How the dentist can establish a personal budget in 5 minutes per month

Kevin Henry

Kevin Henry was formerly the group editorial director for Advanstar Dental Media and has more than 15 years of experience in the dental publications field. You can follow him on Twitter (@kgh23).

Dr. Doug Carlsen retired at age 53 from a 25-year restorative practice. He never produced $1 million, yet was able to be financially free at an early age. Now he is sharing some of his secrets with you. Today, he looks at how a dentist can establish a workable personal budget in 5 minutes per month.

Two percent of doctors actually keep track of spending via a personal budget.

Make sure your checking account is balanced each month. Quicken and Mint can balance for you. This is fine; yet check for any spurious entries.

More from Dr. Carlsen: The millionaire dentist Part 1Part 2Part 3

Credit Cards: Again, check for spurious entries.

Simple budget tracking comes next. Couples need to be aware of these “hot” problem areas:

Clothes: The average dental family spends $500 per month. If it’s higher, track it. If someone has unopened clothes in the closet, this is a sign of major trouble.

Personal hygiene: This area can go nuts. It includes haircuts, mani-petis, facials, massages, yoga, Tibetan bell therapy, and any other alternative way to settle you down. Yes, you need it, yet watch the price. The normal dental couple spends but $100 per month. I’ve seen spending easily top $1,000 per month. If over $100 per month, track it.

Home improvements: This is the biggest personal obstacle to dental family savings. The average for dentists is around $500 per month or $6,000 per month, yet for those with $1M+ homes; the total can easily top $60,000 per year. Given that the average dentist needs to save at least 15% of a $250,000 income, or $35,000 to $40,000 per year for retirement, that $60,000 presents a large impediment to savings.

Gifts: The average is $5,000 per year or about $400 per month. This amount can explode in doctors’ fifties and grandchildren emerge.

Dining out: This is another large problem area. The average is $500 per month, yet I know of those that dine out every night of the week, spending well over $2,000 per month.

Hobbies: Average is $3,600 per year. Carlsen’s weakness is mountain biking and skiing. These eat up $4,000 per year for him, yet he could spend up to $10,000 annually easily.

Vacations: Average is $12,000 per year. Doctors can easily spend over $50,000 per year. Vacation time is important, yet keep it to 8% or less of your personal income.

Finally, talk to your spouse about your personally hot spending areas.

More from Dr. Carlsen:

20 steps to building wealth, part 1

20 steps to building wealth, part 2