From more flexibility to the chance to earn more in less time, travel, per diem, and contract jobs have a lot to offer. But if you’re new to them, the finances can take some getting used to! We're here to help with the 10 most important budget tips you need to know for contractors and per diem healthcare professionals.
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10 Budget Tips for Per Diem, Contract and Travel Nurses and Healthcare Professionals
Contract and per diem work can make for an exceptional career, whether it's a long-term lifestyle or a short-term bridge to your dream job. But getting the most out of it takes smart financial planning, for a number of reasons such as:
- Your income is usually unevenly distributed throughout the year
- You'll probably have to set up your own retirement savings
- You want to get reimbursed for work expenses, which isn't an option for salaried employees
For those used to being a salaried employee — or entirely new to the workforce — this kind of budget planning is probably new. It’s not complicated, but it does take a bit of planning and work. Here are the most important things to know.
#1. Estimate your total earnings and Income
Unlike a salaried job, where you’ll take home the same amount of pay with each check, your income can change from month to month in a contract or per diem job, especially if you take time off between assignments. Do your best to estimate your yearly amount based on your past few assignments, or current pay and future plans.
- Pro Tip: If you're having trouble coming up with a number, lowball it. Having too much money at the end of the year is better than not enough!
#2. Understand your tax filing requirements
Contract and per diem healthcare professionals also have to pay extra attention to their tax requirements. If you worked per diem shifts as an employee, your employer will provide that info on a W-2 form. But if you worked as a contractor, you'll get a 1099 form, and you'll need to fill out Schedule C of your 1040.
- Hey, HealthTrust contractors: Get a simple, step-by-step guide to accessing your tax documents here.
#3. Understand your tax liability by state
If you’re a traveler who works in different states, you’ll still usually file where you live and where you're licensed. However, if you spend more than half the year in another state — in other words, if you work more than two 13-week assignments in 12 months — then you may have to file there. If you’re not sure, talk to your recruiter or a tax advisor.
#4. Keep track of day-to-day living expenses
Living expenses can creep up on you as a contract or traveler — for instance, you may not be able to cook your own meals if you’re staying at a hotel. Of course, hitting up restaurants is part of the fun for some travelers! If that’s you, just be aware of how much you’re spending.
- Pro Tip: Remember, HealthTrust offers a weekly meal stipend along with a housing stipend for travelers! Search travel jobs here.
#5. Plan for the short-term costs of moving
If you’re a traveler, then you’ll need to factor short-term costs of moving into your budget, even if those costs are reimbursed. Doing so will help ensure you always have enough cash on hand when you need it. It’ll also save you money by helping you avoid costly last-minute changes or bookings.
#6. Know your deductions
Did you know that contractors can make deductions that salaried employees can’t? It's true, and it includes lots of items you use for work, like scrubs, shoes, stethoscopes, pens. It can even include the money you pay for licenses, education, CE credits, certifications, and the exam you have to take for a new job. Get a longer list here.
- Pro Tip: Nurses and clinicians also get deals and discounts on a ton of everyday products and services, including some of your favorite brands.
#7. Set up a retirement fund
Financial advisors generally recommend putting away at least 20% of your earnings toward long-term savings. If your employer doesn’t offer a 401(k) or similar matching contribution plan, you may be able to invest in a savings fund for self-employed individuals, like a 201(k).
#8. Set up an emergency fund
As a contractor, you'll want to build a separate fund for emergencies — in other words, situations when you’re not able to work, whether from illness, injury, family needs, or many other possibilities. Saving three to six months’ worth of salary helps you better prepare for whatever surprises life may throw at you.
#9. Choose the right banks and credit cards
Budgeting is about more than saving and investing, but also how you access your money and where you keep it. If you’re a frequent traveler, get a credit card that rewards that travel to make your budget go even further. If you’re trying to build an emergency fund, find a bank with a high rate of savings interest.
#10. Find a financial advisor
If you have questions about any aspect of setting your travel or per diem budget — and even if you don’t — it’s worth the time and expense to at least run it by a financial advisor who understands the requirements around state filing, deductions you can take, you much you can invest in an IRA, and much more.
- Pro Tip: Search Google for financial experts in your area who may have experience with travelers, or at least contract healthcare professionals.
Better Meet Your Budget Goals with a New Travel, Local Contract, or Per Diem Job from HealthTrust
As the nation’s leading provider of travel, local contract, and per diem jobs for nurses and healthcare professionals, you can trust us to connect you with the opportunities you need to truly succeed. See for yourself — browse all of our open per diem and contract jobs here.
