Finances for Doctors with Medics Money (22 Nov 2023)

SPEAKER_00 0:00

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SPEAKER_01 0:36

I am joined today by the Medic's Money team, which is fantastic. And we're going to be chatting about all things finance, what you probably wish you had learned in medical school, just to get some top tips. This is not independent financial advice, but it's just to give you a kind of brief overview of education and to kind of point you in the right direction of where you can go to learn a bit more. So I'll just start off by letting you guys introduce yourselves, who you are, what medic's money is, and I guess how you kind of got into this.

SPEAKER_03 1:07

Yeah, awesome. Thank you so much for inviting us on the podcast. Really great to be with you. So my name's Dr. Tommy Perkins. I'm a GP partner based on the South Coast of England. I also have a special interest in dermatology. I've also got my Duke Federbrothers award. I have to big up my CV because Ed's CV is better than mine and his postnamials are longer. But yeah, I think that's it for me.

SPEAKER_02 1:27

Hi guys, my name is Dr. Ed Cantillo. I'm a salary GP down on the South Coast. But also I was previously, or was Solam, but previously a chartered accountant and a chartered tax advisor. So trying to use those unique skill sets to help doctors with their financial position. And also just to add to what Thomas said, yeah, thank you very much for having us on the podcast.

SPEAKER_01 1:45

I mean, I can see why you guys have set up medic's money, but what kind of, I guess, blatantly gaping hole do we have within our education that doctors kind of need to know about finances?

SPEAKER_03 1:57

Yeah, I think the reason we started is probably gonna be a familiar story to some people. But I was the first person to go to medical school for my family. When I graduated, I had really bad debts, not just student loan, but credit cards. I owed some money to my mum as well. And when I got my first paycheck and I looked at my debt repayments, I just suddenly realized that I'd been through medical school and I had all this fantastic medical education, but I literally didn't even know how much I was supposed to be paid, I didn't know what a tax code was, I didn't even know how the tax system worked. And because I was in a bit of a crisis with like the level of debt that I had, I was basically forced to learn this myself. So over the next like 15 years, I just really forced myself to learn and went to every educational opportunity that I could find, read loads of books I could find, and I got okay at managing my finances and I started to help other colleagues. So one thing that I found really bad was the cost of postgraduate exams, they're really expensive. But then I realized that you could clean the tax back on them, and I got like, you know, I think over a thousand pounds back, and I think you've done that similarly. Hopefully, we'll talk about that in a minute, Hannah. But so I started helping people, and then before I knew I was helping way too many people, and you know, I didn't really want to do this. I love being a doctor, still I'm a doctor. But I thought, God, there's a real need for this. And then one day I was doing a locum shift in AE. I think I was doing a house renovation at the time and just broke again for a change. And I bumped into Ed with his unique skill set, and he'd had like a similar kind of journey of helping people as well, and maybe he'll speak about that in a bit in a minute. And then we just thought, well, we could kind of get together, we'll do something together, you know, help doctors. And we started off just helping a few of our friends and then their friends, and all of a sudden we had over 46,000 email subscribers, and our podcast is approaching a million downloads. And so I think you had a similar kind of story as well, a journey of discovery with your finances as well, which you're gonna talk about.

SPEAKER_02 3:42

Yeah, so I mean I started read economics in my first degree, went to London to work for PWC as an accountant, and I did my accountants exams, I did my tax exams, and then for sort of personal reasons in 2009 I began to rethink about what I wanted to do with my life and how I wanted that to go and basically had a bit of an accident. So then the healthcare system for a bit for the first time I was 29 and really kind of been involved with healthcare at all, particularly, but was in the system for a little bit. Had, you know, it may sound really far-fetched, but it's honestly true that at the time it was the financial crisis, and I got copied standard on the way home from work, and it said in there about how people were coping with the recession at the time. So a lot of people had been laid off in the city, they'd become plumbers, electricians, etc. And it mentioned that there was a four-year graduate course that you could do. And I thought to myself, well, I've just had some experience of healthcare, you know, it's really fascinating, really rewarding, really worthwhile. Let's have a look into this, especially if there's a four-year course, because four years sounded a little bit better than five years and so on. So I bid the bullet. I got accepted by King's to go to medical school, and then I ended up in Guildford's for my F1 year, and then down to Chichester for my F2 year. And that was really, really fortuitous because I'm sure you've had this hand, I'm sure Tommy, you've had the same thing as well. You get that where you start off in a new job and you get asked that awful question, you know, say one thing that's interesting about yourself. And I just thought to myself, I really I they've got the most boring person in the world, although I am an accountant, but I can't think of anything interesting. So the only thing I think was that I used to be an accountant, which you'll see is quite a dull, interesting fact. You know, I've had people say, Oh, I scored a Wembley or whatever it was. Yeah, just it started really dull. But interestingly enough, you know, that's other people began to talk about that. And I think that's how Tommy, when he was working in NE, also heard about it. So I'm sure we'd have chatted a bit more about hello sort of situation, but started to get talking, and we were talking about, you know, there is a real gap there, there was a real issue with financial education for doctors because you know, understandably, that's what I said, you get all this clinical information, which quite rightly too, that's what you're there for. But nobody gives any of us any kind of financial information. And you know, first of all, you don't know what you don't know, and secondly, even things you do know may actually be really hard to understand, LHS pension being definitely in there. And we thought we'd utilize our skills, got together, and we found it many funny. I think in 2019, I think they officially launched. So we're going for strength to strength since, which is really, really good.

