How To Be A Wealthy Therapist: 5 Secrets Uncovered

Are you a therapist looking for ways to increase your wealth? If so, the top secrets of wealthy therapists are something you will definitely want to uncover.

Setting yourself up for financial success working in mental health is essential if you are looking to build a sustainable business in this modern day economy. With the right strategies, you can use this year to build yourself a foundation of success and raise your income rates to higher than ever before. In this article, we will explore how to be a wealthy therapist and provide tips on how to make money even in the midst of difficult times both in and outside of the therapy room.

How To Be A Wealthy Therapist Secret #1: Avoid Debt Wherever Possible

It goes without saying that the sooner you can get out of debt the better. Depending on your life circumstances, this may be easier for some and harder for others.

If you are still in school, do your best to graduate debt free by:

• Going to school part time while working (this alone was a top reason why I was able to gradate grad school debt free)
• Buy used/rent textbooks
• Live below your means
• Attend a state school/university—but be sure that it is accredited (not once have I ever been asked where I attended school, just saying)
• Consider participating in a master’s program instead of a doctoral program. If you know you are planning on doing the clinical route and have no interest in teaching, research or testing, a doctoral degree might not be necessary. Be sure to you your homework on what programs are available and what makes the most sense for you.
• Look into and maximize employer sponsored tuition reimbursement programs.
• Consider state incentive work programs. Some states offer loan forgiveness programs to social workers who work in underserviced areas after graduation. I know many friends who have maximized this benefit and have graduated debt free with the added bonus of getting fantastic work experience.

If you are already in the field, a lot of the same tips apply just in a different format

• When selecting continuing education (CEU’s) be sure to pick something that is going to get you the largest return on your investment. This can be a certification in a specialized modality such as EMDR, or even extra training in a population so that you can call yourself an expert. [NOTE: Be sure the CEU’s you are taking is accepted in your state. For example, PESI offers fantastic courses but are not NJ-NASW approved.]
• Take advantage of any free CEU’s you can get your hands on. I know that the NASW Special Programs Sections offer tons of free CEU’s if you are a member of NASW (and pay the $40 extra a year for the SPS access). The amount of NASW CEU’s I have participated in has more then paid for the price of admission. ALMA also offers free CEU’s as part of their membership program. Read more about ALMA here.
• Consider doing certifications instead of going for your DSW (or comparable doctoral degree). My experience, unless you are planning on doing research or neuropsychological testing, a MSW (or comparable maters degree) will get you far in the counseling field.
• If you are starting out in your own practice, you may want to consider a virtual office or renting a room as needed until you build a larger caseload to justify the price of renting a fulltime office.
• If you are in need of clinical supervision, see if your job offers on site supervision or if they will pay for it using their tuition reimbursement programs.

How To Be A Wealthy Therapist Secret #3: When Taking A Job Do Your Research

Especially in today’s world, it seems as if everyone is looking to hire a therapist. Especially if you are new to the field or freshly licensed, it is tempting to take the first job that is offered in order to collect those clinical hours. Before you sign on the dotted line however there are some things to consider:

Know the average salary for the position (private and non profit)

Setting yourself up for financial success can be difficult, especially when it comes to salary. When looking for a job in the private or non-profit sectors, it’s important to know the average salary that you should expect. Knowing this information beforehand can help ensure that you are not taken advantage of and get paid what you’re worth.

The best way to find out the average salary for a particular position is by researching online through reliable sources such as Glassdoor or Indeed. Use these websites to compare salaries at different companies and look up what other people with similar qualifications have been offered in the past.

You should also look into any benefits packages that may be included with the job offer and factor them into your overall compensation package when considering salary expectations. Benefits to consider are things like paid time off, 401K matching, health insurance, childcare (free or reduced), tuition reimbursement (which can also be used for CEU’s), ect. Sometimes the salary might be low but the other benefits balance out the loss in wages. Be sure to look at your needs adn lifestyle before making a decision.

Are there non-compete clauses?

Non-compete clauses can be a great way to set yourself up for financial success (if you are the employer). In the business world, these are contractual agreements between two parties that restrict an employee or contractor from competing with the company for a certain period of time after their contract ends. Non-competes can also protect employers from losing valuable proprietary information and trade secrets. The last thing any employer wants to to spend time training an employee for them to leave and start their own practice in a month.

A well-crafted non-compete can help protect both parties involved and ensure that each has access to certain resources necessary for continued growth and success. It is also important to consider any legal implications that may arise from signing such an agreement, as some states have laws limiting or prohibiting non-competition agreements altogether.

Keep in mind, non-compete clauses are designed to benefit the employer, not necessarily the employee. When considering whether to sign a non-compete clause, it’s important to understand what types of restrictions are included in the agreement and how they will impact your future employment opportunities. Though these are hard to enforce, you can potentially run into trouble finding work if you leave a job that isn’t a good fit and have a non-compete agreement.

