5 ways to ensure you’re financially protected against the unexpected

As we continue to advance in our careers, we must ensure that we have protected ourselves financially. If unexpected expenses, life events, or pandemics, come our way, we must make sure we have the financial means to cover our bills and take care of our families without worry. Here are 5 ways to protect yourself financially:

1. Keep your fixed expenses low. One of the first things you can do as you are getting your finances in order is keep your fixed expenses low. Fixed expenses are regular expenses (like your monthly rent or mortgage payment) that don’t vary much in price and occur each week or each month. Keeping these expenses low allows you to save and invest more money towards your future goals. It also gives you a cushion financially in case something unexpected arises. If you have the unfortunate luck of losing your job, undergoing financial hardship, or simply living through this current pandemic that has wrecked the economy and lowered your salary, it is much easier to adjust to the changes and make any necessary spending cuts if your fixed expenses are low. If your fixed expenses are high it is much harder to weather the storm and cover your bills during times of hardship. Keep your fixed expenses low.

2. Reduce (and eliminate) your debt. Along with decreasing your fixed expenses, you should also work to eliminate your debt. The sooner you pay off your credit card bills, car loans, and student loans the sooner you’ll be debt free and have less money from your paycheck going to these expenses. It’s much easier to adjust to a reduction in income or a financial hardship when you have fewer bills and expenses to cover. Plus, paying off your debt leaves more money in your pocket each month that you can use to save or invest for the future.

3. Insure yourself against catastrophe. As we’ve all seen during this pandemic, you can’t always predict when financial hardship will occur or how long it will last. Aside from keeping your expenses low and paying off your debts so that you are better able to handle any income changes or unexpected expenses, you should also make sure you’re insured. We can’t always predict when large expenses will occur and may need some assistance if they do occur. Just like all people need health insurance, all working people should also have disability insurance. You need disability insurance so that if you are injured, sick, or unable to work at your full capacity for a prolonged period of time, you can get money each month to cover your bills. People with a spouse, kids, or family members who depend on their income should also have life insurance so that if they pass away unexpectedly, their family members are covered.

4. Save money for unexpected emergencies. Although you can’t always predict when unexpected things will occur, you should prepare for this possibility so that you are ready if it does occur. Part of protecting yourself financially means having an emergency fund with enough cash to cover 3-6 months of expenses. It may take some time to save up this amount of money, but putting a certain percentage of each paycheck into a separate bank account for emergencies will ensure that you are protected financially. Many people who had emergency funds before the Coronavirus pandemic found themselves in a much better position to handle the economic impacts than those who did not have an emergency fund.

5. Make sure your retirement is funded and diversified. Another thing you can do to protect yourself financially is make sure that you have invested money for retirement in a way that increases your profits and decreases your risk. Many people who were not investing money toward retirement when they were young have fewer years to let compound interest work in their favor and may have to work even longer and save even more money to be able to retire after several decades in the workforce. Others have invested a great deal of money towards retirement but have done so in a way that makes them extremely vulnerable to changes in the real estate market or stock market. Both groups of people may be even more impacted than others during this current pandemic. The goal is to have your money invested in many different companies across a variety of industries (ideally through index mutual funds) so that you are in a good position to gain interest on your money overtime but better protected in an economic downturn.

My point? While none of us have a crystal ball to predict when unexpected things will occur, we can do the things above to protect ourselves if and when hardship arises.

6 Things To Do With Your Stimulus Check

Of note, a version of this article first appeared on Doximity’s OpMed.

The federal government has started sending out stimulus checks of $1200 to all Americans with an adjusted gross income of less than $75,000 a year for singles and 150,000 a year for married couples. Although the amount of the stimulus decreases for those who make above $75,000 a year and is completely phased out for those who make over $99,000 a year, many people will be seeing a bank account boost, if they haven’t already. Here are 6 things you should consider doing with your stimulus check:

1.     Pay bills and buy necessities. With over 22 million people filing for unemployment over the last 4weeks, many people are seeing a sharp reduction in their income and may be relying solely on government assistance. This $1200 may be just what people need to cover all their bills during this time. It may also help newer physicians and healthcare workers with any extra expenses we might be facing such as increased transportation costs to and from the hospital or increased food costs as we pay for more take out & delivery services. Others people may have children or a spouse they are helping to support and may need to use this money to pay a babysitter or cover other childcare fees. Regardless of what the expense is, we should all use this extra money to cover any bills we would have had difficulty paying otherwise.

2.     Create an emergency fund. Saving money for an emergency fund it a little bit like trying to eat healthier or lose weight. We know we should do it, but we’re always tempted to put it off. Why not use this stimulus check to finally get the ball rolling? Although many of our jobs are salaried and thus our income seems guaranteed, an emergency fund is still useful. You never know when the car might break down, the house needs repair, or our cell phone stops working. While these inconveniences may not bankrupt us, having money set aside for these seemingly inevitable, unpredictable expenses is a good use of our money. According to finance guru Dave Ramsey, the minimum amount of money in any emergency fund should be $1,000 and many financial planners advise patrons to have about 3 months of expenses in cash available at all times. This stimulus check is a good starting point.

3.     Pay down your debt. If you have any consumer debt like credit card bills or car loans that have an interest rate of higher than 8%, use this money to pay down the debt. The sooner you are able to eliminate your consumer debt, the quicker you’ll be able to build wealth and become financially independent. Instead of sending hundreds of dollars a month to a credit card company or car dealership, after paying off the debt you can instead use that money to increase your savings, invest, and fund future trips and vacations. With the Coronavirus pandemic, you may even be able to refinance loans at a lower interest rate which will allow you to pay off the balance you owe even sooner.

