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Personal Finance - GP registrars' financial needs

In the first of a new five-part series, Phil Mileham provides advice for GPs on creating a stable financial base throughout their careers.

Family: once you are debt-free, create a savings pot to cover significant events, such as having children (Photograph: Istockphoto.com / Cindy Singleton)
Family: once you are debt-free, create a savings pot to cover significant events, such as having children (Photograph: Istockphoto.com / Cindy Singleton)

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Being a GP registrar is a fantastic time to learn but you will not have much time to consider your finances.

So here is an overview of some basic requirements to put in place to ensure financial stability as your career progresses.

Dealing with debt
Debt is a fact of life for most young doctors and can take years to pay off. The key to is to take control of your debt.

Start by listing everything you owe including unpaid bills, money owed on credit cards, loans from family or friends. Next, prioritise your debts.

This does not necessarily mean repaying the biggest first. Debts with the largest penalties or charges should be your priority - mortgage arrears or overdue rent, for example.

Savvy saving
Significant life events might be on or just over the horizon: buying a home, marriage and children. Once you are clear of debt, look at building up a savings pot.

For most registrars, individual savings accounts (ISAs) will be one of the most tax efficient ways of saving as, when you withdraw your money, you will not have to pay any tax on it - unlike a a normal bank account where interest is taxed.

There are two main types to consider: cash ISAs and stocks and shares ISAs.

Most cash ISAs resemble bank/building society saving accounts but can also be bought through investments that pay into in cash funds. Stocks and shares ISAs can be made up of one or more investment funds or put toghether from individual stocks and shares.

Before deciding which ISA is for you, think about your savings goals, how long you want to save for and the level of risk you can afford to take.

Stocks and shares ISAs are more suited to long-term saving so might not be appropriate for money you might need to withdraw in the next few years.

From 6 April 2011, ISA allowances will be £10,680, of which £5,340 can be in a cash ISA.

There are other tax efficient savings products that may also suit your needs.

Securing your future
As a GP your potential future career earnings are substantial and it is important to protect them against illness and disability.

Paying into an income protection plan may seem an unnecessary expenditure in these cash-strapped times but could prove to be the best money that you have ever spent.

Income protection insurance can help safeguard against the financial consequences of sickness or disability. Policies can be tailored to ensure that if you are off work for a significant amount of time - even up to retirement - you continue to receive a regular income.

Make sure you choose a plan that suits your circumstances. And, if you have dependants, make sure you have adequate life insurance.

Talk to an adviser who understands the GP profession, including your NHS benefits, to ensure you buy the right level of cover and do not pay for unnecessary products.

At home and on the move
Be sure to protect the possessions you already have. Home, contents and car insurance are often something people renew each year without really understanding what is included and if the cover is adequate.

You need to consider things like legal cover or a replacement car should you be unfortunate enough to be in an accident.

And, for example, check if high-value items like laptops or digital cameras are covered while they are out of your home.

There are insurance providers specialising in the GP market. It is worth shopping around rather than just ticking the box to renew.

Pension planning
Doing this early in your career might feel unnecessary, but this is not the case.

The NHS Pension Scheme is currently a generous scheme but comes with a unique set of financial considerations - and changes to pensions legislation may mean it will become less generous.

Careful planning now could help to compensate for this and make your long-term savings more tax efficient.

  • Phil Mileham is national sales manager with Wesleyan Medical Sickness, www.wesleyan.co.uk

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