SPEAKER_01 5:47

Amazing. I agree. We you totally you come out of medical school, you get your first paycheck, and you kind of just assume that you're being paid correctly, stuff's going into the right place, you don't really know how to interpret it. So I guess that kind of leads on to what should you be looking at on your pay slip? What are the important things that you need to take note of other than income that you get after you've been taxed and everything's gone off? That's the thing that comes into your bank account and you look at first. But really, what are the other parts on it that we should be looking at?

SPEAKER_02 6:18

Yeah, absolutely. So, you know, I think one of the key things that you can do, it's a little bit like when you get your patients and you get your blood test results. And sometimes you might get a real like red flag result that jumps out. Sometimes you might notice that there's a change in the trend in those blood test results. Just think about your pay slip a little bit like that. If you suddenly get on your pay slip, to be honest, you probably notice it in your bank account before you even get your pay slip. If you notice that suddenly there's a sharp increase or decrease the amount you've actually received, just definitely think to yourself, what is going on? Get your pay slip and the one before that, compare the two and work out what exactly has happened there, what has gone wrong here. Well, actually, work with someone who got a paycheck and it came up as 17 pence. Now that is clearly not going to be right you'd hope as a doctor. That's not gonna be the right amount for that doctor's salary. So if you get anything that's really ontowards, check the past pay slip and work out what's gone wrong there. Okay, so that's the first thing to say. And likewise, if you're noticing your the amounts are going down month by month or up month by month, again, just be comfortable why that is okay. The issue with payroll departments and payslips is that you know I always think of them a little bit like the random number generator in the lossy, you know, just sometimes you get a pay slip and you think, what on earth is going on with this spaceslip? But usually they do stay consistent. But if you notice any changes, definitely look into that. The other thing that's really important to look into or to check is your tax code on your pay slip, okay? That's really, really fundamental. If at any point on your main pay slip you notice a tax code that says D0, 0T or BR, then you're very much likely to be on the wrong tax code, okay? And it's just sadly, sadly common in the NHS for that to be wrong. And if you don't do something about it, maybe nobody ever will do anything about it for you, and maybe you'll be overpaying tax for you know adding for an item until you you get that correct. Just to say with the reason why it's an issue for doctors in particular is because usually during the tax year, August being the classic time, we move uh trusts quite often. You know, I move from Guildford to Chichester, you know, I moved trust when I was at NF1 to NF2, for example. And when you do that, you often get a pay slip up to a certain day in August, usually the first Wednesday, let's say, from your old trust, and one from that date in August up to the pay date from your next trust. And what happens is HMRC, they just cannot get into their heads what's going on here. Because they've not received a P45 saying you've left your job, they don't understand. They think you've got two jobs, uh, and they will start to tax your main job, your new F2 job, say in this case, under an emergency tax code. So you'll notice your like I did, you'll notice that your pay will suddenly plummet because your tax has gone up. So that's a really common pay set pitfall that we see. So if you have a move in trust within the tax year, which happens quite a lot, just make sure you check your tax code. If you see D0 or Zero T, it should be flagged up. So you have to get that change because otherwise we've overpaid tax until you sort it out.

SPEAKER_01 8:53

Yeah, that's definitely true. And that just happened for me in August. I had gone out of programme to start doing a PhD, and so I've swung from NHS to university, and the university thinks it's your second job, so you you come out with not only going unbanded, but pretty much unpaid unbanded. So definitely it then requires a call to HNRC and payroll to get it sorted. So I guess on that, we're talking about tax codes, and we mentioned briefly about tax claims, which are a really important area and a way that you can get some of your money back. So would you be able to chat about kind of what tax claims are, what we should be claiming for, and briefly how to do it?

