3 Financial Moves to Make in the New Year
Key Takeaways
- A well-designed financial plan gives you the freedom to choose how to spend your money.
- For practice owners, increasing revenue is a direct way to give yourself a raise.
- Strategic tax planning allows you to keep more of what you earn.
As the year comes to a close, it marks another opportunity to take control of your financial future. Whether you’re a practice owner or an associate, giving yourself a raise doesn’t just mean increasing your take-home pay. Increasing profitability means keeping more of what you earn and making every dollar work harder. Here are three areas to focus on to start the new year strong.
Create or Refine Your Financial Plan
A well-designed financial plan is like giving yourself a raise. Once your essential goals are covered, the remaining income can be spent on the things you enjoy.
Too often, people devote more time to planning a vacation than to planning their financial future. A comprehensive plan gives you the freedom to choose how to spend your money. It clarifies how much money you need to save, what your overall personal expenses are and where to allocate savings to achieve your short- and long-term goals. Where you save — whether in a 401(k), cash balance plan or an IRA — matters because it impacts your taxes. How you save is equally important. Automating contributions removes emotion, builds the habit of saving, reduces the temptation to time the market, and leverages the power of compounding interest. Thanks to the 1:1, 2:1, 3:1 money growth concept, starting early could mean millions over time.
Increase Business Revenue
For practice owners, increasing revenue is one of the most direct ways to give yourself a raise. Practices should focus on the top line because without it, the practice doesn’t exist.
Start by increasing your fees 3-5% annually to keep pace with inflation. In fee-for-service practices, a fee adjustment flows directly to your bottom line. For preferred provider practices, the principle still applies, but the financial impact will be less. Many patients will pay out-of-pocket, and maintaining competitive fees supports your practice’s long-term sustainability.
Another key step for practice owners is to set financial targets for the new year and monitor key expense categories such as staff salaries, supplies, lab costs, rent, and advertising. Even small percentage changes in these areas can affect profitability. Setting targets and reviewing them monthly helps you track progress, identify trends early and make timely adjustments.
Finally, focus on new patient flow. The value of a new patient is significant. Tracking hygiene visits provides insight into patient retention and acquisition. A decline in hygiene volume often signals two issues: too few new patients coming in the door and too many not returning. Addressing both sides is essential.
Reduce Taxes Strategically
Strategic tax planning is another way to keep more of what you earn. Increasing contributions to retirement plans, such as a 401(k), cash balance plan, or IRA, may reduce taxable income.
The SALT (State and Local Tax) deduction is expanding from $10,000 to $40,000 for taxpayers earning under $500,000, phasing back to $10,000 at $600,000. This creates a planning opportunity. By increasing retirement contributions, you may be able to reduce taxable income enough to qualify for the larger deduction. Cash balance plans often allow flexibility within a funding range, so working with your plan administrator can help you maximize contributions and tax savings.
Bottom Line
Giving yourself a raise isn’t about wishful thinking — it’s about strategy. Invest consistently, grow your revenue, and plan proactively for taxes. Start now, and by next December, you’ll be glad you did.
If you still have questions, our financial planners can create a custom plan to map out your goals. Contact us for a complimentary consultation.
