Laying Your Financial Foundation

If you’ve sat through hundreds of lunch & learns, attended any number of ASDA meetings or have ever been curious as to what your student loans are doing while you sleep, you have probably received an introduction to compound interest. 

But the real question that never really gets answered: What can I do while I’m in dental school? The end goal is to get to that glorious seven percent interest rate so that I can retire and sail off into the sunset with decades of wealth accumulation behind me, but what can I do NOW? 

And here is the real answer: Begin laying your financial foundation.

No matter where you are in your life, whether you are a recent college graduate or a fourth-year student who already has the dream job and a spouse pulling a six-figure salary, you still have to take the “treatment plan” approach to get on the path to wealth accumulation. As we know with treatment planning, we have to take a look at everything as a whole unit in order to find the specific steps to take. 
Take your first step: build a balance sheet

Before hiring accountants, lawyers and financial advisors, it’s important to know what you have and what you owe. You may need help from your parents/guardians/spouse to be able to figure this out.

Assets: what you have – compile every single dollar that you have in savings accounts, checking accounts, certificates of deposit, savings bonds, whole-life insurance, etc. If it has monetary value, it is an asset.

Loans: what you owe – compile every single dollar that you owe to the federal government, your school, your parents in the form of school loans from dental school, undergraduate loans, car loans, credit card balances, mortgages, etc.

Once you have a balance sheet, you are on the right track toward a life that is focused on “what you have” instead of “what you owe,” and that is what the financial world calls wealth accumulation.
Take the next step: plan for the future

We have all heard in treatment planning that failing to plan is planning to fail. The same goes for our future as accumulators of wealth. It is no secret that those who don the white coat tend to have a competitive six-figure salary for a majority of our practicing lives. However, in school we tend to get bogged down by, well, school. However, as intelligent humans who seek more and more knowledge, remember that the amount of information at our disposal is immense. 

Do you want to be an associate dentist forever? Then books on practice management will not be useful to you. Do you want to own your own practice and self-direct your own investments until you turn 65, because your type A personality won’t let someone else help? First of all, you’re brave. But it can be done. Literature on trading and picking the right investment account may be more suitable for you. 

There are countless articles and books on a number of topics that pertain to you, no matter what your future goals may be. Find where you are weakest and exploit that weakness, soaking up information to turn your weakness into a strength.

Examples of topics for reading for the typical student may be:
  1. Savings (knowing how to have a rainy day fund and the importance of having available cash)
  2. Managing debt (repaying and living with massive amounts of debt for homeowners, practice owners or those with student loan debt)
  3. Using debt as a tool (using debt at advantageous interest rates to create wealth)
  4. Credit management (understanding how borrowing money will affect your credit score, which influences ability to borrow in the future)
  5. Investing (find a beginner’s guide to what it means to own a piece, or share, of a company or a mutual fund with pieces of multiple funds and how that can provide you wealth)
ASDA has put together a list of member-suggested books on financial and practice management.

It is critical to understand the benefits of your career, but we must monitor our own financial health. Just as every treatment plan is different for every patient, so is every financial plan for every dentist. Tailor your reading in school toward what pertains to you. Now is the time to begin developing good habits, soaking in information that will provide long-term rewards and fostering relationships with financially successful professionals and non-professionals.

This content was developed in cooperation with Jeffrey Kerst, Louisiana ’19, 2017-18 district 5 trustee. Experience includes nearly a decade of work at Community First Trust, Co., a provider of trust, finance, legal, insurance and accounting expertise with more than $350 million in assets under management/custody. Written in collaboration with William L. Kerst, Jr., president & CEO of Community First Trust, Co.