Can Therapists Have Financial Stability?

Is it possible for a therapist to have true financial stability without getting burned out and stretching themselves thin? Short answer: yes!

I know I’ve spoken on my youtube channel and blog about how to increase your income as a therapist as well as about how I’ve scaled my income past 6 figures while working part-time as a therapist, but there is so much more to financial stability than your income.

In fact, I know therapists with multiple 6-figure businesses who haven’t achieved financial stability. And I know therapists earning less than 6 figures who are financially thriving.

I want to share some of my opinions about what factors contribute to financial stability so that you can achieve financial health as well.

What Is Financial Stability?

So first, let’s define our terms. Financial stability does NOT refer to how much income someone makes. It’s about having the flexibility to financially endure the good and the bad. The Federal Reserve defines financial stability as:

“…a financial system that can function in good times and bad, and can absorb all the good and bad things that happen in the U.S. economy at any moment; it isn’t about preventing failure or stopping people or businesses from making or losing money. It is just helping to create conditions where the system keeps working effectively even with such events.”

Financial Stability vs. Financial Health

Sometimes financial stability is used interchangeably with financial health, but personally, I think of financial health as a more broadly encompassing term that includes your financial stability as well as your money mindset.

You could be financially stable, but you might also live in constant worry about your finances and therefore not have financial health, if that makes sense.

Generally speaking, I think of financial stability as having enough of a strategy and buffer available so that when hardship comes, your whole system doesn’t come crashing down.

You have enough of an emergency buffer, you have preparations in place for retirement and health needs, and on average, you are saving rather than accruing debt.

4 Tools To Make Stability Possible

So, is it possible for therapists to have financial stability? 100%! And it’s also possible to make a lot of money and be financially unstable.

So let’s talk about some tools to increase financial stability:

1) Income

I know I said stability comes from more than just income, but income definitely plays a role.
If you’re making $30k a year while trying to raise a family, you’re going to have a much tougher time reaching financial stability than someone making $100k per year.
Generally speaking, it’s usually easier to increase your income than to do some of the other items on this list.

2) Spend A Lot Less Than You Make

What a lot of people miss with finances is: whatever income you earn, you’re not really making that full amount.
If you’re earning $100,000 revenue per year in private practice, but your practice expenses are $20k, and you pay $20k in taxes, now you’re down to $60k.
Let’s say you also spend another $20k per year on childcare. Now we’re down to $40k.
So if you make $100k in revenue and think you can spend $80k and save $20k, you’re in for a very rude awakening. Because you may be spending money you don’t have.
I encourage you to sit down and really work out the math of how much money you actually have to spend after you pay for your business expenses, taxes, and childcare. This is the number you want to work with when you make financial decisions about how much to spend on housing, food, travel, and other expenses, as well as how much to save.

3) Be Disciplined (Especially In The Beginning)

The irony with financial stability is the sooner you start saving, the better, which means the most important time to save is while you’re making the least amount of money.
I think in our 20s, most of us assume and hope that we will be in a better financial position later, so we don’t consider saving and we may even accrue additional debt on top of our mountain of grad school debt.
Then when our income starts going up, we’re racing to pay down debts rather than saving money.
For a lot of folks, we don’t really start saving money until we’re in our 40s. And because we’re starting that process so much later in the game, we have to really buckle down and save a LOT of money in order to have enough of a buffer. And if any financial emergency happens in the midst of all that, forget it. The money isn’t there.
I share more in a video about retirement planning in private practice. But even if you start putting away little bits of money here and there early in your career, it will likely be worth so much more 20 or 40 years later.

4) Spend Money On What Matters To You Today

I know this is the opposite of what I just shared about being disciplined. But if all of your work towards financial stability is focused on budgeting, spending as little as possible, and delaying gratification for a time decades in the future, it’s not going to be sustainable or healthy.
The problem I often see is folks who aren’t yet financially stable are not intentional about how they spend money. They often are spending money indiscriminately.
So I do encourage you to consider where you get the most “bang for your buck” in your spending. What are the splurges that really support you or bring you joy? And take a look at where in your spending you may be letting money flow out of your account when it may not be really adding much to your life.
If you let yourself intentionally prioritize your spending where it adds the most to your present life, it can feel much more possible to stay disciplined overall with your finances.

Of course, there are many more things you can do to increase your financial stability and overall financial wellness, but I wanted to give a few tangible tips for you to chew on and get the ball rolling.

Financial Advisors Can Help!

If you really are serious about digging into your finances and straightening them out, I suggest you consult with a financial advisor who can really help you see the big picture of your finances and offer professional advice that aligns with your goals and values.

But for now: know that it is possible to have financial stability as a therapist.

More To Chew On

If this article has caused you to want to do some more work on the financial side of your business, I have a youtube playlist all about managing finances in private practice. You might also like to check out the folks at Heard* to see if their therapist-specific bookkeeping and tax services may be of benefit to you.

Until next time, from one therapist to another: I wish you well.

-Marie

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