There are many ways for people to accumulate wealth, but for most dentists, the reliable, predictable (and best) source of wealth creation is their practice. It is important for dentists to understand the best path to financial success because most of us face a unique set of challenges when it comes to saving money.
- Dentists enter the workforce four or five (or more) years later than many other people. This reduces the number of years for earning potential.
- Most dentists do not have trust funds or will receive large inheritances.
- Most dentists today have student loan debt. Debt is the opposite of wealth accumulation. The more debt you have, the longer it will take you to build savings.
- Most dentists will enter the workforce with very low, if any, savings, and have to then earn wealth from that point forward.
- Dentists do not typically receive business education in dental school, and yet are expected to operate and lead the dental business, all while performing dentistry all day, every day.
The best way for dentists to accumulate wealth is to build an excellent practice. The foundation of all dentist wealth accumulation is their practice. In a way, your practice is your ATM. If practice production grows every year, the ability of the dentist to accumulate wealth will be excellent. The larger the production growth, the faster the path to financial independence, but slow and steady should be the goal. It is better to create a practice that will achieve steady growth year after year, versus trying to identify “home run” opportunities, which typically carry more risk than reward.
Why does slow and steady win the race? Compound interest is the best friend of a dentist, or anyone saving money. You earn money in the practice by working hard, but you earn money with compound interest passively. Steady growth of the practice combined with compound interest will almost always lead to wealth accumulation. The better the contribution from the practice, the better the wealth accumulation.
What can be dangerous is “going for the brass ring” or buying into opportunities that sound too good to be true. Because dentists are considered to be high-income earners, we are frequently targeted for investment opportunities that carry very high risk and present a danger to achieving wealth.
Focus on building a fantastic practice. Keep taking it to the next level and the levels beyond. Have an excellent savings structure and financial plan. And then invest in a way where you will grow over time and not get hurt. That’s the wealth accumulation formula for dentists.
ABOUT THE AUTHOR
Roger P. Levin, DDS, is the CEO and founder of Levin Group, a leading practice management consulting firm that has worked with over 30,000 clients to increase production. A recognized expert on dental practice management and marketing, he has written more than 60 books and over 4,000 articles and regularly presents seminars in the U.S. and around the world.
To contact Dr. Levin or to join the 40,000 dental professionals who receive his Practice Production Tip of the Day, visit www.levingroup.com or email email@example.com.
FEATURED IMAGE CREDIT: Mohamed Hassan from Pixabay