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By Richard Chater

How to diversify your income

4 min
Dr Richard Chater profile

More and more medical and dental students are looking to make their money go further, including working while studying.

Dr Richard Chater is a current F1 with a passion for all things personal finance. He has also held down many additional employment opportunities while studying and, more recently, working.

Below he’ll talk you through the framework he uses when thinking about a new income stream to help you decide whether it’s the right decision for you.

Are you looking for additional employment opportunities?

As a medical professional, you may have pursued a number of additional employment opportunities to help you through your studies. But even if you didn’t, you probably volunteered, took part in societies or participated in activities to build your CV.

Spoiler alert – one of the conclusions of this article is that the ‘CV building’ stuff you enjoy can usually be turned into something you earn money from.

It’s also good to diversify your income and passions. Admittedly work as a doctor is about as close to guaranteed employment as you can get, so we typically get less benefit from a safety net side hustle.

However, for me, there were benefits to exploring a different career path to find out if I enjoy it and whether the journey I’m on is the right one for me.

Whether it’s teaching, aesthetics or corporate work, working full time in a hospital rarely exposes you to the realities of working elsewhere.

Be your own boss

When you consider a side hustle, do you think about entrepreneurialism? Maybe setting up your own company so that you’re not carried by the whims of a rota coordinator?

Building a company gives you the power to create something bigger than yourself and ultimately detach your income from the hours you work.

In my opinion, the biggest boon of entrepreneurship as a side hustle is that you can create the job you want, as you want it to be. In medicine we get pigeon-holed back-to-back for most of our careers, moving from one pre-made set of jobs to the next. It’s also often the case that you only get a job that is bespoke to your passions when you’re a consultant.

In business, you pick your niche and grow it as you see fit. Obviously, the drive for success may push you further away from what you envisioned to be successful, but nevertheless, you are in control. 

Finally, an additional consideration is that income through a company is taxed differently to income through employment. While this may not be a big consideration at the start of your career, many consultants and GPs will be paying a 45% income tax rate on any of their additional income.

Being able to potentially pay a lower rate of tax on the money you earn towards the end of your career can be very beneficial. Some people also keep the money their business earns inside the business and then pay it out when they reach retirement to help boost their pension income.

This is just a very brief headline though, so make sure you do your own research to better understand this very complicated topic.

Please note that tax treatment depends on your individual circumstances and may be subject to change in the future.

Opportunity cost

The final thing to mention is locum rates. At the moment, trusts across the country are understaffed. This means you can attract very significant locum pay rates in many places across the country.

When you consider the ‘opportunity cost’ of a business venture, there can often be a high bar for what makes a good financial decision. Locum work is a great way to secure extra income in a way that is formalised, looks like your normal job and is reliable and trustworthy.

There can be a lot of uncertainty when starting a side hustle, and it may be less profitable than it would be to just spend that time locuming.

In summary

I hope this article has helped to guide you to the decision that is right for you. It certainly isn’t an easy decision to make, especially when the financial incentives and your passions don’t align.

But remember, a side hustle isn’t always necessary. You are allowed to try it out, and if it isn’t right for you, take a step back.

If you would like to find out more about Richard, you can follow him on Instagram @richchater, check him out online or download his 15 Minute Finance book.

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