Posted by Evgenia Galinskaya on 02 April, 2015
When it comes to considering alternative careers, for many doctors there are two main stumbling blocks. Even if you’ve got the answer to the question “What would I do instead?”, the second (possibly even bigger) obstacle is “Can I afford the transition?”.
‘Doctors and money matters’ is a complex topic, which is not discussed openly, other than the occasional damning article in the likes of the Daily Mail.
Whether through choice or necessity, doctors who are considering reducing full-time clinical hours or leaving medicine all together need to face financial planning head-on. Burying your head in the sand about money matters can lead to regrets due to poorly thought-out decisions, or may leave you stuck sitting on the fence while your life is passing by.
Although there are no fast and easy solutions, especially bearing in mind that each person’s situation is going to be unique, there are a number of strategies to prepare for career transitions from a financial point of view. Few lucky medics have a partner who will happily assume the responsibility for supporting the family while you are sorting out your career. If this does not apply to you, you will need to consider some of the strategies outlined below.
Do you know how much is going in and coming out of your account monthly, to the nearest £10? Working out a monthly balance is an essential first step when considering whether, and when, you can afford a career transition. Assess your starting point with this free interactive calculator: http://www.moneysavingexpert.com/banking/Budget-planning
Unlike many other professions, doctors can supplement or even replace their full-time salary by doing locum work.
Upside: (relative) flexibility to choose the time and number of your shifts; higher pay per hour compared to employed positions and a potential to free up more time to plan that career move.
Downside: regular work at a preferred hospital or GP practice is not guaranteed; travel distance to preferred place of work may be long; possibly higher indemnity costs compared to substantive posts; no sense of belonging; constant change of teams and environments can be stressful; if locum work is the only type of clinical work you do, you may have an extra hassle to find a responsible officer for revalidation.
– Doing locum shifts through an agency may get you better pay per hour compared to doing bank shifts through your own employer. Research which agencies supply locums to your preferred hospitals.
– When researching locum agencies, enquire whether they provide CPD activities and a responsible officer for revalidation. Read more here: http://careers.bmj.com/careers/advice/view-article.html?id=20020562
Upside: creating a money-saving strategy and sticking to it can help you feel empowered and in control.
Downside: may be a slow process, during which you might talk yourself out of making career changes (“not worth the hassle”).
– Figure out how much you want to save each month and set up a standing order to put that amount aside, before you pay anyone else. This creates commitment.
– Use this strategy in combination with other strategies, such as smart budgeting (#4) and investing.
– Take advantage of non-taxable ISA savings accounts.
Budgeting is about developing a habit of living efficiently. Over time, these habits can liberate money to reinvest into your career change. Budgeting is about being resourceful, which is doing more with less.
– Small changes in your spending habits can help you create quite substantial savings. For example, if you have a coffee 5 times a week, 48 weeks of the year, that could cost you over £650 per year. If you have the same coffee only twice a week, you could save nearly £400.
– This can help you to prepare psychologically for a temporary drop in income, which often results from career transition (especially if you are starting from a lower position before building your way up)
Downside: cutting down on things you enjoy; can feel like you are lowering your standard of living; can be a tedious and slow process.
– Assess your current financial situation with this calculator and ask yourself “Are there luxuries I can temporarily do without?”. Carefully consider your “wants” and “needs” every month and keep a diary (example: http://www.smartaboutmoney.org/Portals/0/Worksheets/WantsvsNeeds.pdf)
– How can you optimise your current direct debit and standing orders? Are there any payments you make regularly that are strictly not necessary?
– Download and print out vouchers before going to restaurants and days out. Did you know that googling “vouchers coupons UK” generates over a million hits? Well established voucher sites are http://www.vouchercloud.com/ and http://www.groupon.co.uk/ .
– Don’t buy from physical shops. Try things on or test out features of an electronic product in a High Street shop if you have “to get a feel”, but remember that you are likely to get a better deal online.
– Energy saving: http://www.which.co.uk/energy/saving-money/guides/how-to-use-less-electricity/money-saving-tips/
– Book your flights from money-saving websites, such as http://www.momondo.co.uk/.
– If you want to treat yourself, https://www.wahanda.com/ have excellent deals and offers to be pampered in your local beauty salons and spas.