SPEAKER_02 9:35

Yeah, of course, absolutely, because as you say, really, really important to know about this because if you don't know about it, you're never gonna do it and you're never gonna get tax back on a variety of tax expenses. So, first of all, obviously you're getting an employment income from your job as a doctor. Legally, under tax law, you're allowed to claim employment expenses against that income if those activities are allowable, okay? And there are quite a lot of expenses that doctors pay that they can claim the tax back on, okay. You know, HMLC have got what the tax law has four specific categories that you can claim tax back on, but the main one really is professional subscriptions payable to an organization that HMRC have approved. Okay. The list is public knowledge, it's called list free. You can Google it, find that, and find out if your organization is on there. But the classic ones are all on there, okay? So the GMC is on there, the BMA is on there, the MDU, MPS, the Royal College of Physicians in all parts of the UK, that's on there as well. Okay. And you can claim the tax back on those allowable expenses. And also, this is really important, any Royal College exams that you incur under a training contract, you can claim for those and any resets as well. And you can go back you can claim for the current tax year that we're in. So we're currently in the 2023 to 2024 tax year, but you can actually go back four tax years. Okay. So any time from the 5th of April 2019, you can claim for those expenses. And you think about it, that's four years plus this current tax year, it's a huge amount of time you can claim expenses for. So if you haven't claimed for it, you know, you could be due a lot of money back. To make a claim is you might think, oh, that's going to be really tricky. And we've actually had people that say to us, or we've seen comments, to say it's definitely not worth claiming for. It's definitely not worth claiming. Well, it really is worth claiming for, especially when all those fees you know add up. And it is quite easy to do, okay? Or we think so anyway, because we've created Melix Money a free step-by-step guide that you can download. So it's on our website, completely free. It just holds your hand all the way through to get that claim back, okay? So really easy to do. Definitely, if you haven't done it, definitely do it. Get all the receipts that you paid for and just make that claim today if you haven't done it already, okay. One last thing to say, Henry, just on this, I know I'm talking quite a lot, but if you do in any one tax year have a claim that's more than 2,500, which isn't impossible, especially if you've done several exams or you've had to reset several exams all within the same tax year, you do have to do a tax return. You can't just make a claim. But again, you know, that's not the end of the world, and it's only for that one tax year in which your expense to claim is above 2,500. If you do need any help with that, we've got some specialist medical accountants that can help with that. But the vast majority of people might even be able to do that on their own. But it's just to say that, you know, for most people, user guide, it's brilliant, being biased here, but it really is good. Those of you that are in that unique position of having slightly more to claim might have to do a tax return.

SPEAKER_01 12:16

And what happens if your tax claim amount kind of varies year by year? So say you've got some exams one year and you claim a load because you've just had your part one, part two, or paces or something, or you pay a bulk portfolio fee that will cover you for five years, and then the next year actually all you've really got is say GMC and an indemnity or something like that. So you've got quite startling differences.

SPEAKER_02 12:43

Yeah, so you know what will happen is I mean, let's say I've not claimed any expenses since April 2019. And as you say, each year there's a different amount to put exams in there and so on. You start for the first year, it will come up, yeah. We'll show you your claim of force, you take the 19 to 20, uh, 2020 tax year, and then you make your claim on there for each of the expenses, and then you start with the the next tax year. So we do it per tax year, so you can account for the variations in there, okay? Things like exams, resets, and so on, they usually are sort of one-off things, they're not recurring fees. So HMRC will just process those and give you a refund. Uh let's say you came over four years, okay. The final year that you claim for, you've got various uh receipts in there. So you've got your GMC expense, you've got your rural college expense in there. Actually, what HMRC do is they will then change your tax code go forward to take into account that every year you're getting that expense because they will assume that your GMC fee, say, is paid every year, okay? So they will then change your tax code, and that's actually beneficial because it gives you the tax relief every month, okay? Now, one thing to say on that is of course you might say, well, what happens if I'm paying this fee in that tax year and then the next time around I don't pay the fee, or I'm paying my GMC fee and next year it goes up by 10%, whatever. Well, you can adjust your tax code. You can tell HMSC all about that. Don't photo them for goodness sake, you mentioned about folding about tax codes. I mean, it's not the most uh I imagine you didn't have the most uh pain free experience with that. Again, on our website, you know, we do have a blog all about tax codes, what they are, what they mean, and how to change them if you think they're wrong. Okay, so whether you're that poor S2 that's suddenly got a D0 tax code, or you've got a GMSC fee that's gone up by 10% in the next year, you know, just go to our blog on tax codes and that will tell you how to change it, okay?

SPEAKER_01 14:19

Okay, great. That's really helpful. I guess what other common kind of starting pitfalls do doctors generally have, or are there any other quick ways of saving? So we we're getting some saving through the tax claims. Are there any other things that we can do to save some pennies, especially at the moment where everything seems to call so much?

SPEAKER_03 14:38

Yeah, definitely. So you're right, you know, cost of living crisis, everything's getting more expensive, doctors' wages in real terms. Hopefully, everyone's aware that in real terms our wages have gone down significantly hence the strikes. So I think the first thing with spending less is in the same way that we analyze our patients' blood tests really carefully and go through them meticulously, just get your bank statement out, okay, and analyze it in the same meticulous way. So look down that bank statement and just think is there anything on that bank statement that I don't need to be spending that I could be spending less on? And try to spend what I say consciously, not unconsciously. So consciously would be, you know, I'm gonna buy a cup of coffee and I realize that costs me every day, but I enjoy it and therefore I'm happy to do it. So try to spend consciously. Don't spend unconsciously where you're looking down your bank statement and go, I've got no idea what that's for. Don't even know when I just used that product or service and get rid of it. We have an ebook. If you just Google Medic's Money ebook, you'll find. But in the ebook, we use an example of a doctor who spent £139,000 over their career on lunch at the hospital. And lunch at the hospital is definitely not worth £139,000, in our opinion. It's usually pretty mediocre food. So I guess the point there is that small amounts of spending really, really add up. So just have a look at that. And then, of course, there's all the kind of other ways that you can budget, which kind of brings me on to what I was alluding to, which is try to set a budget. So work out what you need to spend, what are your fixed outgoings, you know, your mortgage or your rent and other fixed outgoings, your utilities, and then work out what your variable outgoings are. And then in order to save, we like to use something called pay yourself first. So what would happen is your wages would come into your bank account, and then out goes your rent and your fixed expenses, and then out goes your savings as well. So you've decided you're gonna save 50 pounds a month. That would come out automatically on a direct debit into a separate account, and that's why it's called pay yourself first, because you pay yourself, and then once that 50 pound of savings has gone out, which happens automatically every month to buy a direct debit, what's left is what you can spend on coffee or cats or coffee and cats in Ed's case. So yeah, I think it's about conscious spending, trying to make sure that you're making those hard-earned pennies go as far as you can.

SPEAKER_01 16:53

Amazing. Yeah, those are great tips. And definitely if you can not spend or remortgage your house because of Marks and Spencer's in the hospital or any other outlet, then that's probably worthwhile. No, sometimes on a night shift, totally reasonable and totally justifiable. On that topic of savings, so you could put some money into a savings account. What other ways of savings and what types of savings should we maybe be thinking about? And when should you start thinking about them? When is the right time to start saving?

SPEAKER_03 17:24

Yeah, I think starting early is really important because of something called compound interest. So compound interest Einstein reportedly described as the eighth fund of the world, and that's well covered in our ebook. But essentially, compound interest is interest on interest. And the reason why compound interest is so powerful is because of time. So the earlier that you start saving and or investing, the better. So again, in our ebook, there's an example of a doctor who started saving, I think it's 200 pounds a month from age 25. And at age 65, they had over 300,000 pounds. And then somebody started just 10 years later, ended up with at least two-thirds less than that doctor because of compound interest. So it's painful saving, but the earlier you can do it, the better. And if you automate it using pay yourself first, where your savings just come out like one of your regular bills, after a while, you just get used to living on less. Don't tend to notice it so much because you've adjusted your lifestyle and spending to hit your savings goals. So, yes, the other thing to say is that one thing we talk about a lot on our podcast, which is Ed's least favorite topic, is an emergency fund. So an emergency fund is just a pot of savings that is not invested, it's liquid, which means it's ready to go. So it's just in your bank account. And that's just if anything unexpected happens. You know, if you were to get ill or an unexpected event was to happen, your emergency fund can cover that. And a common question we get is how much emergency fund should we have? And the answer is like a lot of this stuff, it depends on your personal circumstances. But just to use a personal example, when I was a fully employed doctor working at the hospital, I might have, you know, three months of my outgoings saved up in my emergency fund. When I became a self-employed GP locoming with a completely variable work plan that might have no work for some period of time, and I've got a young family to support, I might increase that savings to six months or more. So it depends, but just have that little cushion of backup emergency fund.

SPEAKER_01 19:21

Great. That's really useful. And I guess you briefly mentioned kind of investments, which are slightly different from savings. When should you move from basic savings to investments?

