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Why Dentists Struggle to Save: Cash Flow Myths That Hold You Back · The Millionaire Dentist™

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  Hello, everyone, Welcome to the Millionaire Dentist Podcast, brought to you by
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  four Quadrants Advisory. On this podcast, we break down the world of dentistry,
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  finances and business practices to help you become the millionaire dentist you deserve to
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  be. Please be advised we do speak with an honest tongue and may not
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  be safe for work. Hello and welcome. This is Casey Hires back at
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  the Millionaire Dnist Podcast in studio with co host Jared Bridgeman. Casey, how
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  are you good? We're approaching the longest day of the year. I love
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  it. Yeah, this one's going to be twenty four hours. It's crazy.
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  What that's in Alaska? What are you talking about? Twenty four today?
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  Twenty four hours? It was a terrible joke, Casey. Um,
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  Tomorrow you are going to be presenting at Top Golf in Auburn Hills, Michigan,
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  outside Detroit. By the time people hear this, you will already have
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  been back. Um. What are you looking forward to? You on your
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  trip and and being there? Well, this will sound cheesy, and if
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  I didn't mean it, I wouldn't say it. But ultimately, when we
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  do these events to prevent the subject matter. You're gonna have your people that
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  are ce junkies. They just one another hour for their bio. There's other
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  folks that want free top golf and food. But there's going to be people
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  there that when they hear this, they go huh and they start thinking,
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  and they're going and potentially to be able to help one person in that room
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  retire sooner with more money, with less stress, getting the practice healthy again.
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  That's when I go into the room, I look at them, I
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  go, who's it going to be today? Right? And so I it
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  sounds cheesy, but I'm excited to see who we can help potentially today.
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  Now of the twenty people that are going to be there, I'll probably talk
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  the fifteen of them afterwards, but ultimately we're only going to help one,
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  maybe maybe two, and that's only if it bears fruit looking at data.
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  But yeah, that sounds cheesy, but that's what I'm looking forward to.
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  That awesome and part of what you you talk about when you present, as
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  you know, a lot of the folks on cash flow. Some of it's
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  on on saving and putting money towards retirement and things like that, but there
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  are some pretty glaring and obvious reasons, you know, obvious to us.
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  I should say of why a lot of practice owners are are unable to save
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  or unable to save properly. Right, If our firm had a love language,
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  it would be saving for retirement. And there are a lot of headwinds
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  when it comes to saving for retirement for practice owners. Even when they're in
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  a position meaning they're producing a lot of dentistry, they're collecting a lot of
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  dentistry. The money's there, it's still challenging, but they could. There's
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  things that can prevent them from from properly saving. An entity structure is one
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  of them that we talk about in our course. Right, A lot of
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  these, a lot of a lot of practice owners, you know, before
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  they come to us, have do not have a W two in place for
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  themselves. Now, can you tell me why that isn't worked? Yeah,
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  I can, and um and we'll back up a little bit. It's incredible
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  how many practice owners, when asked how they pay themselves on an offline conversation,
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  it's well, they take what's left over at the end of the month.
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  I'll skip a paycheck, but I'll make it up in some erratic distributions
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  throughout the year or at the end of the year. We just like drain
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  the accounts after we build them up all year. Right, if you're doing
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  that, yikes, how do you plan for your your your bills or emergencies
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  that may pop up at home? Well, Unfortunately, entity structure can prevent
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  practice owners from from from achieving their goals. Um, if one of the
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  big ones is retiring, it's reverse engineered this, Well, what you need
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  to retire? Well, I need X amount of money? Okay, how
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  do I do that? Sometimes entity structure prevents practice owners from saving, and
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  it's really easy to keep skipping that thing every year. Well, I'll do
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  it next year, I'll do it next year, I'll do it next year.
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  Well, I'm gonnait till I get my my debt, my student loan
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  debt paid off. I'm gonna and it's probably a low interest, right,
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  And that's another conversation, but emotionally I want to get that and then well,
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  I'm gonna get the practice paid off. And well, I'm gonna do
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  this, and I'm gonna do that. And my friend gave me the Dave
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  Ramsey books. I'm gonna get sure all my net's gone. And they keep
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  putting it off and then they look up and they go, oh, yeah,
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  yeah, I talked to somebody recently. They they've done that and they've
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  got all the stuff, but they don't have as much for retirement, right,
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  and their backs starting to hurt, their next starting the hurt. And
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  there there I saw it. I mean, they looked at me to go,
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  Casey, I'm a little concerned, like I can't work after into my
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  sixties. Um, but yeah, sometimes entity structure will prevent people from doing
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  that. And ultimately sometimes they don't know, they don't know why they've gotten
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  poor advice from their CPA or an accounting firm. Um, well, what's
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  a benefit to getting onto a scheduled pay system for yourself like a paycheck?
