How to Afford Working as a Per Diem PT

You’ve probably heard about some of the perks of working per diem. You can take time off without asking for it. You can work only a few days a week, or month! You can have more time off at the holidays. You can work in a variety of settings at the same time. But how can you actually afford to work per diem as a physical therapist?

What I Know About Working as a Per Diem PT

I’ve been working per diem for more of my career than not. It hasn’t always looked the same, and I haven’t always been able to take every holiday off or pick and choose my schedule. Some jobs do have holiday or weekend requirements, even for PRN physical therapists. I often get paid more on holidays so I choose to work many of them anyway.

Some of my jobs could have used me every day, so the choice of when to work was basically up to me. Now I generally only cover for planned vacations and some busy days at the last minute, so I feel inclined to say yes more often than not when I'm asked to work. Regardless, working as a PRN PT has given me much more flexibility than working full time ever did.

With that flexibility though, can come some financial instability. I wrote another post about things to consider when deciding if per diem is right for you. In this post, I wanted to explain more about how I got to the point where financially I am able to work without the stability of a consistent paycheck.

For me, it has all come down to ‘budgeting’, building my savings and investing.

Budgeting

For as long as I can remember, I’ve had a very informal system of tracking my finances.

Usually in a small notebook, I’d write down my fixed costs for the month, figure out how much I needed to work to cover those expenses and then the rest of my income became ‘fun money’. Fixed costs include all the things you have to pay for every month: housing costs, utilities, auto expenses, loan payments, insurances, groceries, etc.

I didn’t use an app to track every transaction (they didn’t even exist when I started) or give myself limits on how much I could spend to go out, shop or travel. I kept it simple: pay the bills and the rest could be spent freely. I’m not sure this had a name when I started doing it, but it’s commonly referred to as anti-budgeting in the personal finance community.

Once I had a handle on that, saving and eventually investing were my next steps.

Saving

I started to pay myself first by saving before spending my fun money, not after. I chose a set amount and set up an automatic transfer to move it to a savings account as part of my fixed costs every month. If you can do this, before you know it you’ll have enough to make up for those days when you get cancelled or choose not to work.

I always use a separate online bank for my savings account. If it was at the same bank as my checking account, it would be too easy to access that money. Transfers within a bank take minutes and it’s easy to access that savings account with my debit card. Using an online bank (I currently use Ally) without a debit card means I have to plan ahead a few days if I need to transfer that money to my checking account. But it also means I can’t spend it impulsively.

You can also use these online banks to save for multiple goals at the same time. You can easily set up more than one account, or you can use buckets within one account to differentiate your savings. You might have one bucket or account that becomes a sinking fund for something like travel and another for PTO, or whatever categories work for you.

Investing

Investing is another one of those expenses that falls into the-sooner-you-get-used-to-putting-it-in-the-budget-the-better category.

I definitely did not contribute much (read: anything) to retirement or investments when I first graduated from physical therapy school. I don’t recommend this approach, but I didn’t think I had anything to spare. During my time as a travel PT, I didn’t stick with one company long enough to contribute to a 401k. And I didn’t even know about traditional or Roth IRAs. So I just figured I’d get to it “someday”.

Someday came when I eventually took a full time job and did start contributing up to the employer match. Working full time wasn’t for me for long, but luckily, even when I switched to per diem at that same hospital, I still got a match as long as I worked 1000 hours per year.

The best part about contributing pre-tax money to a 401k wasn’t that it reduced my taxable income, it was that the money was moved into a retirement account before I could ever see it. Every time we got a raise, no matter how small, I increased my contributions. I realized if I never saw the increase in my paycheck, I’d never miss it. I definitely wish I’d figured this out in my 20's instead of 30's, because I missed out on all those years of growth, but I think we all wish we knew something then that we know now.

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My Journey to Financial Independence

While contributing to traditional retirement accounts and investing in a taxable brokerage account might not seem to directly contribute to how I can afford to work less now, they do! By contributing more during the times I worked more, I was able to play catch up with my retirement accounts, including finally opening a Roth IRA. I was also able to add money from selling a house to a taxable brokerage account that I have earmarked for retirement.

This all means that now, in theory, I don’t have to contribute anything more to these accounts and I’ll have enough money to live on once I reach traditional retirement age. This is referred to as Coast FI in the Financial Independence (FI) community. Coast FI assumes that the money I have invested now will grow into the amount I’ll need for retirement at around age 65. In the meantime, I only have to earn enough money to cover my fixed costs and fun money. This means can worry a little less if I choose to take longer stretches of time off or I’m offered less work from time to time.

I’ve only recently reached this point, and I’m not sure I’m completely comfortable without adding anything else to retirement, so I am still planning to max out my Roth IRA for the foreseeable future. And I can always decide to work more and contribute more again if I decide I need to. But the idea that I don’t *have* to contribute as much does take some pressure off and makes the uncertainty of working per diem easier.

My Path to Working Solely as a Per Diem PT

I definitely didn’t start my career working a few days a week at most, and I didn’t get here overnight. I did not have it all figured out the day I finished PT school. In fact, I didn’t have much figured out that day. The PPS system had just started, RUGs weren’t just a thing we beg patients to move in home health, and there weren’t many jobs available.

I started working in sales and eventually made my way back to physical therapy. I pieced together a few part time and PRN PT jobs and worked six days a week to catch up on my student loans…and to live in an expensive city, San Francisco. I choose travel therapy to pay off even more debt and to jump start my savings…and to be able to take large chunks of time off to travel internationally for fun. I worked full time when I needed to in order to fill in some gaps…and buy a house.

My path to per diem PT wasn’t linear and yours may not be either. Whatever your situation, if the flexibility of working per diem outweighs the uncertainty of it, there’s probably a way to afford it. It may not be right away and it may take some planning, but it can be done!