The relationship between a person and their money is shaped by many factors, one of which is their ability to generate money in relation to time and energy spent doing so. For most people, this is primarily through their job. As such, what are the particular key factors in a medic’s life that will impact on their finances?
In the beginning
Going back to the halcyon days of university, medical undergraduates rack up more time at their alma mater than most. At the ‘short’ end of the spectrum, four-year ‘accelerated’ graduate programmes are still longer than most UK degrees (excluding Scotland) and you’ll already have clocked in for a whole degree beforehand. At the other end, a full blown undergraduate degree with intercalated BSc will set you back a princely six years. Only a complete architecture degree beats that for length (seven years).
Since the government allowed a rise in the maximum chargeable tuition fee in 2012, new students can expect to pay £9,250 per year in tuition. Even with an NHS bursary covering the final one or two year’s tuition fees, new doctors can expected to be saddled with nearly £40,000 worth of tuition debt alone. Most graduate with between £50,000 and £90,000 of debt in total. Once you add in interest rates that reach 5-6%, things are off to a bad start. “Get a job at university!” is perhaps not an unfair retort, though don’t underestimate the difficulty of the degree and the requirement for some serious graft to pass.
Another consequence of a long time studying is what one might call the ‘six-pointer effect’. In football, when two teams fighting it out in a similar position play, the value of a win over your rival is not just three points your team gets, but also the three points the opposition fail to pick up i.e. six points. For medics the extra one, two or three years spent studying compared to a standard degree length mean they have more time accruing student loan debt and less time in a job earning. A financial six-pointer, so to speak.
The working years
Pay is, as ever, a controversial topic. Are medics paid too much? Too little? Do they sit in the metaphorical Goldilocks zone of income? A full debate on this questions is beyond the scope of this initial offering, but let’s look at some numbers.
First year doctors’ basic pay is £27,689, according to the latest NHS pay circular. That falls pretty much in the middle of the Office of National Statistics‘ two ‘average’ UK salaries for 2019; £24,897 (median) and £30,629 (mean). As a source of comparison, those graduates who choose to enter the Civil Service’s fast-stream can expect a starting salary of £28,000 for three years, followed by an increase of between 61% and 96% (to £45,000-55,000).
From there it gets a bit tricky to calculate owing to the varying lengths of specialty training programmes. Assuming the longest training possible, one would experience three basic pay rises in the first five years (16%, 18% and 27% respectively). This is counter-balanced by five years of stagnant pay thereafter.
Another increase (66%) at the time of earning a consultant job is again balanced against multiple five-year blocks of unchanging salary. The increases in-between these blocks work out as annualised increases of <1.5%/year.
The Cost of Working
Income is not an isolated number, but can be related to the time and energy input to earn it. This is difficult to quantify as it will vary hugely amongst individuals and specialties. The European Working Time Directive keeps medical rotas to a 48hr week, although this doesn’t account for extra time spent staying late at work. In theory the latest junior doctor’s contract says time for the myriad of other bits and pieces (think exams, audits, portfolios etc.) that are required for career progression should be included in working hours; the reality is that most still use their free time to complete these requisite add-ons.
Similarly, the physical and emotional toll that is paid by a medical professional is nearly impossible to quantify. It’s a discussion for another post, perhaps, though a brief nod towards the GMC’s new ‘Caring for Doctors, Caring for Patients’ report is acknowledgement that there is a problem in this regard that needs addressing.
A 2011 paper by the BMA concluded an ‘average’ UK doctor will spend ~£17,000 on post-graduate training (range £7,000-£25,000). Exams, the GMC’s licence to practice , medical indemnity, college membership subscriptions and a battery of other mandatory expenditure is required to stay on track.
The End is Nigh
As one’s time in NHS employment draws to a close, the NHS Pension comes ever-closer. Fully understanding the inner workings of the NHS Pension Scheme is a story for another time and we have planned a series on it. It’s anecdotally described as “good” and there’s probably some merit in that description.
Recent news has been more to do with pension taxation. A new consultation regarding this, in order to prevent (more) consultants reducing their working hours to avoid hefty tax bills, is in process. Let’s not get bogged down in the nitty gritty now, but suffice to say that there’s a chance you’ll have a reasonable pension waiting at the end of the line. You might just need to keep an eye on the numbers.
What’s the point? Where’s the FI?
The aim of this initial post is not to dismay about student loan debt, whine about salary or bemoan the NHS Pension. Similarly, we hope you’ll find personal opinion scant and facts aplenty in a piece that is primarily aimed to educate those both in and outside the profession.
Financial Independence is a personal quest that must come with a degree of introspection and understanding of the paths that one might, could or should take. Too few understand the nuance of their projected financial journey and the significant impact this will have on your life as a whole. We hope this post serves as a starting point for your own thoughts about finances, FI(RE) and ultimately the way you want your life to be.
We hope you enjoyed reading,