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  Well, the funny answer is you have some consistency, so you feel better,
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  your your spouse is feeling better because it's again predictable. It's really hard
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  when what I mentioned earlier, when you're skipping paychecks are taking what's left over
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  when there's erratic distributions. It's hard for the practice owner, it's even harder
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  for the spouse. So at home that's better. But from a more of
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  a business sense, having a w two allows you to have a four oh
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  one K allows you to save more of there's some reduced tax liability. There's
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  a whole bunch of things we can dive into today, but ultimately that is
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  the foundation for giving people an avenue to achieve some of the things they need
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  to achieve if they want to retire and not be in their seventies or god
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  forbid eighties now. And that little tirade you just did, You mentioned tirade,
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  You see nothing yet you mentioned a four oh one K. Now is
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  that? Is there a reason why a soul practice owner may not have a
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  four oh one K. Well, soul props generally don't have a four oh
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  one K. So if you're if you're entity structure as a soul proprietor a
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  soul prop, generally you don't have a four one CAM place and they opt
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  for a simple ira um. There's a I don't want to get too much
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  in the weeds here, right, but there's there's not as much opportunity to
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  save with that right, or save as much as one should could. It
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  also be there's always bad advice out there or someone just not knowing how to
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  do it, how to get it started well, because I can tell you
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  right now. You know, I have a we have a four O one
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  K here, But if you've just set me out on my own, you
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  know, into the wilderness, I couldn't tell you how you get one started.
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  Well, listen, we personally, I just talked to somebody and they're
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  going to have some dinner work done. They don't know how to do it,
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  so they're going to a dentist and then a specialist, and they expect
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  them to know what they're doing, and they follow their advice. What a
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  practice owners do. They go to an accounting firm that three of their dental
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  friends go to, and they expect to get sound advice, and unfortunately some
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  hopefully just a little bit, but some go decades and decades with that.
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  And then they talk to a dental specific firm who does this all day every
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  day and master in our sleep, and they realize, oh my gosh,
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  I've been set up in the wrong way and it's limited me. But they
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  trusted that their person, their accounting firm was doing the right things because they're
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  the expert. And I have been on tirades previously where the standard of care
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  with accounting and dentistry for practice owners is unfortunately abysmal rum not all cases at
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  all, but goodness, I mean over seven out of ten. There's typically
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  some big old red flags that we find, and it's setting out of ten.
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  It's right, you are the numbers guy. Well, and the nice
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  thing with four one cases. Once you get that in place, you can
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  also have your your your'll see whatever it is your company h match your funds
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  as well to really kind of double down on that. Well, ultimately,
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  what do you want an Antiti structure? You want reduced tax liability, and
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  you want it to be better for cash flow, and you want to be
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  able to save more for retirement. And you know how about paying quarterly taxes.
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  That's a great idea that helps a tax situation. Hey, hard last
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  last week's episode, if you have not listened to it was all about quarterly
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  tax estimates. And again you listen to that episode one. For some people
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  they're like, yeah, of course, why wouldn't I Well, guess what,
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  there's a massive percentage of practice owners out there that they if they're paying
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  them, they're not up to date because you've grown, or maybe maybe somebody
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  had had a kid and took six weeks off or eight weeks off, and
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  so they're they're producing their hearts out, and they're all day every day in
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  the chair and they get home, don't want to touch the books exactly right,
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  thank you, Casey. So as a kid, I would try to
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  save up money. Never great at it because there's always a brand new you
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  know, ninja turtle, you know thing. I do love shiny stuff.
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  I like retail therapy. But I have and I still have it to this
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  day for my grandparents' house. It's a Tutsi roll bank. It's a it's
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  a tube, a little slot in it, and I would save all my
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  little money. I still got a couple of two dollars bills from my grandfather
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  in there from thirty years ago. How much are they worth? I think
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  of two o five? But that was my system, you know, I
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  do a couple of chores, get five bucks here and there and stuff it
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  in there. Why is that not a great idea to just keep money in
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  one place like that? Well, I think what you're referring to is hoarding
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  cash, right and so there's some mity structures out there where you know,
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  like like a like a squirrel storing acorns right there, They're hoarding cash and
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  it might sound like a good idea to build it up the initial idea and
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  on an emotional level makes sense having more money. And let's say your emergency
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  fund means you have coverage for emergencies. But we have a benchmark with our
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  company. You know that we advise people of here's how much you should have
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  in that in that fund. Right, absolutely well, and it all ties
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  together. If you're getting poor tax management and it's erratic and what, you
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  want to have some extra money in the bank to be able to pay for
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  those mistakes that ultimately they're not tax surprises because you're used to them every year.