– The following websites provide ample advice and tips for saving money and cutting your daily living costs:
Many doctors, especially SAS doctors, do not realise and therefore do not take full advantage of budgets set aside for staff professional development. Make sure you research what is available for doctors within your department, the Trust and the “Deanery”.
Upside: one of few perks of the job!
Downside: takes time to apply; often associated with unnecessary bureaucracy, which can be demotivating
– Financial support from your employer is not just about “study leave”. How much do you know about your entitlement for travel expenses if you have to travel between different sites?
– At the end of the financial year (i.e. March-April), approach your local budget holder (eg. your immediate supervisor, Head of Department or programme administrator) and ask whether there is any money left unused from the previous year. This is usually the case for most departments, because many staff do not use up their budget allowance. If you can provide details of an event, course or conference you would like to go to, and how it would help the department, you get extra funding from the unused ‘money pot’ (even you have used up your own allocation for the year). A good example would be getting communication skills or leadership training under your belt – an asset on your CV regardless of your career direction.
Downside: high competition; usually for a specific purpose; takes time to do the research.
– There are governmental grants for adult learners – spend some time researching those online. If your career change involves setting up a business, there are a number of grants for small businesses, for example: http://www.smarta.com/advice/business-finance/small-business-grants/how-to-find-a-grant/
– If your career change involves moving into academic research, you may find this grants directory useful: http://www.rdlearning.org.uk/
– There are some useful generic tips when applying for grants: http://www.money4medstudents.org/charitable-trusts
– A list of some national awards: http://www.awardsintelligence.co.uk/
Did you know that professional subscriptions are allowable against tax? This means you can claim back from HMRC many work-related expenses, such as uniform, equipment, memberships (GMC, RSM, RCP, etc) and some exams, travel and courses? If you get a knowledgeable accountant, they could recoup in the order of several thousand pounds for the past 3-5 years.
Upside: unexpected “free” cash
Upside: can negotiate a good deal
Downside: can change dynamic of the relationship (they may make you feel “indebted” to them and you may feel you have to agree with their opinions about your career or business)
When setting up a business, there are many ways to keep your costs down. You can get free legal advice, attend business training and do business research for free via the British Library or your local library, outsource creative work (eg. logo design) for $5 to professionals on fiverr.com. More useful resources for entrepreneurs are listed here.
Upside: money is readily available if you need it fast;
Downside: it is a liability, which can add to any pre-existing debt and exacerbate a financial insecurity of a career transition.
– Try to borrow as little as humanly possible. Ideally, borrow nothing. Credit cards give you the illusion of having money, which can make “making money” less of a priority.
– If you are setting up a business, aim to use profits from your business, and put them back into your business to grow it. If this means cutting your spending while you grow, do that rather than go into credit card debt to support a lifestyle you have not yet earned. Your business should support you, not the other way around.
– If you need retraining, you can research a government-sponsored “Professional and Career Development” loan. The amount you can borrow is between £300 and £10,000, which can be used to assist with the payment of a course or a degree. While you’re learning, you don’t pay interest on the loan. A month after you stop studying, you start paying the interest. The rate of interest is about the same as normal unsecured personal loans. Find out more here: http://www.moneysavingexpert.com/students/career-development-loans
Upside: If a super mansion (or two-bed semi) is less important to you than escaping the rat race and doing something you love, it is a good way to liberate funds and make it possible.
Downside: moving house and re-mortgaging may seem impractical and “too much hassle”; admittedly, the current market doesn’t make this the best time to do this, but it’s one to keep up your sleeve for later.
Upside: can potentially raise quite substantial funds
Downside: a “simple” career change may not qualify!
Find out more at http://www.ukbusinessangelsassociation.org.uk/entrepreneurs
Upside: If you have some spare cash and a career change is not urgent, investing into property may be a good way to secure reliable passive income, which could eventually release you from the rat race.
Downside: slow process; need to learn the ropes from someone who is an experienced property investor.
– It is a common misconception that you must always buy a property to have some financial returns from it (e.g. “buy-to-let”). There are (legal and ethical) schemes that allow you to invest without buying. Learn more by attending “Property Investor and Home Buying Show” or read about the basics of property investment.
All the above strategies have their benefits and pitfalls. When thinking of a career transition, analysing own unique career and financial situation is the first step to figuring out the best way forward.