Whether you have a dental practice up and running already or you are looking to start your first corporate journey, it is important to keep track of where your profits are going. Money can get lost quickly in the details of running a business if you do not have an established tracking method. And that means soon you will be asking yourself, “Where did all my money go?” Here, we will discuss a breakdown method of tracking your income, and ways to save money for your future endeavors, so that you can keep your dental practice running smoothly.
Taxes
I do not know of anyone who enjoys paying taxes but, unfortunately, there are numerous laws that govern when and how taxes must be paid. That includes business and personal taxes. Personal taxes can account for an average of 12% of a person’s income. There is not much you can do about tax payments for you or your business. But one way to help is to stay updated on the latest tax reform laws as it relates to dental practices to make the most of your hard-earned dollars.
Personal Spending
Of course, you have your own bills to pay. For most people, expenses include food, living expenses, basic utilities and personal miscellaneous spending. But the range of your personal spending is largely flexible and dependent on you. It is reported that Americans spend an average of 4% of yearly income on entertainment, 3% of yearly income on clothing and 2% of income on other miscellaneous purchases and services. That is nearly 10% of yearly income that is flexible.
So, if you are earning $300,000 yearly, that is an estimated $30,000 of flexible spending. We are not recommending that you skip a much-needed vacation, but it could be beneficial to evaluate what personal purchases eat up the most income and consider ways to save costs.
Debt
Debts can include student loans, personal loans and credit cards, as well as home and auto debt. The average American citizen’s debt totals nearly $53,000. The number one largest debt is mortgage, followed by student loans and auto loans. If debt is calculated to be where most of your money is being spent, consider talking with a loan adviser about ways to reduce your monthly expenditures.
Savings
A key to having healthy finances and living a more comfortable life is to save, save, save! Ask yourself, what are your goals? If you are considering retirement, you should consider saving 10-15% of your yearly income. Some employers offer matching retirement contributions, in which case your 5% contribution would be matched to meet the 10% recommended savings.
In the case of an emergency, do you have enough in savings to live and pay your bills for 3-6 months? Maybe you want to save up for a particular item. If your goal is to buy a car in one year, calculate the cost of the car divided by 12 months and you have the total monthly savings you will need to set aside.
Evaluate and prioritize what is most important to you. Then you will have an idea of how much savings you will need for each project or idea.
Ways to Save
Now that you know where your money is going, it is time to investigate ways to save your hard-earned bucks. Perhaps, the first area to evaluate where you can save is your amount of owed debt. Paying off debt quickly will save you money in the long-term. There are a couple of methods to pay off debt quickly. Two of them are the avalanche method and the snowball method.
The snowball method differs from the avalanche method in that you will start paying off your smallest debt first, gaining momentum to pay your largest debt. The debt avalanche method tackles debts with the highest interest rates first. With average credit card rates nearing 18%, debts can get out of hand and one of these methods can save hundreds or even thousands of dollars long-term.
Other methods of saving include debt consolidation and refinancing. With debt consolidation, multiple debts are combined into one debt. One way to do this is with a personal loan, eliminating multiple monthly payments and multiple interest rates. Refinancing may be an option for debts like mortgages when interest rates are lower. A financial advisor could provide more detail about which cost-saving option would work best for you.
If you are still looking for financial advice, look no further than PPO Negotiation Solutions for your business needs. PPO Negotiation Solutions takes a multi-step approach to ensure that your business is receiving the most revenue possible. Whether you are an established dental provider office or are starting a new service, they can help you get on track, financially. Call for a free consultation and assessment!