You strive for mental and physical health for your family, your patients, and yourself – but, do you have financial health?

We all know the stress, anxiety and general unhealthy feeling that comes with a poor financial state. To keep your business healthy, you need financial health. Think of it as the equivalent of exercising for physical health. Yes, it’s THAT important.

Financial health is achieved when you know what’s going on with your finances and are making proactive decisions, not reactive.

I’m not here to tell you that you will always be stress-free when it comes to money. But, you can set financial goals and have the knowledge you need to achieve them. Having financial health allows you to mitigate most of the stress around your finances and have actionable steps to achieve your goals.

But, how do you achieve financial health?

Here are the 4 components to financial health:

Overall positive cash flow.
You have more revenue than expenses. And, as your revenue increases, your expenses don’t increase at the same rate. It’s tempting to spend money once you make more, but your expenses should not increase at the same rate as your incoming cash flow. You work hard to make more money, but you haven’t benefited from your hard work if you spend it all on expenses.
Excess cash in your business bank account.
Living paycheck to paycheck is not financially healthy. You need to maintain excess cash in your business bank account for supplementing your personal income in low sales or high expense months, vacation (when you don’t work you don’t earn income), emergency sickness leave, unexpected expenses or feeling financially secure. We recommend having a minimum of 2 months of sales saved!
Don’t forget to save for both your income tax and GST/HST payable balances as well. That’s the government’s money, not yours.
Never miss a debt minimum payment.
This applies to both your business and personal finances. The consequences of missing a minimum debt payment can be poor credit rating, increased bank fees, and feeling financially insecure. The best way to avoid this is not to take on too much debt and make sure that your minimum monthly payments are sustainable for your current cash flows.
A proper financial plan.
Financial planning is the key to securing future growth and stability. Ensure to think about your goals about the maximum number of patients you can see (burnout warning!).
The first step is to ensure your costs align with your planned steady/increasing/decreasing revenues. You want to know when significant expenses are coming so you don’t have to take out debt and understand how you made money in the month.

The key steps to getting financially healthy

Now that you know the components, here are the key steps to becoming financially healthy!

Understand where you are starting.
Tell your money where to go (proactively, not reactively).
Make informed decisions about:
- Your business structure
- Tax planning
- Where to work
Review key metrics monthly, so you know you’re on track!

Here’s to becoming financially healthy!

Ready to make a change and get financially healthy?

Our Business Foundations program is specifically designed to help health professionals gain financial literacy. Click the link below to learn more.