BUSINESS

It's time for your annual fiscal physical

Practice Pointers. By Amy S. Born, AMNews contributor. Feb. 21, 2005.

Answers to questions about the business side of your practice

Question: What are some personal financial issues that I should be thinking about and addressing as this new year begins?

Answer: Kicking off the new year on the right foot is important to your personal financial well-being. Just as you may recommend that your patients should get an annual physical, doctors should conduct an annual fiscal physical on their personal finances. Following are five financial areas you should review every year.

First, reassess your financial goals.

Think about short-term goals that you would like to accomplish in the next year, such as reducing debt, increasing charitable giving, making home improvements, buying a new car, etc. Then develop an action plan to achieve these goals, such as increasing your savings or the amount you allocate to debt repayment.

Then review your long-term goals, such as retirement planning and education funding for your children. Are you still on track to reach these goals? If not, you may have to consider adjusting short-term goals to accommodate the long-term goals -- such as delaying the purchase of that new car.

Second, determine where you stand today.

In order for you to assess the feasibility of your short- and long-term goals, it is important for you to develop an accurate picture of where you are now. This can be accomplished with a cash flow and net worth statement.

Further, it is important to review your debt structure periodically. For example, can you pay off high-interest debt or restructure your debt by shopping around for cheaper rates?

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