113: Dental Financial Planning: Turning Chaos into Financial Freedom - Part 3

Welcome back to The Dental Board Room Podcast! In this episode, we continue our multi-part series on financial planning for dental practice owners. Phase 1 covered building the right financial team. Now in Phase 2, we shift the focus from the business to you personally — developing a Personal Plan for Financial Independence.

In today's episode, we deep dive into Step 2 of Phase 2:

Creating a Personal Spending Plan – or how to design a smart, sustainable approach to how you use your money today.

You’ll learn how to separate your business cash flow into short-term personal spending and long-term savings, why most dentists mistakenly reverse this process, and how you can proactively plan for both your current lifestyle and your financial future.

🔑 Key Points:

• Phase 1 was about constructing your financial team.
• Phase 2 is focused on your personal financial independence, not the business side (which comes in Phase 3).
• Step 1 of Phase 2: Create a long-term financial plan (covered in the previous episode).
• Step 2: Complete a Personal Spending Plan to manage today's spending.
• There are two main outflows from your business checking account:

→ Personal spending today (checking account)

→ Future savings (investment or savings accounts)

• Dentists often save what’s left after spending — but this should be reversed. Prioritize savings and plan spending based on what remains.
• Understand your business cash flow:

→ Collections → Minus Overhead = Profit

→ From Profit, subtract Debt, Taxes, and 401(k) contributions

→ What's left is your take-home amount

• Owners (S Corp) take money out either via W2 (payroll) or owner draws/distributions.
• Importance of separating operating costs from debt payments and understanding the tax implications of draws vs. dividends.

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