Introduction to Budgeting for Health Professionals

As a health professional, your expertise is in health-related issues, so you may feel a little out of your depth when it comes to budgeting. Your passion is helping people live healthier lifestyles, not number-crunching.

And that’s okay, because this blog has budgeting processes all laid out for you, so you can create a simple budget, avoid overspending and get through the year comfortably with your finances in order.

Budgeting is crucial for health professionals in Canada, whether yours is a new or established business, because it helps you stay on track with your finances, even in times of uncertainty.

At Tyagi Group, we've got years of experience guiding clients through the financial ups and downs of running a health business. So, you can count on us to be the team you lean on for support in this area. Our specialty is helping health professionals manage their finances with ease. Let us share some of our insights to help you develop healthier money habits in your practice and keep those doors open for years to come.

But first, check out our FREE budgeting guide that will make budgeting much easier for you, so you can focus on your patients.

Short Summary

Setting and reaching financial goals
Managing low-income months
Making the most of high-income months
Budgeting for income taxes
Planning for a well-deserved vacation

Setting and Reaching Financial Goals

Everyone has their own specific financial goals, which can include things like how much you want to earn by the end of the year or what assets you hope to purchase for your business.

Setting these goals is a must in the budgeting process for health professionals – not only will it help motivate you to stay on track, setting financial goals right from the start will help you come up with a set of specific budgeting strategies to achieve your end goal.

Types of Goals

Before you jump straight to making a list of your financial goals, it’s extremely helpful to first understand the different types of goals:

Short-term goals should be easily attainable, like paying your credit card bill on time and planning a budget.

Mid-term goals could include paying off loans, hiring more staff or selling your health business.

Consider these first two stages as stepping stones to your bigger, long-term goals, which might be expanding the business, opening a new branch in a different city, or even planning for retirement.

How to Set Financial Goals

List your goals, prioritizing from short-term to long-term.
Set a deadline for each goal.
Make sure you cover basic financial responsibilities, like making minimum monthly debt payments .
Be specific about the financial goals you want to achieve.
Ask yourself why you want to achieve each goal.
Go back and look at your goals often, ticking off the ones you have achieved.
Use a digital financial planner that you can edit and access quickly.

Budgeting Strategies to Help You Achieve Your Financial Goals

Now that your goals are set, you are one step closer to achieving them! You may need to use different money management techniques to help you achieve each goal, depending on the size and complexity. For example, buying a new printer may mean saving a little extra one month, but planning for a sabbatical or extended vacation may require expert help.

Try these budgeting strategies to align with your goals:
Saving small amounts each month.
Use specific savings accounts for specific goals, e.g. retirement fund.
Complete your bookkeeping monthly to identify overspending.
Cut down unnecessary costs.
Consider investment opportunities for long-term stability.

Managing Low-Income Months

Budgeting for health professionals in Canada is particularly useful when those low-income months arrive. These are typically the months in which client intake is slower than normal due to holidays, number of days in a month, or other economic factors. You may notice that your appointment book is looking quite empty, or you may receive plenty of queries but find that people are less willing to part with money at a particular time of year (typically the summer)

Whether you are just starting out or you’ve already established your health practice in Canada, these financial dips in the calendar are most dreaded. The ugly truth is that low-income months are inevitable; they can happen to any business, no matter how big or small. However, the good news is that they don’t have to end in disaster. With a little financial planning and careful budgeting, you can get through it without becoming a ball of stress!

How to Prepare for an Income Dip

If this sounds like we are asking you to predict the future, relax; we aren’t! While you can’t foresee economic crashes, global pandemics or client behaviour, you can make an educated estimate of business activity based on certain patterns.

For example, during the summer season, many people travel and may not be in town for their monthly appointments, and this is a trend that is unlikely to change. So, flag this in your calendar as a low-income period. It also won't hurt to keep an eye on world news, and if you notice a general dip in spending behaviour due to global events, assume that this will affect your business to be on the safe side.

Financial Valley Survival Toolkit

So, you’ve been disciplined about financial planning and budgeting for a low-income period, but now that it’s here, how do you survive? Here are some tools to help you get through it:

Track your expenses.
Keep referring to your budget and sticking to it.
With fewer clients, you can dedicate more time to marketing to secure future bookings.
Spend less on luxury items, e.g. fancy office stationery.
Reduce continuing education expenses where possible.
Don’t reduce your service or product quality, as this could lead to further reductions in clients and income in the long run.

Making the Most of High-Income Months

As a health professional, there will be plenty of months in the year when your schedule is fully booked and your income is looking pretty good. Think back to the end-of-year rush to use up remaining insurance funds! However, when you’re in the business of caring for others, it’s easy to neglect your own financial planning. That income often sits there, doing nothing.

This is the perfect time to consider investment strategies that will boost your business’s long-term success. Investment strategies could include investing internally, like renovating or rebranding your business for more client appeal, hiring more staff, or purchasing equipment that will give you a competitive advantage. You could also consult with our expert team at Tyagi Group to get more customized advice.

Interest rates paid on debts can be financially and emotionally draining. That’s why we advise health professionals to use high-income months to settle as many debts as possible. This will relieve significant financial strain and allow you to allocate more of your future funds to things you really want to do. However, don’t forget to save some of your surplus income or create emergency funds for those drier periods.

Avoid These Common Mistakes in High-Income Months

Splurging on unnecessary items, e.g. office furniture, gala dinners or staff bonuses.
Leaving your money idle and uninvested.
Not contributing towards emergency funds or savings accounts.
Not paying off debts.

