When does it pay to pay someone else?
House cleaning, finances, shoveling, dog grooming, food prep, shopping, admin work . . . life’s chores can seem endless. So when is it worth it for busy doctors to pay someone else to get it done?
We checked in with some finance-savvy doctors and a financial planner who coaches physicians to gather some Dos and Don’ts.
Dr. Stephanie Zhou is a Toronto-based addiction medicine physician who led the development of the financial literacy curriculum at the University of Toronto’s faculty of medicine. She recommends, for starters, income splitting or “income sprinkling” for those who have a partner or family members who are in lower income tax brackets.
“I have outsourced basic tasks such as data entry, administrative tasks and following up on billing/billing rejections,” she said. “If you are incorporated, you can income split with these individuals and pay them a reasonable standard rate as long as they are working 20 hours a week with timesheets as proof.” Dr. Zhou, who has a YouTube video series called Breaking Bad Debt, talks about this concept here.
Dr. Zhou adds that when she has students or residents with her, she will have them help with scribing and history-taking, which saves her time on charting.
“Outsourcing childcare through having a nanny or daycare is common among my colleagues,” said Dr. Zhou. “I've heard some residents will share a nanny to help cut costs while allowing for flexibility that daycare may not have.”
Dr. Kerry Galenzoski, a psychiatrist in Winnipeg, outsources domestic chores to her kids. “I am fortunate that I have teenagers, so I outsource some of the cooking to them, as they each have to make dinner one night per week.”
She also outsources house cleaning. “It really boosts my mood to come home to a clean house. I enjoy doing laundry, and dog walking is good exercise and time with my pup, so I am happy to keep those tasks.”
Dr. John Crosby, a recently retired family physician in Cambridge, Ont., who coaches doctors on time management and money, agrees getting a nanny is a no-brainer, as well as house cleaning (only as often as you can afford it) and an accountant. “It’s worth the cost to save money on taxes and keep the CRA happy.”
Dr. Paul Healey is an ER physician in Mississauga who runs the Physician Financial Independence (Canada) Facebook group with his pediatrician wife Dr. Jane Healey. He looks at the question of outsourcing first and foremost through a lens of what things you should not do yourself. And those are wills and taxes. “Your taxes are not DIY. That's going to be a problem. You need to have a will and a will is not DIY. It's not appropriate to get ChatGPT to write your will. It's not appropriate to use a software package. You need to spend the money and get a lawyer and do that properly. All the other stuff is nice to outsource, but you've got to start with your priority list of non-negotiables.”
When is it worth it?
“From a purely financial perspective, outsourcing makes sense if it can be done at an hourly rate that is lower than the hourly rate you are capable of earning,” said Dr. Barbara Knoblach (PhD), a certified financial planner who specializes in working with physicians through Money Coaches Canada, a national network of skilled, fee-only financial planners.
“The most important concept behind outsourcing is that we all only have so much time. Time, and not money is our most precious asset. Career-oriented professionals who are working long hours need to put a premium on their time.”
Knoblach points out that if you are a medical professional and are, for example, working 2,000 hours per year to arrive at the $400,000 per year before-tax income, and would have to spend another 500 hours per year on a task which can also be outsourced at $50 per hour (at a total cost of $25,000 per year), you could outsource this task, spend another 500 hours on your main job and thus increase your annual before-tax earnings to $500,000.
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Just as worthy an alternative, she points out, is taking the time that has been freed up and spending it on an activity that is more meaningful to you, like quality time with your children. “In either case, outsourcing this task is likely going to be money well spent.”
Dr. Ben Barankin, a dermatologist and the Medical Director & Founder of the Toronto Dermatology Centre, is a firm believer in outsourcing, especially when the task is not one you like or are particularly skilled at.
“Unless you truly enjoy the experience or exercise or peacefulness of it, outsourcing landscaping and shovelling is a great idea,” said Dr. Barankin. “Better yet, consider installing a heated driveway, especially if you’re planning to live for more than 10 years in your house. It not only prevents having to shovel both large and small snowfalls, but also reduces ice and the risk of slipping and falling and reduces salt usage for the environment.” Also, instead of contacting eaves trough companies twice a year, Dr. Barankin recommends a permanent/automatic eaves trough installation.