SPEAKER_03 19:32

Yeah, it's a really important distinction on this as well, because back when me and Ed were young, you know, savings rates were, you know, reasonably high, and you had a little book which you took to the Building Society and they sort of stamped the amount that was in there. I don't think there was even an electronic record at the time, which is absolutely crazy if you think about it. And if you lost the book, it was game over. In general, if you save cash, so there's lots of things you can do for your money. You could invest it or you could save it in cash. In general, over a long period of time, investing it outperforms cash because of inflation. So at the moment, your bank might be paying you 5% interest rate, and you're like, that's awesome. But actually, inflation is currently 7%. You're getting 5% via your bank, you're losing 2% on that cash. So that's why we say cash is not an investment, which might be controversial, but if you look at the numbers, it's not. And so that brings you into investing. What can you invest in? There's lots of options. We prefer to invest in a low-cost, well-diversified stock market portfolio. That's a big topic. But I think the earlier you start investing, the better. Because if you keep all your money in cash for a long, long time, it feels nice and secure. But actually, if you factor in inflation, you're actually losing money by leaving money in the bank right now, which is such an abstract concept to get your head around. But it's because of inflation.

SPEAKER_01 20:45

Have your emergency bit and then look into other areas after that once you've got that kind of little cushion.

SPEAKER_02 20:51

Yeah, a lot of people don't forget, of course, if you've got quite high debts as well. You know, paying off those debts, they'd say that you know, a penny spent on debt is basically a penny saved. You know, it's it's a form of saving paying down your debt, especially nowadays with quite high interest rates that people might incur. So definitely think about paying off debts as well if you've got high interest rates.

SPEAKER_03 21:08

Yeah, absolutely. There's like a kind of pecking order. So, you know, I would say get a basic emergency fund settled, fine. Once that's done, if you have any bad debts, and we would sort of clarify them as high interest rate debts, such as credit cards, store cards, put carloins in there as well, but that's controversial. So bad debts, then look to repay those first. Because if you're repaying a debt with an interest rate of 19%, that is effectively a guaranteed return of 19%. And not many other investments can offer you a guaranteed return of 19%. So pay down that bad debt, high interest rate debt. Once you've done that, then after thinking about it, consulting a financial advisor, etc., consider investing. Because as Ed Wiley points out, you just got to pay off that bad debt, basically.

SPEAKER_01 21:52

That's really useful. And I guess with thinking about savings, that then brings us on to kind of other topics, which again. Again, it's probably a whole podcast series on its own, but you've got savings such as the NHS pension scheme to consider. Probably our most current group of listeners will be doctors and training. So they'll be probably on the current pension scheme and rather than the old one that was very much glorified. Can you briefly just describe what that pension scheme is and how do we know if what's coming out of our pay slip is going in somewhere correctly? And do we need to be checking on it?

SPEAKER_03 22:29

Yeah, awesome question, and definitely the subject of a lot of our podcasts. But just breaking it down really simply, a pension is a tax-sufficient way to save for your retirement. And it's described as tax efficient because you get tax relief on the amount that you contribute to that pension. So, for example, if you're a basic rate taxpayer, your tax rate is 20%. So to put one pound in there to your pension, effectively would just cost you ATP, right? And obviously, if you're a higher rate taxpayer on a 45% or digital rate taxpayer, then the tax savings are even greater. So that's why it's described as tax-efficient way. And then broadly splitting it out, you've got two types of pensions. You've got what's called defined contribution or defined benefit. And you kind of alluded to the fact that the NHS pension is a bit special. We think it's very special. And the reason is your normal pension is a defined contribution pension. So sometimes described as a private pension or a SIP or something like that. And what can happen there is you and maybe your employer contribute the money every month, you put it in the pot, and then that pot is invested usually in a combination of the stock market and bonds. At retirement, that pot is your pension. And if inflation is rampant like it is at the moment, the value of that pot will be severely eroded. It's not protected from inflation. And in theory, you could run out of money. If you live for 30 years in retirement and your pot is only sort of 20 years worth of spending, you've got a big problem. So that's your normal pension. The NHS pension is what's called a defined benefit pension. And it works slightly differently. So what happens is you make a contribution and your employer makes a contribution to a hypothetical pot. It's not really a pot, but if we think of it like that. And then at retirement, that pot will pay you a guaranteed inflation-proof income for life. So if you live for 100 years in retirement, the NHS pension will just continue paying you. You cannot run out of money. If inflation is at 20% when you're in retirement, your pension is protected from that inflation. So the NHS pension, you kind of mentioned it as well. There's lots of different versions. Most of your listeners will be in what's called the 2015 scheme, which is a career average scheme. Often people say, oh, it's not as good as a 95 or 2008. That's an oversimplification. It's just different. But the salient points are it's still a really important part of your overall reward and pay package. You know, me and Ed are all in on the NHS pension as well as our other investments, but you know, maximizing those pension benefits as much as you can is a priority. And so getting a handle on the basics is really important. But then you're like, well, how do I keep an eye on it? And in the same way that Ed was advocating keeping a hold of your pay slips, which is incredibly important, your pension has some documentation as well. And there's lots, but really, all you really need at this level is something called a total reward statement. And that just comes out every year in the autumn. It's updated every year. You need to get one every year, and that just gives you a summary of how much you paid in, what's on there. I mean, you've just written an article about this. So what else is on the TRS?