Budgeting for Income Taxes

Income taxes are probably the last thing you want to think about as a business owner. It’s much nicer to think about booking clients and running your business smoothly. However, turning a blind eye to income taxes can lead to a nasty surprise if you haven't budgeted adequately.

Unfortunately, many new health business owners who are unaware of income tax requirements are caught off guard and suffer huge financial losses by simply not being prepared for tax season. To avoid the same mistake, we highly recommend using our tax planning tips.

These tips will help you to stay tax-compliant and sleep much better at night, knowing that you have set aside enough money to comfortably meet your business tax obligations without disrupting the quality of the health services you offer to your clients.

Feeling like there is too much information for you to go through when it comes to income taxes? That’s where the Tyagi Group comes in! We offer budgeting courses for health professionals, so you never miss a beat with business protocol, financial planning and taxes. We’re sharing a few of the key takeaways for budgeting for your income taxes listed here for your convenience.

Expert Tips for Tax Planning

Ask a professional to explain the fundamentals of income tax deductions, credits, and requirements for health businesses in Canada so you know what to expect.

Use an income tax calculator to determine how much you will need to pay. You can snag ours here.
Make a note of the tax deductions you can claim and take advantage of opportunities for tax deductions that will save you money.
Include an income tax budget in your business budget.
Optimize high-income months to set aside funds for projected taxes.
Include clear deadlines for taxes in your budget and financial planning documents to avoid costly penalties that come with late tax filing or payments.

Planning for a Well-Deserved Vacation

As a health professional, you are no doubt working long hours. Your work may be physically and mentally demanding. The combined intensity of tending to patients daily and running a business cannot be underestimated. Your work has value, and your patients need you at your very best! So, if you’ve been putting off that vacation for financial reasons, it’s time to start saving for the vacation that you deserve.

All Work and No Play…

Too many dedicated health professionals make the mistake of believing non-stop work is the answer to a successful business. It’s not. What will really get you the results you want is careful financial planning, budgeting, and taking breaks when you need them. Taking one long break at the end of the year or even shorter breaks throughout the year will make a world of difference to your state of mind and will increase your productivity.

At Tyagi Group, we understand that you might not want to disrupt business operations or financial stability while you are away. That’s why we’ve compiled some pointers on how to budget for a vacation the smart way.

Frequently Asked Questions

So, why not just hop on a plane and enjoy that holiday? Well, this might be your long-term goal, but we don’t want your vacation to make unwanted waves in the business, right? A vacation budget is essentially a roadmap to help you safely arrive at your financial destination.

By creating a well-thought-out plan based on forecasts and historical business data, you can estimate how much income you will have by the time you want to go on holiday. This budget will complement your attempts at saving for a vacation to ensure that you can unwind stress-free, knowing that your business finances are not going to suffer.

Saving for Vacation with a Watertight Vacation Budget

We want you to have the vacation you’ve been dreaming of without sacrificing the success of your health business. Our vacation budget guidelines will take you to where you want to be:

Create a vacation wish list of where you want to go.
List all your vacation expenses, from hotels to swimwear.
Shop around for group tours and package discounts.
Calculate business projections for the year.
Boost your marketing campaign to reach your targeted monthly income.
Be realistic and flexible when setting your budget.
Start a separate savings account for your vacation.
Use a digital budget template that you can edit in real-time and have easy access to.
Review expenses monthly to cut down on overspending.
Set deadlines on short-term, medium-term and long-term financial goals so you can move steadily towards saving for your vacation.
Monitor your spending closely until departure day.

Building a Sustainable Financial Future

We hope this blog has given you some sound advice when it comes to budgeting for health professionals. A really successful business is one that has a sustainable financial future, and that doesn’t come by crossing your fingers and hoping for the best. It comes from detailed planning.

If that’s the vision you have for your health practice, we can't stress enough how important budgeting and financial planning are. Don't become one of the health business owners who sadly have to close down. Your patients depend on your quality services, and they would love for you to stick around for many years to come!

If saving, setting financial goals or creating a vacation budget recently felt out of your reach, these tips will help you turn that around. Take control of your financial future now and allow your business to flourish and prosper the way it’s meant to. You don’t have to feel overwhelmed by budgeting anymore; just take our lead and see how easy it is.

In Conclusion

Health professionals may feel a little out of depth when it comes to budgeting, but that’s okay, and help is not far away.
Tyagi Group has years of experience guiding clients through the financial highs and lows of running a health business. Use our FREE budgeting checklist to make the task much easier.
Set short-term, medium-term and long-term financial goals that are specific and have deadlines. Monitor and revisit financial goals for a sustainable financial future.
Be prepared for low-income months and save by negotiating with suppliers, reducing travel costs and focusing on marketing.
Optimize high-income months by settling debts or investing in high-return opportunities.
Remember to budget for income taxes to stay compliant, save with tax deductions, and avoid costly penalties. Ask an accounting consultant for help explaining health business tax requirements.
Start planning early for your vacation with a solid but flexible budget that ensures business costs are covered.

Sign Up for Our Budgeting Online Course and Learn from the Pros

Eager to know more about budgeting for health professionals? Explore Tyagi Group's Business Foundations Budgeting Online Course for Canadian Health Professionals. It’s designed by our business finance experts to teach you everything you need to know to run your business with confidence and enjoy a sustainable financial future. Gain vital skills from registered CPAs and tax strategists who have experience specifically with helping health professionals.

Here’s what you will learn in this course: