Navigating the rising cost of living
Locums share their top tips for helping to balance the books – from negotiating a fair rate of pay to budgeting basics
10 June 2022
Rising fuel and energy costs, a growing supermarket bill and predictions that inflation will approach a 40-year high of 9%.
Cost of living pressures are causing workers across all sectors to reassess how they prioritise their spending.
For locum optometrists, the price pinch comes following a tumultuous time in the workforce prompted by the COVID-19 pandemic.
The introduction of social distancing restrictions resulted in many locums watching their bookings dry up overnight. However, demand has bounced back during the recovery phase of the pandemic.
“In just two short years I have had sudden declines in work, then overwhelming demand and in my area rates that have skyrocketed due to short supply,” he added.
Phillips noted that rising fuel costs have made it less attractive to provide a geographically broad locum service.
Locum optometrist, Hassnain Safdar, shared that he always tries to stick to a one-hour limit on his commute time in order to preserve a healthy work-life balance.
“The rising cost of fuel is something I’ve had to accept as part of my work as a locum,” he said.
“The fuel shortage makes me slightly apprehensive, but I’ve factored in public transport if I can’t find any fuel,” he said.
As a locum optometrist who does not drive, Rebecca Rushton is expecting the cost of public transport to increase.
Asked whether they had observed the effect of cost pressures on purchasing behaviour in practice, locum optometrists told OT that it was hard to judge if there had been a direct effect.
“I haven't noticed customers behaving any differently, though I've had several conversations about the increased cost of living, so it's definitely on people's minds,” Rushton shared.
If there is a practice that you really want to work with you may decide to make concessions from a financial point of view as you may benefit in other ways
Phillips noted that some patients may cut back on services or products that they perceive as a “luxury.”
“I’d like to think that effective recommendations would mean the customer sees the value in the quality eyewear and eye care that we provide,” he said.
National chair of the Federation of Small Businesses, Martin McTague, shares insight on the hurdles facing the self-employed workforceSelf-employed people are facing huge challenges at the moment, not least the recent hike in National Insurance, which our research found would prompt over two in five self-employed people to raise their prices, worsening the inflationary spiral which has already wrought havoc on bottom lines and cash cushions.
Fuel prices and energy bills continue to rise, hitting many self-employed people especially hard, while disappointing GDP figures from February underline the scale of the challenge facing the economy as a whole.
Around one in 10 formerly self-employed people have left self-employment since the onset of the pandemic. Some have moved into salaried roles, but – as the latest employment figures show – many will have joined the half a million working-age people who are now counted as economically inactive. As a country, we need to find ways for as many as possible of this group to re-enter work, perhaps in more flexible roles, to utilise their skills in order to generate growth and fuel the UK’s economic recovery.
Sharing her budgeting tips, Rushton encouraged locums to have between three and six months of living expenses in the bank to provide a buffer.
“That way it's no biggie if you're off sick for a couple of weeks or if someone doesn't pay an invoice on time,” she said.
She recommended putting a third to a quarter of each payment to one side for tax purposes.
Phillips recommended comparing different options for fuel and parking – especially if working in cities.
“Consider cycling or public transport if convenient and readily available,” he said.
Locums could consider favouring block bookings if working in locations further afield, Phillips shared.
For Safdar, planning his route in advance is key.
“Check if there’s traffic on your route or whether you can take another route to avoid being stuck in a jam. Waze is a good app, which helps to plan your journey in advance and gives you approximate traffic data based on historic reports,” he said.
He also recommended checking whether there is free street parking within walking distance of a practice.
“It may mean you have to walk a little more, but those extra steps don’t harm you,” Safdar said.
Locum optometrist, James Brawn, recommended maintaining a separate account for self-employment.
Brawn noted that having an accountant helps locums to budget for their self-assessment payments.
“They can also advise you on which of your expenses are tax deductible,” Brawn added.
Lastly, Brawn recommended regularly re-evaluating locum rates.
“Due to the effects of inflation, if you charge the same today as you did five years ago, you are now effectively charging less than you did in 2017, yet are more experienced and may also have undertaken additional qualifications,” he emphasised.
Five tax tips
David Davies, of TWD Accountants, shares his thoughts on the steps locums can take to protect their finances
- Have a separate bank account. All income and expenditure related to your self-employed work should go in and out of that account. You should not be using your personal bank account
- You should also have a separate credit card that you use only for your business purchases
- Keep supporting records, either electronically or in hard copy, to support all the figures you use in your tax returns for a minimum of six years
- If you are paid in cash, put it in your business bank account. You should not retain the cash and spend it because then your bank account will not reflect your transactions correctly. This way you have a full electronic trail of your income and expenditure
- Use an accountant. An accountant can save you money and protect you from tax-related risks.
Negotiating a fair rate
Turning to negotiating rates for locum work, Brawn highlighted the importance of knowing what the rate is for locum work in a certain area.
“Early in my career, I discovered to my horror that I was charging £100 less than the other locums in a store, quite simply as I didn't know what other locums were charging,” he said.
Brawn is open about what he charges and his desired working conditions (such as testing times and lunch break duration) when discussing potential work.
“I find that stating these upfront allows negotiations to run more smoothly,” he said.
Phillips noted that keeping an eye on locum apps and recruitment services can provide an indication of available rates in certain areas.
“You can use this information to negotiate better rates with your new and existing practices,” he said.
Early in my career, I discovered to my horror that I was charging £100 less than the other locums in a store, quite simply as I didn't know what other locums were charging
He noted that the offered rate is only one of a range of considerations when deciding whether to work at a practice.
“If there is a practice that you really want to work with you may decide to make concessions from a financial point of view as you may benefit in other ways. For example, working in a practice with new or different equipment may help you develop clinically which in its own way is valuable,” he highlighted.
Safdar encouraged locums to highlight the ways that they can bring value to a practice when negotiating a rate.
“It’s important wherever you decide to work to mention your skills and qualities and what you can add to the practice that will benefit them,” he said.
Locum optometrist, Pete Sharm, emphasised that the rate has to reflect his level of experience.
“I tell the store what else I can offer, whether it is myopia control, OCT training or my current training in independent prescribing,” he shared.
IR35 in a nutshellLocums need to be aware of changes to IR35 rules that were introduced in 2021. These changes may have tax implications for locums. Use the Check Employment Status for Tax tool on the HMRC website: www.gov.uk/guidance/check-employment-status-for-tax
For more information on IR35 changes, contact David Davies of TWD Accountants on 07775 920 927.