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  It's just a matter of do I owe thirty or do am I going
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  to get thirty back or more? Yeah, we've had a couple of people
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  come through sixty eighty. Yeah, obviously you do need X amount in an
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  account basically at all times. Well, there should be a benchmarks for everything.
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  And if you're a practice owner and you, I don't know, collect
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  one point three five million dollars, ten percent of that's one hundred and thirty
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  five thousand dollars. An ideal bank balance would be one hundred and thirty five
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  thousand dollars. Why Is it a bad idea to say, haven't tripled that
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  amount in the account? Why is that? Why? Why would we suggest
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  or advise against that. Well, there's some proprietary strategies that we should use
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  and things of that nature for our clients. But ultimately it comes down to
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  this, and I'll be sharing this in Auburn Hills. But folks that have
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  five six hundred thousand dollars in their practice accounts, that makes them sleep good,
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  feel better about it. But but ultimately, again it comes back to
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  cash flow. Let's reduce some debt. Let's say for retirement. People go,
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  well, how are your clients saving two hundred thousand dollars a year for
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  a retirement Well, there's four in one case. There's profit shares, there's
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  brokerage accounts. Now for different practices, there's different timings and strategies to all
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  of those things. Because sometimes profit shares the timing isn't right, but maybe
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  in three years it is. But those are the ways we get that done.
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  Yeah, again, reducing debt saving for retirement significantly, like six figures,
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  but better cash flow right at home. But having that one thirty five
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  in the bank if you have a one point three five million dollars practice.
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  That's an ideal amount. Keep that as a trend three months, four months,
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  five months. Then if you go, well, I have got one
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  eighty, great, you have one eighty five. You will do that for
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  simple math, you have an extra how much is that fifty? Yeah,
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  forty fifty six an extra fifty thousand dollars, right, So if you see
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  that for a couple of months, well, it's safe to say that there's
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  fifty thousand dollars that we can now look to what. Hey, go on
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  a trip. If you need a car, buy a car, we do
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  your kitchen, pay down debts, say for retirement. It's not all stuff
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  that's not fun. Our clients have great stuff, great toys. Oh,
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  I've seen some some some of our clients will send us some of our new
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  cars. They get the car, but I send it pictures of the car.
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  Yeah, and some of those are real pretty. Oh. I mean
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  again, if you're listening, you work hard, and your hard work needs
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  to be reflected, and you should feel good. You shouldn't have a house
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  of cards or you look like you're the successful dentist, but in a pit
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  of your stomach, you know that you're not. And that you might have
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  to work until you're in your sixties, and that frightened you. And you
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  know again, getting this all right leads to being able to retire early and
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  have nice things now and in the future. But entity structure is a real
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  foundational thing that unfortunately a smaller percentage. But they just they don't have it
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  right, and they don't know why. They don't know why it's set up
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  that way. They simply trust the people that are doing it or are set
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  up that way fifteen twenty years ago. And now that's right, that's right.
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  And so ask you, ask yourself, ask your accountant. Is this
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  good for cash flow? Is this good for tax reduced tax liability? Um?
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  Is their flexibility with it? And is there consistency with it? And
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  those are typically UM good good, um good things to look for if they
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  want a second opinion, casey, what can they do doing a website?
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  I think so it's uh, if you go onto the internet and webs Yep,
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  there's a Google, bahtt whatever is colon slash slash, four quadrants,
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  advisory dot com. Fill out the form um and just and just mark that
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  you're interested in, you know, maybe looking at our taxes. We do
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  offer a free tax assessment. Um, we can look at your structure and
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  give you a little bit of advice and really open the gateway to Hey,
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  if you want to take the next steps, we can do even more than
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  just what we did today. Well, and there's a lot of people that
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  we engage in some conversations, some phone meetings, look at some data.
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  It's not a good fit. We can't help them to the level that we
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  want to help them. Timing isn't right for whatever reason. But typically if
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  they go through that, we're going to give them some complimentary advice because we
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  don't want to nobody comes out worse. We don't know that we want to
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  work with somebody until we go through our process, and many times it's not
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  a good fit, and we tell them, hey, you don't need to
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  pay us for our services. That being said, you engage in our process.
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  Here's some things that we found. Let's talk next year exactly, Casey,
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  I really appreciate your time today. I hope you have a good trip
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  and you really get to learn and NONESO dentists be well. Thanks, that's
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  all the time we have today. Thank you to our guests for their insight
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  and for sharing some really great information and thank you to you the listener for
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  tuning in. The Millionaire Dentist podcast is brought to you by four Quadrants Advisory
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  to see if they might be a good fit for you and your practice.
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  Going over to four Quadrants Advisory dot com and see why year after year they
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  retain over ninety five percent of their clients. Thank you again for joining us
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  and we'll see you next time. The Greek Bomber