4.     Spend it when the economy bounces back. Whether it’s gifts for your kids or a much-needed family vacation, one of the things you could do with the money is simply spend it. Now for those who already buy way more things than they need, perhaps this isn’t the best idea, but for others who have a budget in place and are meeting all of their saving goals, using some of the money to “treat yo’self” may not be a bad idea. Many of us have been on the front lines of this pandemic and have sacrificed a great deal to help care for others. Despite the increase in hours, workload, and mental stress, many jobs don’t include any sort of bonus pay for times like these. Instead of feeling like you have to always put others before yourself, why not consider going against then grain and spending part of the stimulus money on yourself or those you love? Perhaps you’ve delayed buying those air pods you see your colleagues wearing at work. Maybe you’ve always wanted to travel overseas with your family, party in Las Vegas with your friends, or go wine tasting with your significant other. We all work hard and deserve a break. Why not use part of this check to do something nice for yourself?

5.     Prepare to invest it when good opportunities arise. Although the economy is down right now, it won’t be this way forever. Once the pandemic begins to subside and the prevalence of the virus decreases, the economy will start to bounce back. Why not use this money to prepare for when it does? Using this stimulus check, along with any additional money you may have received from your tax return or previous savings might leave you with a nice sum of cash to invest in various opportunities. Perhaps you’ve considered investing in an intriguing business idea, purchasing a rental property, or simply want to increase your investments in the stock market. Using this stimulus check as a jumpstart for your future investments might be a good use of this money.

6.     Give some of it away.  I’d be remiss, and a bit selfish, if I didn’t mention that one additional thing you could do with your check is give part of it away. For those of us who are in a good financial position, giving part of the money away to our friends and family who may be less fortunate may also be a good use of this money. While many of us have financial goals or fancy trips we’d like to save up for, we can all think of at least one person in our life who could use a little extra cash around this time of the year. Perhaps we could commit to giving at least a small portion of the money away or buying someone we love a nice gift. As the biblical saying goes, “We are blessed to be a blessing.” Why not use this money to provide a small token of love to someone else?

5 Books to Read while Social Distancing from the Coronavirus

With coronavirus and the nationwide push for “social distancing,” you may find yourself home a lot more often than you’re used to. While binging Netflix shows and old movies can be fun for a while, you may also find that you want to do something a little different or perhaps use some of your extra time to gain new insights. If that’s the case, here are 5 books about business, finance, and real estate that you may want to consider read while quarantining:

1. Rich Dad Poor Dad by Robert Kiyosaki. This was one of the first books I read about finance and I can’t even articulate how good it is. Unlike most investment books that delve deep into the details of FICO scores and retirement accounts, this book is completely different. It actually tells of story of two fathers: one is well-educated and broke while the other is minimally educated but rich. In this book, Kiyosaki highlights the life lessons he picked up from both men. He also explains why accumulating wealth requires a shift in thinking and how pursuing a career in real estate or entrepreneurship can be the springboard we need to reach our monetary goals. While you may not agree with all of his life lessons, there is no doubt this book will cause a paradigm shift in the way you think about money, while entertaining you along the way.  

2. The White Coat Investor by Jim Dahle. This is one of my favorite personal finance books. Besides the fact that it was written specifically for doctors like myself and other high-income earners, I like this book for a couple other reasons as well. First, it’s easy to understand. If you never read anything about personal finance or money management before, start with this one. It goes over the basics, easily defines terms in an interesting way, and starts off by answering the most basic question “why should I even care?.” Secondly, this book is easy to follow and gives you all the tools you need to know to get your life in order. You don’t have to go picking stocks or making complicated tax manipulations. Instead, he walks you through the most important things so that you don’t screw up in a major way. You’ll gain some student loan insight and get basic info on retirement plans, buying a house, building wealth, and protecting your assets. It’s a must-read for any doctor and a really good read for anyone else.

3. The ABCs of Real Estate Investing by Ken McElroy. After I read Rich Dad Poor Dad, I began to think about investing in real estate. Real estate investing is one ways many people accumulate wealth and since I didn’t have any personal experience in that area, I wanted to educate myself on the topic. Ken McElroy invests in real estate with Robert Kiyosaki, the author of Rich Dad Poor Dad, so I figured his book would be a great start. I’m so glad I got it. This book is like a beginner’s guide to real estate investing and does so in an informative, easy-to-understand manner. I learned a lot from this book including the benefits of real estate and how to properly evaluate a variety of deals. If you’re even the slightest bit interested in real estate investing, consider reading this book.

4. Ego is the Enemy by Ryan Holiday. Those who know me personally have seen me post quotes and excerpts from this book since the start of the new year. Ego is the Enemy is a must-read for any one with even the slightest bit of ambition. In this classic, Holiday walks us through how to manage our ambition, properly handle our successes, and overcome our failures in a clear-cut way. Each chapter is fairly short and clearly delineates a character trait we either need to develop further or break entirely to become the best version of ourselves. This book will make you examine your habits and really think about what you can do differently to reach the level of success you desire.

5. Lean In by Sheryl Stanberg. Sheryl Stanberg is one of the most well-known female senior managers in the country. From her work at Google to her current role as the Chief Operating Officer at Facebook, she is a household name and an idol for women in corporate business. In this book, Stanberg challenges us women to seek leadership positions and “lean in” to push ourselves even further to succeed in our careers. Stanberg examines how she reached such a high level of success in her own life and pinpoints tips to help other women overcome some of the most common obstacles. She famously talks about the “competing” desire to have a successful career while nurturing a loving family and provides some advice on how she tackled handled both priorities. For females who desire a successful career and family, it’s definitely worth a read.