20 www.pagd.org \advocacy Considerations for Trying Times These are financially challenging times for sure. Whether or not you and your practice have been challenged by COVID or is thriving with a large demand, you face financial issues either way. One of the big financial concerns of the time is inflation. For months, the Fed was claiming that inflation is transitory but they are now backtracking on that. The Consumer Price Index is hovering around 6% but we know that it is calculated without the inclusion of gas and other significant items we all use. I suspect with meat prices increasing by 30% and many other things rising in cost, the real effective inflation rate is well above 10%. If you want to confirm this claim, check out shadowstats.com for a more realistic calculation of inflation. It has been a long time since dentists have had to function with high inflation. This article will hopefully give you several strategies to deal with inflation and make good financial decisions. Financial Freedom and Net Worth A worthy financial goal for practicing dentists is financial freedom. I would define financial freedom as the point where the monthly passive income is equal to the monthly budget. You define your budget. Many people create budgets that include the normal items such as mortgage, utilities, groceries, school, insurance, and taxes. Many will budget for vacations and leisure but often don’t factor in unexpected repairs and medical expenses which are notorious for blowing up a budget. Now with inflation creeping in you will need to consider whether your practice income is keeping up with inflation and adjust your budget if it is not. If your budget costs increased by over 10% but you only raised your fees 5%, you will need to increase your production to make up the deficit or you will need a larger fee increase. This insidious thief we call inflation will sneak up and steal the money you were using to create your financial freedom. Financial Strategies for Inflation Eric N. Shelly DMD, MAGD
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