Financial tips for when you start your medical career
After years of study, the end is in sight. Before you start looking after patients and clients, here’s a few simple tips to ensure your own financial health.Learn More
Whether you’re a recent medical, dental or veterinary graduate, it’s an exciting moment when you start your first job. The years of study are behind you and it’s time to carve out a place in the profession of your choice.
One of the most memorable rites of passage is receiving your first payslip and seeing your wages added to a bank account. While the temptation is strong to treat yourself to something expensive, now is the time to take active control of your finances.
Here are seven tips for managing your first professional income:
Your payslip needs to include certain legally required information. Double-check the spelling of your name, the name of your employer, its ABN, the date of the payment and the pay period. Your gross pay and pay after tax should be clearly listed. Any deductions must be detailed, including the amount of each deduction. Any allowances, penalty rates and entitlements must also be listed.
While most graduates are paid an annual rate, some may be paid an hourly rate. If it’s an annual rate, the rate must be listed. If an hourly rate, the number of hours worked and the rate must be listed. Ensuring that all these details are correct on your first payslip, prevents confusion and corrections later.
You probably know that part of your salary will be paid into a superannuation fund for you. While your employer can suggest a suitable superannuation fund (called a ‘default fund’), you are completely within your rights to choose your own fund. Superannuation should be taken seriously and set up correctly from your first pay. Choosing the right fund can make a difference, literally to the tune of hundreds of thousands of dollars, when you retire. Once you have signed onto the fund of your choice, ensure your employer is making contributions as designated on your payslip.
Some people are very diligent about saving for retirement, and they may decide that the compulsory super rate of 10.5% (set to rise to 11% in July this year) isn’t saving enough. If this is you, then you can also choose to salary sacrifice a further percentage of your pre-tax income. The good news is that this reduces what you pay in tax.
The real benefit is the increased amount of money you will have when it’s time to give up work. While it’s hard to even contemplate retirement when you’re a new graduate, superannuation is designed to work in a cumulative and exponential way. The larger the amount of money and the earlier you place it in your super fund, the better the result when you need to access it.
Tracking your spending is the best way to manage your finances and avoid excessive debt. Creating a realistic budget—and sticking to it—helps you to reach your financial goals.
Your take-home pay has to cover all of your expenses each month. Some are unavoidable such as rent or mortgage, petrol, car payments, food and utilities. Some are discretionary such as entertainment, eating out, new clothes and holidays. On top of that, a certain percentage of your income should be saved or used to pay off any debts. Make sure your budget is realistic, liveable and includes both short- and long-term goals.
The most important part of your budget is how much you commit to save. Your savings are your buffer against unexpected bills and costs, protecting you from unforeseen circumstances in the future. Sometimes, it may only be possible to add a small amount to your savings but any amount is a step in the right direction.
Taxation simply can’t be avoided so it’s important to have all your details up to date and correct with the Australian Taxation Office (ATO). The most important piece of information is your tax file number (TFN) that stays with you for the rest of your life. Keeping your information current while lodging your tax returns accurately and on time will make life much easier. Down the track, it’s likely your situation will change. You may even become a practice owner. Once again, keep the ATO up to date and lodge all required forms in a timely manner.
You’ve completed a complex multi-year university course and are now a new graduate, embarking on a career in a vital healthcare profession. Be proud of yourself. Your foot is on the first rung of the career ladder and many exciting and challenging times are in front of you. Your first payslip, earning money from a job that excites and fulfils, is a moment to celebrate. Maybe hold off on the extended overseas holiday or the new Tesla for now, but a nice bottle of wine, dinner with friends, or even a small unnecessary purchase is certainly on the cards. You’ve reached one of life’s major milestones and the future is yours for the taking.
The information contained in this webpage is general in nature and has been provided in good faith, without taking into account your personal circumstances. While all reasonable care has been taken to ensure that the information is accurate and opinions fair and reasonable, no warranties in this regard are provided.