Working as a locum doctor affords numerous opportunities to build wealth, even much more than permanent practitioners do through flexible work schedules.
Yet, financial management is often challenging for locums—like any independent job. After all, you’re often in charge of managing your taxes and superannuation fund. The good news is properly handling your finances allows you to enjoy the benefits of being a locum without jeopardising your financial well-being.
Considering the challenge, you can thrive in your line of work by identifying essential areas of financial management, as seen in this infographic.
Important Financial Considerations of Being a Locum Doctor
Working as a locum doctor in Australia can be a lucrative profession. You only need to be mindful of how the following factors can impact your finances so you can avoid losing your hard-earned money.
1. Availability of work
The main problem with contractual positions is that work opportunities are primarily unpredictable. While it might be easy to find an opening most of the time, some days aren’t as fruitful. The volume and consistency of available locum positions vary based on several factors, such as your location, the demand for your specialty, and seasonal variations.
Metropolitan areas with high demand for healthcare might have fewer openings. Meanwhile, locum work in rural areas might be more abundant, as is the case for many remote towns in Australia. Enlisting the help of a recruitment agency helps you avoid extended periods of unemployment.
2. Financial benefits
Working as a locum doctor means receiving different financial benefits than a permanent practitioner. Talent.com reports that the average locum general practitioner in Australia earns an hourly $152, while the average permanent GP earns approximately $115. After all, you won’t receive benefits and have a stable income, so the pay balances it out.
Additionally, many locum positions offer allowances to cover travel and accommodation costs while on assignment. These additional payments significantly boost your earnings and offset the costs of travelling to different healthcare facilities—something most in-house doctors don’t enjoy.
3. Tax obligations
If you work as a contractor, you’re responsible for handling your tax obligations. For instance, you need an Australian Business Number (ABN) to register your practice and pay taxes and superannuation contributions. You may also claim tax deductions for certain work expenses, such as further education, journal subscriptions, licence and registration fees, and more.
If you’re a locum for Australian Medical Placements, you can choose whether you want to be an employee or a contractor. As an employee, Australian Medical Placements is responsible for deducting your tax from your salary and contributing to your superannuation fund. It’s more convenient than the alternative since you can focus solely on your quality of care instead of your taxes.
4. Superannuation Funds
Superannuation funds are crucial because they ensure financial security post-employment. While you can’t access employer-specific superannuation plans as a locum doctor, you can still contribute to other Superannuation Funds or self-managed super funds (SMSFs).
SMSFs let you allocate money you’d traditionally put in an employer-sponsored fund into your super, which can have up to six members. You also pick the investment vehicles and insurance to protect your fund. However, managing your own super is risky, so carefully assess your financial plans to determine whether an SMSF or another option suits your needs.
5. Earning opportunity
Locum work is lucrative. You can enjoy significantly higher hourly rates and earn competitive compensation. You may also take on additional assignments or pursue alternative income streams to supplement your earnings.
Then again, the irregular nature of locum work can make it challenging to earn a stable income. It’s best to employ prudent financial management tactics for economic stability amid fluctuating earnings and demand.
Financial Management Tips for Locum Doctors
The following are tried-and-tested strategies to help you mitigate financial risks while working as a locum doctor.
1. Build an emergency fund
Like other independent positions, being a locum can be a risky venture. Income is unpredictable, and you could face weeks or months without work. A foolproof way to protect your savings during such periods is by setting up an emergency fund.
An emergency fund cushions against unforeseen circumstances like home repairs or, in your case, zero-income periods. A rule of thumb is to set aside three to six months of your living expenses. Then, store it in a liquid, easily accessible account for quick retrieval.
2. Prioritise paying off debts
Addressing debts, particularly high-interest ones like student loans, should be a primary focus to fortify your finances. After all, saving funds and building your credit score with outstanding obligations won’t be that easy.
A practical way to achieve this goal is by committing a portion of your income toward debt repayment. Set aside your plans for a vacation, new car, or new home. Instead, put most of your income toward paying off your debts so that you can eliminate them ASAP. At the same time, prioritise loans with the highest fees to reduce accrued interests and keep them from overtaking your payments.
If you have multiple unmanageable liabilities, consider consolidating them into a single loan to pay off most or all of your obligations. By reducing the debts you owe, repayment can be significantly easier.
3. Leverage recruitment agencies
Periods of unemployment are one of the challenges you’ll inevitably face when working as a locum doctor. Finding openings may be challenging, especially in an area with relatively low demand for medical professionals.
Minimise this risk by partnering with reputable medical recruitment agencies. They specialise in connecting healthcare professionals with temporary replacements. They do so by leveraging their extensive industry networks to match you with opportunities aligning with your preferences and qualifications.
Thanks to medical recruitment agencies, you hasten your employment search and access a broader range of job openings to expand your earning potential.
4. Track work-related expenses
Being a locum affords you numerous opportunities to deduct certain expenses from your taxes. However, to utilise this perk, you must meticulously record your work-related spending, including short trips during work hours. No matter how small, every deductible is a chance to retain more of your head-earned income.
Tracking expenses is often tedious; hence, consider using budgeting apps like Frollo or YNAB to streamline the process and ensure accuracy. Some even connect with your bank account, so you don’t have to input your spending manually. Staying on top of tax laws and regulations regarding locum and contractual work is also advisable.
5. Get medical liability insurance that provides enough coverage
Medical practitioners must have indemnity insurance to register with the Australian Health Practitioner Regulation Agency.
Employers may provide additional liability coverage in permanent positions as part of employment benefits. However, given your lack of an employer, you must procure medical indemnity insurance policies that meet your registration requirements, and your work requirements, to protect yourself against legal liabilities.
Investing in an insurance plan tailored to your practice’s demands can ensure adequate coverage for malpractice claims and legal expenses. Remember to conduct your due diligence when looking for an insurer—pick those with a reliable reputation and excellent customer service when insuring locum doctors.
5 Passive Income Ideas for Locum Doctors
Are you looking for low-effort income streams to maximise your earnings as a locum doctor? Here are passive income ideas to complement primary medical practice.
1. Leverage peer-to-peer lending
Peer-to-peer (P2P) lending lets you earn income by lending money to individuals or businesses for interest payments. You could avoid risks by evaluating different platforms based on borrower creditworthiness, loan terms, and reputation.
2. Invest in stocks and shares
This strategy allows you to build wealth through capital appreciation and dividends. While you may invest in any stock, consider adopting a long-term investment approach to minimise losses. Ideally, you leverage online brokerage platforms to make investing much simpler.
3. Explore real estate investments
Another passive way to invest your money is via real estate. For instance, rentals require minimal effort, especially when you hire a property manager to supervise the investment. Meanwhile, real estate investment trusts (REITs) offer liquidity by giving you indirect ownership of real estate assets.
4. Design a medical course
With your medical expertise, you can create and sell online courses catering to fellow healthcare professionals and medical students. Then, regularly update your learning materials to keep your course marketable.
5. Become a consultant
As a consultant, you advise and provide training programs about your specialisation. You may generate passive income through retainer agreements, project-based fees, or intellectual property royalties. This strategy can help establish your credibility and expertise, making you more visible to hospitals looking for top-performing locum doctors.
Maximise Your Financial Opportunities
Navigating finances while working as a locum doctor may be challenging without an employer. However, by prioritising sound money management practices and exploring passive income opportunities, you can enhance your resilience during downtimes and prosper in your medical career.
Make the most of your locum career journey with Australian Medical Placements. With over 30 years of experience, AMP is a trusted medical recruitment agency that matches healthcare professionals with rewarding locum and permanent opportunities across Australia.
Check our listings to find your dream job!
