Why Doctors Should Know Finance-Expenses

Stories written in numbers….that’s what financial statements tell us.  Simply, it just tells us what happened , what was done and what probably we could have done. This is the second of my series on why doctors should know finance.We talked about income last time.

Today, I am writing on expenses.  Who among you keeps track of them?  I admit, even as I try to, sometimes its difficult for me.  I have tried a notebook, my cellphone, an excel file etc. For now, I am into using my credit card and check book.  The plus point is the written documentation of my spending.  A quick look tells me where the bulk of my spending lies.  Am I eating out most of the time? Has my cost of transportation increased? How about my electrical bill?  Your billing statement or checkbook reveals to you your spending pattern.  If it were a pie, look at how much portion goes to one category and so on. Decide what you can do about the portioning of your expenses if there is a need to.  Try to look at what it is telling you. You wont know unless you look.

Needs vs. Wants.   Just how these two are defined can be a whole lot of discussion.  For me, I just ask “how this spending is already hurting you, or potentially hurt you and the people you love in the future?”  An example would be if i spend a lot of money  on expensive clothes because without them I already feel I am incomplete  or that I have to touch  the money I am saving for my son  just to be able to buy one.  Another question I ask myself is “Can I do without it?”. Some years back, I decided to get rid of our television.  I thought it would be horrible. I have been without it for more than five years now.It gave me more personal  time with my family  and less late nights as well.

Living within one’s means.  If you were reading an income statement, it would be Income-Expenses. If you see numbers in red or enclosed in a parentheses say  (15,000), then it means you are living way beyond your means. What would you do?  You may want to go back to your list of income sources and try to increase it. Or you may want to look back into your spending and decrease it.

Let’s write your income statement now.  First, list down your income sources. Then write your Expenses.  Deduct your Expenses from your income.  It would be great to have a  positive number when you do the math.

What’s your income statement story?

 

Do you have other ways to track your expenses that you can share?

 

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