Last November, I did a webinar with Dr. Mick Kling, practice management consultant and an advisor on the financial management techniques in the book Profit First. He had a lot of excellent advice (if you’re interested in seeing a replay of this webinar, just reply back to this email and I’ll send you access), but there was one golden nugget worth revisiting as we are adjusting to the new normal of Covid-19:
Review your expenses regularly
Misleadingly Simple Advice
You may think this is a bit basic, but I encourage you to take a few minutes this week to go through the exercise of looking at your credit card and bank statements at what you’re spending money on. My husband and I do this a few times a year, and here’s what we uncovered just last week:
- An unused Dropbox Subscription: $20/month | $240/year
- Both Apple Music and Sirius XM Subscriptions: $15/mo | $180/year
- A trial app that started charging a monthly fee: $10/mo | $120/year
- An AT&T Now streaming service with only one channel watched: $79/mo | $948/year
It took us about 20 minutes to take care of all of these services, and the savings were just under $1,500—that’s enough to buy first class tickets for our next trip, whenever we’re able to travel again. Or invest in the market. Or pay our water bill for a year.
It's tempting to go through this as a one-time exercise but the reality is in our current environment of auto debiting, Apple Pay and auto payment fill, this is something most households can do 2-3 times a year with meaningful results.
Ask Yourself These Questions
Expenses can be like a piece of clothing you love but don’t fit into anymore—sometimes hard to let go of. Here are some simple questions you can ask yourself, but with one trick: you have to put the limits in place before you start going through expenses:
- Is it necessary?
- When was the last time you used it?
- How often do you use it?
- Is there a lower frequency or level available?
- Is there a cheaper alternative available?
- Is it a duplicate service?
- Can you buy it again if you change your mind?
- Can you get a pro-rated amount back?
Don’t Forget The Obvious
Sometimes we get so caught up in life we forget to tweak our personal finances for life’s changing situations. For example, doctors who recently sold their practices to private equity but still working for a few years at a lower income level need to reduce their disability policy coverage to reflect the reduction in salary. And if your mortgage rate is over 3.75%, it’s a good time to check into refinancing.
One simple trick if you have a basic car insurance (like Geico or Progressive) is to shop it out every 2-3 years. Insurance companies tend to sneak up the premiums by just a little bit at renewal, but over time it can add up, and switching can mean good savings.
Meaningful For Practices Too
While my focus is on personal financial management, it's worth remembering that this is an excellent exercise to do with your practices expenses too, especially at a time when most owners’ finances are tight. I've seen auto debits for charitable contributions, unnecessary magazine subscriptions and unused education programs as a few examples in practices.
When you go through this exercise, I’d love to hear about your results—we all need a reason to celebrate these days! Feel free to reply back and brag about your savings.
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