Stay in your lane
Dr. Crosby says he has seen those who try to sell their own home, ending up overwhelmed and making costly mistakes. “Selling your own home is like taking out your own appendix. Get a realtor.”
For Dr. Galenzoski, dog grooming is where DIY went wrong. “I have a one-year-old Golden Retriever, and I recently watched a YouTube video on grooming, confident that I would be a superstar. I tried to trim him myself to save money, and now poor Macaroon looks pretty raggedy. I’ll be outsourcing puppy cuts in the future.”
Dr. Barankin cites two stories he heard recently of “relatively easy” plumbing and electrical jobs taken on by two aspiring handymen based on YouTube videos. The result? “Major damages, costing way more hassle and money than having it done right the first time.”
“Value yourself and your time, and stay in your lane,” he advised. “Unless you enjoy various chores and repairs, there are better people that can do a better job and do it faster than you.”
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Buyer beware
“Outsourcing doesn't necessarily mean to hand over everything to someone else and not pay attention to it,” said Dr. Zhou. “Whether it's your finances, childcare, billing, etc.—it can be easy to be taken advantage of or have mistakes made if you’re not overseeing or checking in. For example, if you outsource your investing without checking in on your investments, you might discover later that your money was invested in products that aren't right for your goals or come with high fees,” said Dr. Zhou.
For parents who hire a nanny, Dr. Crosby recommends due diligence. “Call the references on the phone as (previous employers) won’t put bad reviews on paper. Find out why they left.”
Dr. Galenzoski feels outsourcing can reduce anxiety and improve quality-of-life for busy docs. “But I would add the caveat that you want to be careful not to miss out on family life by outsourcing too much—cooking, meals, kid activities—in the service of being more available for career pursuits. The work will always be there—don’t outsource your life!”
Pitfalls of the ‘doctor’s lifestyle’
Knoblach cautions especially younger doctors not to fall prey to the lure of the “doctor’s lifestyle.”
“I have seen many physicians whose lifestyle choices left them broke,” she said. “This is not something that can easily be spotted from the outside. However, I would tell all (young) physicians that a glittering façade may not be an indicator of financial success. On the contrary, conspicuous consumption is often an indicator of financial underperformance. It can therefore make a lot of sense to keep a modest lifestyle, which should translate into being very conservative and selective on the number of tasks outsourced to others.”
In summary, she says, “Identify one or two key areas in your life where you can really benefit from having someone else assist you, and outsource only those.”
- The hidden (non-monetary) costs of outsourcing
Outsourcing can save you time, but there are some non-monetary costs to consider, says Barbara Knoblach (PhD), a certified financial planner at Money Coaches Canada, who has physicians among her clients. She cites:
Increasing the complexity in your life
“After having hired a set of helpers you realize that you now have to manage those people,” said Knoblach. ”They may call in sick at inopportune times, have things going on in their lives that you need to accommodate (time off, family emergencies, etc.), or may otherwise force you to accommodate their schedule.”Loss of privacy
“If you have multiple helpers coming into your house on a regular basis, your privacy may concomitantly be going out the window. Is this a lifestyle you feel comfortable with?”Loss of independence (or, 'How do I run a vacuum again?')
“Over time, those helpers may be taking up more and more space in your life, to the point that you may no longer be comfortable carrying out tasks that you always did on your own before. You have traded in some of your independence for convenience.”Locking yourself into a 'lifestyle'
“While one might think that outsourcing a task at a lower pay (than you earn) makes a lot of sense, one also has to consider that in order to afford the many helpers in your life, you’ll have to commit to consistently high annual earnings. This may not seem overly significant at the start of a physician’s career. However, you should ask yourself if you always want to work as many hours as you do today. If the answer to this question is “no,” . . . you should do everything in your ability not to let ‘lifestyle creep’ affect you. Once someone has committed to a certain lifestyle, it is difficult (if not impossible in certain circumstances) to go back to a simpler lifestyle.”