SPEAKER_02 25:21

It gives you goes through your actual pension, how it's constructed, which is complicated but very useful. Goes through your uh hypothetical and it goes through what would happen if the dependents how much money they would get from your pension if you passed away and it went to them.

SPEAKER_03 25:35

Yeah, and that's a great feature that I forgot to mention. In addition to the features of the pension that I mentioned, it also comes with some really valuable deaf and service benefits if you were to unfortunately pass away whilst being an active member. And it also comes with spouse and dependents' pensions as well. So those are extra benefits to that. So you need to get your total award statement every year. Now, there used to be a website where you just Google total award statement. We are in transition from the old total award statement system to something called my NHS pension portal. My total statement is still on the old system, Ed has the new system. It's a bit random at the moment, but just try to get that total reward statement. Try to understand in a bit more detail why that pension is so important. And I kind of think about the pension like this the NHS is basically saying to us, look, we're gonna pay you this amount for today to work, and we're also gonna pay you this amount when you retire. So if you opt out of the pension, you are basically losing a big part of your pay and reward package.

SPEAKER_01 26:32

That's a really good way to phrase it. Great. So I think that kind of sums up a brief summary of the pension, but obviously you guys have got many more podcasts and details and places where people can look on your website for more information because we could be here for hours on end otherwise. But it kind of ties up nicely into kind of we're thinking pensions further down the line. What about life insurance and income protection? Should we be really investing in that as a factor? When do we need to get that and why should we get it or not?

SPEAKER_03 27:01

Yeah, amazing question. And I think like let's break it down into what you can insure yourself against and why you should consider it. So I don't insure anything that I can afford to replace. I don't insure my phone, I don't ensure my surfboards or even my beloved bikes, right? Because I can afford to replace them. But if I can't work, I would not be able to afford my bills and my family would not have enough money to live. And therefore, I do insure myself. And broadly, there's three things you can insure yourself against. You can insure yourself against not being able to work, so if you got sick, and that's called income protection insurance. And you can insure yourself against getting one of a predefined list of what's called critical illnesses like cancers and things like that, and that's called critical illness insurance, and you can insure yourself against premature death, which is called life insurance. So what you need is kind of based on your unique circumstances, okay? And you're probably sat there thinking, well, what about sick pay? Well, the NHS does have a very general sick pay regime, but it does ramp up over time. So in the early years, you don't get much sick pay at all. And the maximum amount that you get in the NHS is after five years, which is six months full pay, six months half pay, and then that's it. If you have like a break in service, then you go back to stage one. So a friend of mine is a surgeon, they went abroad for their fellowship year. Okay, so when they left, they had the full entitlement. They worked for the NHS for 12 years. So six months full pay, six months half pay. They went abroad for a year, they come back, they've got a family, a mortgage, and everything. But because they had a break in service, they're back to square one, which is, you know, a problem. So first thing is just understand your sick pay. And we've got a whole section of our website about that. And then just think about what if the worst happens? What if you can't work? What is your backup plan? What if you were to die? What is your backup plan? And I did briefly mention that the NHS pension comes with deaf-in-service benefits. And a lot of people say to us, Oh, well, I don't need life insurance because I'm going to use my NHS pension deaf in service. And that's fine, but I would suggest that they probably haven't done the numbers because the deaf-in-service from the pension is broadly two times your pensionable income. Okay, so let's say you're on 50,000 a year. If you were to die, your family would get £100,000. It's a lot of money, but is it enough to clear your mortgage, support your family for the rest of their life, and replace your income? So that is why I have insurance and Ed has insurance. And then you just need to basically talk through and think through your individual circumstances with a specialist, independent financial advisor that understands medics. And the reason why they need to be specializing in doctors is because our sick pay, our pay slips, our pension in particular is really complex. And non-specialist advisors that do not specialize in medics just don't understand it. And that's not really criticizing them. That's just a measure of how complex the pension and our pay has become. And then the why do that person need to be independent? Well, broadly, there's two types of financial advisor. There's a restricted financial advisor, and as the name suggests, they can sell you a restricted number of products from a restricted number of providers. And if your circumstances fit one of their restricted products, great. But if it doesn't, you're probably not going to get the best deal. The other type of financial advisor, which is the ones that we advocate using, are independent. An independent financial advisor, as the name suggests, can get you an insurance product from the entire market. So they're not restricted to a small subset of products. And frustratingly, restricted financial advisors dominate the medical market. And we just thought, well, we don't really like that. We don't use restricted advice ourselves. And so that was kind of the other part of medic's money that we do. So one part is educating doctors about their finances. The other is that if you need help with your finances, we have got all of the best experts in the business, both the best specialist medical accountants and the best specialist independent medical financial advisors. They're all on our platform. You enter your details, we match you with them. We matched over 10,000 doctors now. And that was a really important part of why we made medic's money. Because at the very start, our friends would say to us, Do you recommend this advisor? And we'd be like, Oh, no way. Like they're restricted, I wouldn't use them. Here's who I use. And it kind of ballooned from there so that now we're helping lots of our colleagues. So if you have never considered income protection, yep, that was me, definitely. When I was young, I felt invincible. And you get to a certain age, I know that Ezra is just an age and it offends me. I don't know if you have Hannah, you do not look like you have, but you may have, where you just start to feel a bit less invincible. And you know, if you've got a family and staff, you really need to think about this because you are your most valuable asset and you need to think about ensuring it. So at least have the conversation with a specialist independent financial advisor who actually understands doctors.

