Emergency Funds

Given the uncertainty involved with traveling medical assignments, it is crucial to have an emergency fund before starting a contract. This fund should be large enough to cover all of your primary expenses for at least 3-months. If your contract is canceled or the bill rate has dropped, you need to have enough money to carry you from one job to the next without going into financial distress or racking up credit card debt.

Emergency funds give you the security and peace of mind when something unexpected happens while on the assignment. Whether you encounter car trouble or need to fly back home to take care of family, you must be financially secure before you start to travel. Although travelers get paid well, there can be several weeks to months between the end of one job and the start of the next. The goal is to be a traveler that wants to work, not one that needs to work.

How to calculate your emergency fund

Figuring out how much you need to save for your emergency fund is relatively simple. Look back at your last three months of expenses including, rent/mortgage, food, fuel, insurance, car payment, etc. It's best to actually sit down and write this out or put it into a spreadsheet. Add all recurring monthly-bills together and multiply them by three. This should be the base of your emergency fund. You may want to add an additional 10-15% to this incase there are additional unforeseen expenses while you are between contracts. For those who are more risk adverse, you may want to save for 6-months worth of expenses.

Upfront costs

A lot of upfront expenses are incurred while traveling. Before you receive your first paycheck from your agency, you will be responsible for many overhead costs. These include housing deposits, scrubs, commuting expenses or airfare to your location, food for the first 2-weeks and any additional necessities along the way.

Yes, many of these expenses are reimbursed by your agency. But the traveler is responsible for the upfront expenditures. Although not an ideal use of an emergency fund, it can operate as a buffer to pay for these expenses between assignments if you have no other funds saved. If you do tap in to your emergency funds, be sure to replenish them immediately once your first paycheck comes in.

Flexibility

When you have an emergency fund saved, you develop a greater sense of flexibility. You no longer need to hastily swing from one contract to the next, but you can become more selective. After you finish one assignment, you can carefully choose your next. You can wait to see if a desired location, shift, or better paying contract comes available.

Travelers living paycheck-to-paycheck don't have that luxury and will feel pressure to take the first contract offered. An emergency fund is the financial backbone of a resilient traveler.

Strength

Having a small cushion of cash can give you the strength to stand up against a pay rate drop. Knowing that you can comfortably walk away from an unfair adjustment in pay is empowering. This is a fundamental piece in calling their bluff. Before you can imply that you will leave an unfair contract, you need the financial capability to do so. You don't want to be the one bluffing in a negotiation. An emergency fund grants you the stability to fight back in an unjust or dangerous situation.

Invest

Once you have a healthy reserve saved in your emergency fund, you can begin to invest the additional cash you make as a traveler. There are many different accounts (401k, IRA, HSA, and Brokerage accounts) that you can invest in. Deciding which one to fund first, how much to contribute, and what to buy in the fund can be overwhelming and personal.

In the next few weeks we will further dive into these topics. Traveling medical professionals can easily achieve F.I.R.E (financial independence retire early) by learning the basics of budgeting, saving and investing. Follow along using the subscribe box below this article and find us on Facebook.