Financial Planning for a Variable Income: A Guide for Locum Doctors

One of the biggest perks of working as a locum doctor is the flexibility and potential for higher earnings. But with that flexibility often comes a challenge, managing a variable income. Without a guaranteed monthly salary, it’s crucial to be proactive with budgeting, tax preparation, and long-term savings.

Here’s how locum doctors in Ireland can take control of their finances and avoid the pitfalls of an unpredictable income stream.

1. Understand Your Income Patterns

The first step in financial planning is understanding your earning trends. Locum income can fluctuate based on:

• Seasonality (e.g. winter pressures)
• Assignment type (HSE vs private clinics)
• Specialty demand
• Availability or travel preferences

Tip: Review your income from the past 12 months and identify months with peaks and dips. Use this information to calculate an average monthly income you can base your core budget on.

2. Create a Budget That Adjusts With You

A zero-based budget works well for variable income. Instead of spending based on last month’s earnings, allocate every euro based on the money you’ve actually received.

Divide your budget into:

• Essentials: Rent/mortgage, groceries, utilities
• Flexible spending: Travel, dining out, subscriptions
• Savings and taxes: See below for recommended percentages

Use budgeting tools like:

• YNAB (You Need A Budget)
• Revolut Vaults or Spaces in N26/Monzo
• Google Sheets for custom trackers

Tip: Create a “base income” (your lowest average monthly earning) and live off that, treat any extra as savings.

3. Tax Planning: Stay Ahead of Revenue

As a self-employed or agency-engaged locum doctor, you’re responsible for your own taxes. That includes:

• Income tax (PAYE or self-assessed)
• USC (Universal Social Charge)
• PRSI (Pay Related Social Insurance)

Steps to stay compliant:

• Register for self-assessment with Revenue (Form TR1)
• Submit annual tax returns by 31 October each year
• Keep receipts for business-related expenses (travel, CPD, equipment)

Top Tip:
Set aside 30–40% of each invoice into a separate “tax account” immediately after being paid.

If you’re unsure about allowances or deductions, consider using:

• Taxback.com
• a local accountant familiar with medical professionals
• Revenue Online Service (ROS) for filing

4. Invoicing Best Practices for Locums

Efficient invoicing ensures timely payments and reduces stress.

Tips for success:

• Use templates or invoicing tools like QuickBooks, Xero, or Bonsai
• Include full details: Your name, PPS number, bank details, invoice number, service dates, and VAT (if applicable)
• Track due dates and send polite follow-ups

Pro Tip: Keep a log of all issued invoices, due dates, and payments to ensure no income goes missing.

5. Build a Rainy-Day Fund

With inconsistent monthly income, it’s vital to have a buffer fund.

Aim to build at least 3–6 months’ worth of essential expenses. This fund helps cover:

• Gaps between contracts
• Unexpected expenses (car repairs, medical emergencies)
• Seasonal slowdowns

Where to save it?

Use an easy-access savings account with a competitive interest rate (e.g. An Post State Savings, Revolut Savings Vault, or credit unions).

6. Protect Your Future: Insurance & Retirement

With no employer safety net, consider the following:

• Income protection insurance: Covers a portion of your income if illness prevents you from working.
• Private health insurance: Useful for quicker treatment and peace of mind.
• Pensions: Set up a PRSA or private pension with regular contributions. It’s tax-efficient and future-proof.

Final Thoughts

Working as a locum doctor offers professional freedom, but managing a variable income takes discipline and planning. By embracing smart budgeting, staying tax-compliant, invoicing efficiently, and preparing for downtime, you can thrive financially, no matter how your income fluctuates.

Take control now, and your future self will thank you.

Get in touch with our dedicated team as we nurture a community in which locums can flourish and extend exceptional care to their patients. For more information on any of our roles contact a member of our Locum Express team on +353 (0)21 4297901 or email us at info@locumexpress.ie. You can also register online here.