SPEAKER_01 31:37

Excellent. That's really good advice. I think things like COVID pandemic and stuff really highlighted what if you can't go back to work? What if you're too unwell and you need to carry on living and paying your bills and things like that?

SPEAKER_03 31:49

Yeah, I didn't really want to make this all about myself, but you know, my left hand, you might have noticed, got a few strappings on. About three, four months ago now, I chopped off my thumb index and middle finger completely clean off. Amazingly, it's been put back on and it's almost working, got a bit more work to do. So currently I am unable to work as a doctor, which I'm missing a lot actually. But because I've got a robust protection plan in place, you know, it hasn't affected my finances at all. And I can just focus 100% on getting better and getting this handbag working, which incredibly, thanks to amazing care from colleagues in the NHS, it is getting their way. But if I didn't have insurance, yeah, I didn't really know how I'd pay my bills right now. You know, I earn the majority of the income in my household. So even without my sub story, you should think about it. And if my sub story hasn't brought it into shell focus, bad things just happen. And yeah.

SPEAKER_01 32:39

Definitely. I think that wraps up quite nicely into when should we seek independent advice? How much of this should we do alone? Because obviously there's a cost that comes with that, so you need to balance it up. But at what point do you go, actually, I'm too out of my debt, this is too much. When do I need to look at getting some help?

SPEAKER_03 32:58

Yeah, I mean, that's a great question. And the way that we think about it at medic's money is the same way that we triage our patients. Okay, so I'm a GP. So some of my patients will be better off seeing the pharmacist, some of them will be better off seeing the physio. And we triage our patients to the most appropriate source of help. And that's what we try to do at Medic's Money, really, is to triage you. Like we're a big fan of doing things yourself, getting the education that you need and doing as much as you can yourself. But at some point, you will get to a point where you benefit from advice. So I think the big inflection points for me would be when you start as a doctor, you need to think about income protection. You really do. And if you've got a family and you haven't got any, you definitely need to think about it then. But if you're a non-consultant or, you know, I don't know how to say the word junior doctor, but I guess everyone knows what I mean by that. I don't think you need an accountant to do your tax code, you just use Ed's guide. I don't think you need an accountant to claim your tax rebate, you just use Ed's guide. You know, I think you don't need an accountant to interpret your payslip. These are like things that I would encourage you to do. But if you became a consultant and had a huge private practice or something like that, that would be a great time to think about getting an accountant as well. So I think we are big fans of doing as much as possible yourself, but you're absolutely right. At certain points, there are obvious times where you need it. I don't know if you've got anything to add and whether you wanted to mention about mortgages as well, because that's a thing where we see doctors need to get help.

