$4,000 or $40? How to Make Wise Financial Decisions

Private practitioners spend a lot of time, energy, and effort trying to save money. This often looks like researching the best EHR, social media planners, or HIPAA-compliant phone services. But underneath all the research that goes into these financial decisions, there’s often a level of agony. Because all that time, energy, and effort spent on saving $5 or $40 usually aren’t worth it in the end. 

I know what you’re thinking—how could a financial therapist tell you that saving any amount of money isn’t worth it? But it’s true. I’ve worked with many clinicians who are so focused on saving money—no matter how small the amount—that they don’t pay enough attention to the financial decisions that would have a bigger impact on their long-term financial security. 

Wise Financial Decisions Are a Balancing Act

Let me ask you this: Would you rather save $40 a month, or earn $14,000 in a year?  This isn’t a trick question. When it’s framed this way, most people say they’d rather earn $14,000 extra instead of worrying about saving $40. But their actions say something different. 

When clinicians DIY parts of their practice, like refusing to pay for practice management software or administrative assistance, they’re actually harming themselves in the long run. 

How do I know this? Because when I first started my private practice, I did it too. And rather than “saving” money with all my scrappiness, I actually ended up losing income. It took me a minimum of two to four hours each week to manually do all of my billing, note-taking, and scheduling. If I had just paid a nominal and reasonable fee for a service that did all of those tasks for me, I could have taken on about eight to 16 additional sessions a month.

And the value of all those extra sessions? That was between $1,200 and $2,400 a month that I was missing out on. That comes out to a loss of more than $14,000 in a year—all because I wanted to save a few bucks a month. 

Fighting Internal Resistance

So why are these financial decisions so tricky? Why is it so hard for clinicians to invest in people, software, or services that will not only make their lives easier, but also make them more money in the long run? It has a lot to do with money mindset and training. 

As clinicians, we aren’t taught about the business side of private practice in school. This means that many clinicians end up trying to apply personal finance principles to their business finances—but the two worlds need different things. 

It’s preached in the world of personal finance that cutting spending is one of the best ways to manage your cash flow. However, the other part of that equation is you can increase your overall cash flow when you increase your income. As a private practitioner, increasing your income can be as simple as making a few tweaks to your schedule, your fees, or your time management.

Working Smarter, Not Harder, for Your Money

Everyone has a different definition of wise financial decisions. But for me, wise financial decisions are grounded, future-oriented, and aligned with your individual needs. Before you make financial decisions in your practice, I encourage you to ask yourself the following questions. 

Am I feeling physically and emotionally grounded right now? 
If the answer to this question is “no”, practice some coping or self-regulation strategies before making that financial decision. You don’t want to make choices that impact your financial health out of a feeling of anxiety or sense of restlessness. Take the time to ground yourself, and then dive back into your decision. 

Is this financial choice in alignment with my needs?
Check in with yourself if saving that $40 a month is aligned with your larger goals. Does saving that money come at the expense of practicing self-care, being fully present for your clients, or spending time with your family? When making financial decisions, you need to look at all of your goals—not just your money goals. If doing all your own billing manually means you don’t have time for a hobby that brings you joy and rejuvenates you, it might not actually be serving your long-term goals. 

Is this money choice future-oriented? 
Just like we help our clients make holistic decisions, we need to hold ourselves to that same standard. Does this financial decision serve a need you have right now, or a future need? If it only helps you today, and doesn’t serve your future self or goals, then it may not be the best financial choice. 

4 Ways to Increase Your Income

It’s easy for me to say increase your cash flow by increasing your income—but I know it can be harder to put that idea into practice. Here are a few ways you can explore increasing your income without drastically increasing your workload. 

1. Invest in the right software.
Pay for the software that will save you time. It’s as simple as that. As I laid out before, spending a nominal fee for a software that takes care of your billing and scheduling frees up your time to see more clients in a day. 

2. Hire help. 
If you’re drawing in unreturned emails and phone calls, a part-time virtual assistant (VA) can be an excellent investment. Even if you bring someone in for only a few hours a week, those are hours you get back for yourself and your clients. While hiring a VA might not create an immediate return on your investment, it’ll help your current clients feel well-cared for. And clients who feel cared for are more likely to recommend you and your services to others, potentially increasing your client base.

3. Raise your rates.
This is a difficult one for a lot of clinicians, but sometimes it does have to be done. And you don’t have to raise your rates by a huge amount if you think it’ll be a burden on your clients. I’m talking super small fee raises, because those small raises add up. If you see 25 clients in a week and raise your fee by just $5 per session, that’s an additional $6,5000 in a year.

4. Offer supervision. 
If you have the time and energy, offering supervision can be a great way to bring additional revenue to your practice. Two supervision sessions a month at $150 per session could generate an additional $3,600 a year. However, before you take the leap into supervision, make sure you’re in it for the right reason. It wouldn’t serve you or your potential associates if you’re already stretched too thin to take on another responsibility. 

The next time you find yourself trying to fashion a makeshift solution to save a little money in your private practice, take a minute. Ask yourself if there’s a larger, more holistic shift that needs to happen in your practice and in your own relationship with money. Your time and energy are your most valuable assets as a business owner—make sure you’re putting them to the best use.