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If you are final year medical student, you’re probably in plenty of debt. and looking forward to being paid. Society tells us doctors earn a lot of money and own flash cars and mini-mansions. But how much do doctors in Australia really earn? Are your expectations realistic?
Interns receive gross pay of $65,000- $75,000. This is a little under the Australian mean average of $89K, but often more than the median income of $66K.
Doctors’ pay increases in the public system for each additional year of experience (up to a point).
Larger pay increases occur when a doctor is promoted a level e.g. from internship to residency.
In this article I have adjusted my income from PGY1 to PGY9 for inflation as an example.
The pay on a job offer can bear little relation to the actual pay received. Base pay is affected by many factors included in your award.
Each state has a different award / package. Penalty rates paid for working weekends, evenings and overtime often make for highly variable pay fortnight to fortnight.
How much do Doctors Earn in Australia: Different Specialties
A significant pay increase usually occues with the step up to specialist status.
From ATO data last reported in 2016-17, doctors declared gross income between $200,000 and $400,000.
An average GP specialist can earn $200,000 per annum, with wide 95% confidence intervals!
Surgeons, anaesthetists and cardiologists tend to be the highest paid, grossing ~$500,000.
Due to our progressive tax system, the difference between gross $400,000 and $500,000 is net $54,000.
How Much do Doctors Earn: Private vs Public
There is theoretically no upper limit to private income. Private specialists can earn more than in public hospitals, particularly if they are a procedural specialty.
Pay upwards of $500,000 sounds amazing, but can come with work-life balance challenges.
These specialists (along with GPs) are self-employed, so miss out on paid leave and professional development packages. They can struggle to take holidays and have no guaranteed income. Overhead costs such as rent and staff wages continue regardless of income (this became an issue during COVID-19 lockdowns).
On the plus side, private work can provide opportunities to be your own boss, escape public hospital management and have more autonomy. Owning your own business also has potential tax advantages over being paid “Personal services income” as an employee or sole trader.
How Much do Doctors Earn in Australia vs Elsewhere in the World
Compensation for Australian doctors is generous.
Pay is generally higher than in the UK. It is not as lucrative as in the US, but American graduates are commonly saddled with hundreds of thousands of dollars in student loan debt.
The Australia healthcare system, although far from perfect, is in my opinion, a close to happy medium between the socialist ideals but chronically underfunded NHS, and the profit driven system in the US.
Have you worked elsewhere in the world and want to add your perspective to pay and conditions? Please add your comments below.
How Much do Doctors Earn: More than Enough
Whether your final wage is $200K or $500K, you will be among the highest paid professions in Australia. Any variation within this range, and you have pretty much won the lottery of life!
But income does not equal wealth. There are high earning professionals who don’t save or accumulate wealth. The average earner would laugh at the suggestion a specialist could spend all their earnings and fail to save for emergencies, extended holidays and retirement. Lotto winners and MC Hammer teach us, there is literally no limit to the amount of money an individual can blow!
“Adaptation” means we pretty quickly get used to new luxuries, no longer appreciating them, but feel deprived if they are removed. They become the new normal.
An upgrade in the wine you drink from a cheap and cheerful $10 bottle (or box!) to a $20 bottle seems reasonable. But a similar upgrade in every area of your life doubles your expenses. Once the upgrades are applied to big ticket items (houses and cars) this becomes very significant.
Lifestyle inflation is so insidious it leaves many perplexed about where their income vanishes. Living the new normal, people tend to look for the next luxury to treat themselves with (YOLO).
The end result is that professionals’ decades into well-paying careers can be left with inadequate retirements savings to fund their lavish lifestyles.
How Much do Doctors Earn: Expectations vs Reality
I vividly remember my “Last” economy long-haul flight after final year of medical school. It was a cramped, uncomfortable and pretty miserable 24 hours. I enjoyed the thought that this would be the last time I flew so far in economy. Doctors are rich after all!
I have still never flown anything above economy, 15+ years into my career. Paying triple or more for the comfort of business class is hard to justify. My income (along with everyone else’s) is limited. Everyone has to choose what they prioritize, although many of us don’t realise this for decades.
Society has firm expectations that doctors are “Rich”. I had certainly internalized that, and I think many others do. It can lead to an expectation that you can afford anything and everything you desire.
Even Above Average Income Earners Need to Make Some Effort
There are low income workers who hustle hard and grow impressive wealth through investments.
It is no doubt far easier to build financial freedom with a higher income, but it will not happen automatically.
Everyone has to put conscious effort into managing income effectively in order to find balance between YOLO and financial freedom.
For me, financial freedom means having savings to cover emergencies (e.g. COVID-19 shutdown) and make lifestyle decisions independent of financial implications (e.g. 6-12 months off work for travel, changing to a lower paid but more enjoyable job).
The financial independence crowd call this “FU” money! What does financial freedom mean to you?
How to Use your Above Average Income Effectively
Taxation makes working for income less and less efficient as you earn more.
The progressive tax system in Australia means you are paid less net per hour as your income increases. Once you are paying 46% tax you’re real hourly rate is almost halved!
Not relevant if you love your job and want to work full time or more forever.
But if you would prefer to work fewer hours, or take extra leave unpaid or want to leave that as an option later if your priorities change, it is worth considering limiting your spending within tax efficiency.
Many doctors end up with crippling financial commitments.
Your choice of home and car are the most powerful factors in how much you are able to save and invest. Weigh the luxury big ticket items very consciously against the freedom you are losing as a result.
Consumerism and the Environment
Many doctors wish to make a positive impact on the environment. Buying a keep cup is a real token effort when you are purchasing new cars every few years, and online shopping for luxuries every week.
Living frugally, minimising waste, taking local holidays more often and making your own coffee in an actual mug all benefit your finances and the environment.
Hang Out with People on the Same Path
The people around us have a huge effect on how we think and act. If you’re surrounded by doctors
comparing the latest BMW models, and other luxury items you will find yourself
thinking of this lifestyle as the expected norm.
Surround yourself with average earners, and your expectations will be lower and grip on reality stronger! The average Australian household (with 2.4 people) spent $74K in 2016. That’s ~ $80K this year accounting for inflation.
How does your spending compare?
I hope no-one really chooses friends based on their income! But try not to hang around doctors all the time. If you’re keen to start saving more, find a savings facebook group you like. You will find great ideas for how to gradually increase your savings by hanging out with others trying to do the same.
Subscribe to this blog for reminders to keep you on course.
Get your Spending Under Control
Every household needs an effective money management system.
Below is my very simple system that compensates for the lumpy income many of us recieved.
Scott Pape has a detailed system in his excellent book – The Barefoot Investor 2019 is currently on sale at Amazon*.
In my opinion(and many other doctors) the number one financial management book in Australia, and it’s currently on sale!
Doctors in Australia are paid well, but usually not enough to buy everything society expects.
Utilize the opportunity afforded by average income by managing your money effectively. Spend it on what you decide is a priority.
Appreciate your position of privilege and Pay it Forward in a way that is meaningful to you. Giving others a hand up inevitably gives the giver far more joy than a stupid flash car.
Work for the love of what you do, not for the money to cover your ridiculous mortgage.
Aussie Doc Freedom is not a financial adviser and does need offer any advise. Information on this website is purely a description of my experiences and learning. Please check with your independent financial adviser or accountant before making any changes.See full terms and conditions in footer