Know your classification status and if you are getting the appropriate benefits.

Being a 1099 independent contractor is wonderful if you are looking to get extra income as a second job, or want to test the waters in private practice before opening your own. If however you are a 1099 working 25+ hours a week, you could be missing out on benefits that employees typically get such as sick time, vacation, retirement, etc.  Before you sign any contact, be sure that the agreement is mutually beneficial.

You can learn more about your specific state classifications using Branden Drake’s Contract Classification Cheat Sheet and other blog resources.

If you are a 1099 independent contractor—do your research on the profit share.

As a 1099 independent contractor, it is important to do your research on the profit share. This can help set yourself up for financial success. Profit sharing is an agreement between you and your clients that outlines how profits will be divided from the services you provide. It is smart to be aware of this before agreeing to any contracts with potential clients or employers.

Before entering into a contract, make sure to ask about their profit sharing policies and what percentage of earnings you will receive for each job completed. For example, some companies may offer bonuses as part of their profit sharing policy while others may require additional payments in exchange for more favorable terms. Consider all options carefully when negotiating with employers as well as understanding the legal implications of any agreements being made so that you are always aware of what rights and responsibilities come along with the deal.

From my experience a 60/40 split is standard, meaning 40% goes to the IC and 60% goes to the agency. For your location this may be different. Something to consider too is, if you are giving up 60% of your pay, at what point would it make more sense to open your own practice and take 100% of the cut?

Need help understanding if you need to hire an employee or a contractor? Branden Drake’s mini-course can help (affiliate link): Cheat Sheet

Negotiate your salary

Negotiating your salary is an important step in setting yourself up for financial success. Taking the time to consider what you are worth and negotiating with potential employers can make a huge difference in both the short and long term. Understanding how to approach discussions about salary can be intimidating, but it does not have to be complicated.

When preparing for negotiations, research salaries for similar positions in your industry and location, as well as any benefits associated with the position that could increase your overall compensation package. Make sure you have a good idea of what is “market value” before you begin negotiations so that when it comes time to talk money, you can stand firm on an amount that works best for your needs. Additionally, practice ahead of time what you will say during negotiations so that you feel confident when making requests and responding to offers.

Pro Tip: Know your worth and be prepared to walk if a compromise cannot be made. It is scary to do but if you fold on your requests this well make it even more difficult to ask for a raise in the future.

Related Posts: Shedding Light On The 5 Factors That Shape Therapist Salary

When in the job don’t be afraid to ask for a raise

When it comes to setting yourself up for financial success, you don’t have to wait until you’ve achieved rock-star status in the office before asking for a raise. Doing your job well and timing your request correctly can help you get the salary boost that you deserve.

The key is understanding when it’s appropriate to ask for a raise, and how to go about doing it. First of all, if you’ve recently been promoted or taken on new responsibilities, that’s the perfect opportunity to approach your manager about additional compensation. Be sure that you can articulate how your work has made an impact on the team or company. Additionally, if there have been changes in the industry or marketplace that would warrant an increase in pay, such as increased competition or cost of living adjustments, then this could be another good reason to approach your boss about a salary increase.

I recommend keeping a log of your accomplishments throughout the year in w Word document, this way when the opportunity arises (ie. performance reviews or promotions), you have your list ready to review with you supervision. Be sure to describe specifics of how your actions directly impacted the company. If you can give specific data and number, more power to you.

How To Be A Wealthy Therapist Secret #4: Diversify Your Income Streams

Diversifying your income within clinical practice is one of the most common seen and effective ways to achieve this goal. It means looking for new and creative ways to monetize your services, such as through offering groups or hiring people to expand your practice. By expanding the scope of services you offer, you can increase the number of clients who are able to access therapy while also boosting your bottom line. Below are various examples of how therapists can diversify their income.

Learn how I diversified my income in this YouTube Video, click here.

Build a group practice

Group practices are becoming increasingly popular among therapists and clinical professionals, as they offer a variety of benefits compared to solo practices. By combining resources with other professionals and leveraging the power of collaboration, therapists can create a lucrative business model that allows them to make more money than working alone ever could. In addition, colleagues can share marketing costs and workloads to reduce overhead expenses and free up more time for service delivery.

With multiple therapist under the same roof, services can be diversified essentially making it easy for all clients to find a good match. Are you doing individual therapy with someone who would benefit from couples counseling? You can have a couples counselor working with you therefore keeping the referral in house. You may treat adults exclusively and an associate works with kids, therefore opening the door to nearly all ages for referrals.

There is also the practical benefit of more therapist = more clients = more income. Something to keep in mind however is that more therapists also = more expenses (ie. malpractice coverage, office supplies and rooms, EMR upgrades, ect.). Before building your group practice be sure to run the numbers to be confident that this expansion will work in your favor.

