compared and considered.
No idea of the taxation system
Individuals have to file income tax returns if their total earnings in a financial year cross Rs. 2.5 Lakh.
However, the government has special provisions for doctors. For example, under Section 44AA and Rule 6F of the Income Tax Act, doctors have to maintain specific financial books if their total earnings exceed more than Rs. 1.5 Lakhs in the past 3 years.
Doctors will have to maintain the following:
- Cashbook or journal if the accounts are maintained under the Mercantile System.
- Photocopies of bills in case the expense is more than Rs. 25.
- Original copies of bills in case the expense are more than Rs. 50.
- Daily cash register for keeping records of the patients, fees received, and services provided.
- Inventory of all medicines, drugs, and other consumables.
Doctors have to maintain all of these records for at least the last 6 years.
Limited or no knowledge of the taxation system is another reason why managing finances become a hassle.
These were some of the reasons why doctors need help with their finances. They can consult advisers on how to manage their finance for doctors and utilise it in the right way.