A locum (from the Latin locum tenens, meaning “placeholder”) is a doctor who takes on a temporary or casual medical role, ranging from a single shift to several months. Doctors may choose locum work while transitioning between training positions, seeking greater flexibility and work-life balance, or pursuing experience in a particular specialty.
That flexibility also changes how your finances need to be managed. Unlike salaried employees, locum doctors are often responsible for handling irregular income, tax obligations, superannuation, insurance and long-term financial planning on their own.
For medical professionals already doing locum work or considering it, understanding these moving parts is essential to making the most of higher-income periods, avoiding common financial pitfalls and building long-term financial security.
One of the biggest differences between locum work and permanent employment is that income can fluctuate throughout the year, so understanding the financial aspects matters, especially when pay rates typically sit around $100 to $250+ per hour.
Some months may involve a full schedule of shifts across different healthcare settings, while others may be quieter due to leave, travel or changing work preferences. A budget and cash flow plan that accounts for these variations can help you manage living expenses and make the most of higher-income periods.
For example, one shift can materially change monthly income; a 10-hour locum shift can earn over $1,000.
Building a cash reserve can provide peace of mind and help cover expenses during periods when work is less consistent. It can also reduce the pressure to accept placements purely for financial reasons, whether that means taking one shift you do not need or choosing roles more selectively.
One of the biggest adjustments for new locum doctors is managing their tax obligations. How you are engaged, either as an ABN contractor or a PAYG employee, determines whether you need an Australian Business Number (ABN) and how your income is reported to the Australian Taxation Office (ATO).
If you engage as a contractor without PAYG tax automatically deducted from each payment, it can be easy to underestimate the amount ultimately owed to the ATO. Regularly setting aside funds throughout the year can help you avoid an unexpected tax bill. It is also a common misconception that all travel costs are tax deductible, as travel to a regular workplace is generally considered private.
Working with an advisor can also help ensure you're aware of deductions, record-keeping requirements and the most appropriate structure for your circumstances, and professional advice can assist with understanding which work-related expenses may be deductible under tax law. Examples include travel expenses where doctors are required to attend different sites such as private hospitals, car expenses where work related travel is incurred, accommodation and accommodation expenses when staying away from a permanent home, relevant education costs, fees for a locum agency, medical equipment, laundry expenses for a compulsory uniform where the policy is consistently enforced, and fees for preparing a tax return or tax agent services. Remember that each cost must be genuinely work-related before it is deductible.
When moving into locum work, superannuation can sometimes become a lower priority than immediate cash flow.
However, retirement planning shouldn't stop simply because employment arrangements have changed.
Locum doctors should regularly review their super contributions to ensure their retirement savings remain on track. Depending on their circumstances, additional contributions may also create tax planning opportunities.
For most doctors, your ability to earn an income is your greatest financial asset.
That's why reviewing insurance arrangements is particularly important for locums, who often step in for other doctors and typically hold the same clinical responsibilities as permanent staff. Income protection insurance, life insurance and other personal risk cover should align with your current work arrangements, financial responsibilities, and any relevant premiums.
Many doctors assume existing insurance arrangements remain appropriate after moving into locum work, but changes in employment structure can sometimes create gaps in coverage, especially when your work brings you into contact with new teams and patients.
The flexibility of locum work can make it easy to focus on short-term income opportunities. However, long-term financial planning remains just as important, especially when your income in the medical industry can shift by specialty, surgery exposure, and location across the medical field as your career path develops.
Emergency medicine often attracts competitive pay rates, while specialist registration can open more specialised roles and stronger opportunities for junior doctors, general practitioners, and others building a medical career. Rural locum positions also usually offer higher compensation than urban ones.
Questions worth considering include:
Are you building wealth outside of your day-to-day income?
Do you have a clear investment strategy?
Are your financial decisions aligned with your future lifestyle goals?
What does retirement look like for you?
Taking a broader view can help ensure today's income opportunities translate into long-term financial security.
Locum doctors often face financial circumstances that differ from both salaried employees and business owners, so advice should reflect their personal circumstances as well as the practical steps involved in starting this kind of work.
From tax planning and superannuation to investments and wealth creation, specialist advice can simplify financial decisions and help ensure opportunities are not missed. Starting these conversations early also allows future career moves and financial goals to be considered together from the outset.
At Cutcher & Neale, we work with medical professionals at every stage of their careers, including doctors pursuing locum opportunities. We understand the unique financial challenges that can come with variable income, changing work arrangements across hospitals, and complex career pathways.
Whether you're new to locum work or have been locuming for years, our team can help you manage the financial complexities of variable income and changing work arrangements while building a strategy for what comes next.