Not interested in hiring employees but like the idea of expanding the number of therapists? You might want to consider hiring independent contractors and doing an income split.

The standard practice split is somewhere around 60/40 depending on where you are located and who you work with (I have seen variation in who gets the 60% as well). Your practice, your rules. If you are hiring independent contractors, be sure to check your state laws as to what is allowed. Some states require that and independent contractor must provide a service different then what you are able to provide (ie. a therapist hiring a psychiatrist), otherwise they would need to be classified as an employee to obtain benefits.

NJ Therapists: To read more about NJ independent contractor laws below:

• Department of Labor and Workforce Development: Information for independent contractors & 1099 workers
• Changes to New Jersey Laws Target Independent Contractor Misclassification and Mass Layoffs

Want to stay a solo-preneur? Add a group session or two

You may want to consider adding groups to your portfolio so you can still practice the “one to many model” without having to add clinicians to your payroll. Group therapy has been shown to provide additional mental health benefits beyond individual therapy sessions, particularly when it comes to providing support and building relationships with others in similar life situations. Offering group sessions in addition to individual ones can help you attract a wider range of clients and may even enable you to charge less per session for those on a tight budget.

Need ideas on where to start? Check out The Group Therapy Treatment Planner, with DSM-5 Updates (PracticePlanners) 

Rent or sub-let your office

Unless you are seeing clients full time, there is a good chance that there are some days that you are not using your physical office and may want to consider renting it out to other therapists during the times it is not in use. Typically people rent the office by the day or month, however you can work with others on an agreement that works best for you.

If you own the property, or are thinking of owning a property, consider how many rooms are available and what is the going rental rate. Will you rent only to therapists or other professionals as well? Becoming a landlord is not only a good second income but can also be an income stream if you are planning to retire or cut back on clinical work entirely.

Add a side hustle

Depending on what you are interested in, this can take many forms. Some people start off by adding private practice as their side hustle, typically through independent contracting while they do agency work (this is how I started). You may decide that you want a side hustle outside of one-on-one clinical work, and if that is the case, there are numerous ways to repackage your clinical skills into income streams that are not direct client work. These can include but are not limited to:

• Writing Books
• Creating and hosting Workshops
• Speaking gigs
• Clinical supervision
• Content Creation (ie. Blogging, YouTube, Podcasts)
• Coaching  (Note: PLEASE read your licensing rules and regulations before adding this as you do not want to confuse counseling services for coaching services)
• Freelance writing for therapists
• part time HR job
• Virtual assistant for another practice
• Social media manager for other therapists
• Web design for therapists

You can also gain inspiration of how others use their clinical skills outside of the therapy room in my previous post on 11 influential Facebook groups for private practice owners.

How To Be A Wealthy Therapist Secret #5: Build A Savings As Soon As Possible

Whether you are a therapist or not, the first step to being wealthy is building a savings plan. A good rule of thumb is to always pay yourself first and set a portion of that paycheck away towards savings. It’s important to remember that setting aside money for the future isn’t just an option, it’s a necessity in order to achieve future financial security.

Savings can look different for everyone, depending on their individual financial goals and needs. Whether it’s retirement, investing or simply having an emergency fund, developing a sound budget with room for saving money is key.

For my business I do my best to save at minimum 1/3 of the income every month into a savings account. My general target is to keep a 2-3 months “emergency fund” buffer at all times in that account.

Emergency Fund Calculation = average monthly expenses X 3

Once I exceed the emergency fund buffer number, I contribute to my small business 401K (yes you can have a 401K as an entrepreneur) until I max out the allotted benefit, any additional funds then go towards investing in the company such as additional certifications/trainings to hone my craft.

Now keep in mind this is a general rule of thumb and as life changes, I occasionally adjust when needed (i.e. maternity leave), however I do my best to exhaust all options before dipping below that 2-3 months “emergency fund.”   

Even if you have limited funds right now, setting aside small amounts each month will add up over time and help encourage more disciplined spending habits. Whether that is 2% of each invoice or $5 a session, no amount is too small. Bonus points if you can have it set in your account as an automatic savings deduction so that you do not have to think about it or be tempted with “forgetting” or finding other reasons to not contribute that month. You may also want to consider having your business savings account in a different bank then your business checking account as to avoid any temptation of early dipping (out of sight, out of mind).

If you need help coming up with a savings plan that works best for your business, I found Dave Ramsey’s books to be very helpful. I have a list of my favorite books at the bottom of this post.

Summary

In conclusion, becoming a wealthy therapist is within reach. Building a group practice, running therapy groups, saving money early, getting out of debt and starting a side hustle are all great ways to start on the road to financial success. It may not be an easy journey but with the right strategy and dedication, becoming a wealthy therapist is achievable. Start today by creating a plan for yourself that incorporates these tips and stick to it. With consistent effort and smart decision-making, you can create wealth as a therapist.