SPEAKER_02 34:19

Yeah. Definitely uh just to kind of reiterate Tommy's point, that we are definitely all in and trying to do what you can yourself. There are certain things that definitely doctors, clever people, you know, you as Tommy says, you don't need an accountant to change your tax codes. You, you know, you really don't. These sorts of things, you know, you can do yourself, save the money. Okay, we've got lots of lovely resources on our website, all for free. Just use those, okay? But Tommy's why, so in terms of mortgages, that is quite a big thing where it can help. I mean, you need to get a mortgage advisor anyway, you know, most of the time. But what's important for us is as doctors, I'm sure you're aware how to you know you move rotations quite a lot, you move jobs quite a lot, your pay slip just goes all over the place. I mean, when I got my house in 2018, I had just moved from an AE job, which is paying you know quite well, to a an acute medical unit job, which strangely enough wasn't paying quite so well because where I am, you know, the weekends were went from one in two to one in five and a big drop in pay. So I was trying to negotiate trying to get a mortgage based on my payslip saying, Well, your pay is really low, why's it gone down? You know, a lot of people just don't understand how doctors work because you know, after four months I'm gonna pediatric, so then my pay went up again. So that kind of seesawing in income is really irritating when it comes to trying to get a mortgage. So definitely our advice is to get a specialist in mortgage advice. I would definitely get one of those. It really helped me out get a good deal because I was struggling with my rubbish paste lip from AMU. So that's definitely a big thing, obviously, life assurance, income protection. You need to get a specialist then. But a lot of the kind of more accountancy things, until you get to the point where, as Tommy says, you've got like you know private income, or you have to do a tax return for other reasons, you may have a rental property, or we get a lot of people who are locum in, they might need some help there. You know, yeah.

SPEAKER_03 35:49

I see too many locum GPs doing it themselves, so that's absolutely false economy. It's so complex.

SPEAKER_02 35:53

At the end of the day, the accountants should really be saving you money there. So you are paying a fee to them, but you know, hopefully they'll save you more than you actually pay. But yeah, definitely for simpler things in life, which are still complicated, remember. You know, tax codes are not easy. Um, no one's gonna say to you, oh, it's really easy, you know, your tax code is so obvious. It's not a tool, but you don't need to pay for help to get that change, for example.

SPEAKER_01 36:12

That's really good. So I guess just to finish up with this podcast, because I think it's been so useful. Hopefully, people will have learnt a lot and kind of reflected on what they might be able to do for some quick wins and then for kind of more of the longer term stuff. What would be your top take-home tips that people should take from this podcast and go forward with?

SPEAKER_03 36:33

Yeah, I think something that we always say, and really while we did medics money, is just you've had tons of clinical education, and that's great, but just take a little bit of time to get some financial education, you know, and you can get that on our podcast. If you like podcasts, you get that on our YouTube. If you like YouTube, we've got ebook, which just gets you started with all of the basics, uh, medicsmoney.co.uk forward slash ebook. On our website on the front page, it breaks down. So, like, are you a consultant? Are you a junior doctor? You click the button and it just tells you what tax things you should think about. What should you think about for your savings appropriate to your level of career? So I guess the overall message is just get some education because if you do nothing about tax, HMRC are not gonna phone you up and say, hi Dr. Preston, I can see you've just taken a really expensive postgraduate exam and we're gonna give you the money back because we're generous. It just doesn't happen. You've got to be proactive about it. And it just takes a little bit of time, and it does take a long, long time in a lifetime of good habits. And then, you know, you can be in a position where you are financially comfortable, you don't have to worry about money, you don't have to worry about your bills. And having been in that unfortunate position when I started, to get to a position where if my car breaks down, it's not a disaster for me financially. It's great, it's what we should get. We're hardworking professionals. We should expect that, but it won't happen automatically. So get educated, I guess.

SPEAKER_02 37:51

One thing I want to go back to the LHS pension just because there were reports in April time that they did some research and found that 150,000 healthcare professionals have opted out of the LHS pension for various reasons. One of the big ones was, you know, to try and save some money. We understand that it's across the living crisis at the moment. We totally get that people want to save money, and maybe opt down the pension is one way they can do that. I just want to say to everyone who's thinking about doing that or has done that, just really think long and hard about if that is the right decision. And it may well be, you know, it was personal circumstances that are different, but there are so many benefits to being in the NHS pension, you know. It's not something to take lightly to opt out to it. Okay, so my tip is just, you know, if you're thinking about opting out or you have opted out, just to really study what those benefits are and just to make sure it's definitely the right decision for yourself. You did a non-tax tip, mate. I don't think that's ever happened. Oh yeah, I love it, sister. It's in my mind right now.

SPEAKER_01 38:41

That's been great. Thank you so much for coming on to the show. I'm sure our listeners will really appreciate it and learn a lot and be able to take things forward to be a bit more financially savvy.

SPEAKER_03 38:52

Thanks so much for inviting us. Take care.