Top Financial Pitfalls for New Grads to Avoid

Graduation - an incredible time of excitement and anticipation. We can't wait to explore "what's next" and are eagerly looking forward to finally (!!!) practicing our trade. Part of planning for life after graduation is considering how to take care of ourselves financially as we venture out into the real world and transition from student to Practitioner; or in medical terms - as we transition from haemorrhaging money to a more clot-like state. 

The most common question new graduates ask us is "How will I manage with all my debt?" This question is likely less about the actionable steps you want to know, and more about easing feelings of fear and anxiety that come from having more debt than you've ever imagined possible. For most of us graduating from a 4 year holistic healthcare post-grad means upwards of $100,000 in loans. We understand it can be overwhelming, and that's why we're here to help!

The simplistic solution for overcoming debt is to maximize income and minimize spending. This is easier said than done as we often struggle financially when first starting out. That's why we've compiled a list of the top 5 financial pitfalls we see new grads make, and explain how you can avoid them.

1. Spreading out tuition credits

If you don't understand what this means, here's a quick overview. For every dollar of tuition you've paid, you can earn one dollar tax free (in the future) through the use of your tuition credits. For example, if you paid $100,000 in tuition over 4 years, you'd have $100,000 in tuition credits upon graduation. This means that the first $100,000 income made will be tax free, a huge savings! Presumably this will take anywhere from one (unlikely) to a few years to use up.

Some students have been taught to spread these out and use a small amount each year so they last longer, providing a nominal tax savings annually. This does not make financial sense. You want to use these as fast as possible, that way you'll have more money left over from your first few years to either re-invest and grow your business, or to save and earn interest on. Additionally, the opportunity for more favourable business structures opens up once you've finished with these credits. 

2. High monthly room rental fee

One of the most draining money traps we see for new grads is to sign onto a clinic with a high monthly minimum rental fee. The worst example I recall was a practitioner who signed on with a clinic and couldn't pay the rental fee, so she took on a part-time job to make ends meet - running herself thin and causing burn-out. On top of taking away from your focus as a Practitioner and hindering your business growth, this can cause negative tax implications. 

The best structure for most new grads is a split of revenue. A split costs you nothing, plus the clinic will be more invested in your success, as they earn money only when you see patients. If you think you'll see a high volume of patients, you may want to negotiate a split with a cap, that way once you reach the cap you won't have to continue splitting a portion of each visit. 

3. Overpriced professional website 

A website is essential in this day and age. Most people are hesitant to visit any service provider without checking them out online first. However, a professionally designed out-of-this-world fantastic website will not provide the return on investment (ROI) you're looking for. Continually putting yourself physically out there in front of potential clients is what's going to get the greatest number of new patients through the doors when you're first launching. Lunch-and-learns, corporate seminars, networking events, educational talks - are all going to provide a much higher ROI for you.  

The biggest bang for your buck in terms of websites comes from lower cost hosting sites such as Squarespace or Wordpress. Most people will be able to navigate and assemble their own site on these platforms, and there's the option to inexpensively outsource (to computer savvy college students or start-up focused web designers) to help you where your skills lack. 

4. Investing in equipment before starting

The beauty of operating as an independent contractor in the alternative health field is the very low overhead costs for a new practitioner. You've already purchased the basic diagnostic tools while in school, and there's not much else you need to get your practice up and running.

As you moved through your academic program, you likely noticed yourself changing your ideal treatment focus or target audience a few times. These same changes will most likely happen once you start working, so it's best to save large equipment investment decisions until you've been able to work out the kinks practising for 6-12 months. This way investments you make into equipment or supplies will not go to waste, and provide you a great financial return. Once you are ready to make an investment in equipment, you'll be able to make a more informed decision about what exactly will best compliment your offerings. 

5. Being afraid of real business advice

As a practitioner myself, I understand how confusing the business side of running a practice can be; especially when first starting! Incorrect (and sometimes illegal!) business myths permeate the industry.

A moment I experienced while I sat listening intently in a classroom will forever be ingrained in my mind. Surrounded by other holistic healthcare practitioners to-be, sponging up the information provided to us we were lectured about incorporation with information I knew was incorrect. Being new to the program and filled with doubt I thought - this professor must know more than me! - so I held my tongue. After the lecture I chatted with a business expert who confirmed my thoughts. In this moment I knew I must develop a resource to provide people in my position services they need to succeed. 

I share this story with new graduates to give colour to the terrain that is business advice within the alternative healthcare field. Often what a true business expert will advise will differ from what most practitioners in this field have heard. The disconnect lies in the difference between a practitioner with no real knowledge regurgitating incorrect information they've heard (like in my story) and someone who's using facts, laws and rulings to guide their advice. Situations like this leave new grads wondering who can be trusted. Our advice is to first ask WHO you're getting your advice from. Never accept advice from someone without first questioning their credentials and background, and using this to guide your belief in the information.