What Travel Nurses Ought to Know About the Cost Adjusted Value of Their Pay
Travel nurses incur costs that traditional permanent employees do not. In this article, we discuss why it’s so important for travel nurses to consider these costs when they evaluate travel nursing pay packages. Additionally, we provide examples of how you can factor these costs into your pay evaluations and obtain the “Cost Adjusted Value”. This way, travel nurses achieve a more accurate idea of what they stand to earn on a travel nursing contract.
In previous articles, we’ve covered the costs that travel nurses commonly incur. Therefore, we won’t go into great detail here. However, let’s look at a couple of examples.
Example Expenses for Travel Nurses
Travel nurses almost always incur expenses related to traveling to their assignment destinations. It’s true that agencies often provide travel reimbursements. However, these travel reimbursements don’t always cover the entire expense.
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For example, you might get $500 to travel from Georgia to California. That’s not going to cover the cost of hotels, meals and gas along the way.
Tax home expenses are another expense that travel nurses incur which permanent employees do not. You see, travel nurses must maintain a tax-home in order to qualify for the tax-free reimbursements that travel nursing agencies provide. Doing so most often requires a travel nurse to pay fair market value for an abode back at their tax-home.
Why Travel Nurses Should Factor Costs Into Pay Calculations
These costs can add up quickly. If you don’t track them and factor them into your pay evaluation, then you could end up netting much less than you expected. Let’s take a look at a couple of examples.
You Might Make More at Your Perm Job
Our first example is a personal story of mine. I worked with a travel nurse named Susan White back in 2007. That’s a fictitious name, but the story below is very real and it happens all the time.
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Susan lived and worked as a Med Surg RN in rural Ohio. She needed to make some extra money to help with some unforeseen family related expenses. She heard she could make a lot of money travel nursing.
I worked with her to land the highest paying job for Med Surg RNs in California at the time. She took the housing reimbursement and netted just over $2,000 per week. That was excellent for Med Surg RNs in 2007.
The job was in rural California. Therefore, we were able to find a fully furnished abode with a very reasonable price for California. It was $1,600 per month and included most utilities.
2 months into her 3-month assignment, Susan realized she was not netting nearly as much as she though she would. So, why was that?
Well, she hadn’t considered the cost of her mortgage, utilities, maintenance and other expenses related to her tax home. She also hadn’t considered how much she would actually spend on traveling to and from the assignment. Finally, she hadn’t considered all the miscellaneous expenses she ended up incurring during the assignment.
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In the end, Susan figured she was making less than $1,000 per month more on the travel assignment than she was at home. Moreover, she was working the highest paying assignment in California. If she wanted to continue travel nursing, she would ultimately end up taking jobs that paid less at some point.
Susan also figured she could make up most of the difference by picking up a few extra shifts back at home. So, she decided to return home after completing her first assignment. While she did come out ahead on the deal, it wasn’t enough to make it worthwhile.
Comparing 2 Travel Nursing Jobs in Different Parts of the Country
Our second example involves travel nursing jobs in different locations. For example, let’s say you currently live in South Carolina and you’re considering jobs in Georgia and California.
We all know that California typically pays more. However, we also know that the cost of living in California is higher than Georgia.
Moreover, you’ll have higher travel expenses to get to California. And, you may need to secure a license in California. Perhaps you can’t bring as much with you on the longer trip so you’ll end up paying more for miscellaneous items.
You’ll need to account for all these expenses in order to properly deduce how much you stand to gain with each contract. We look at how you can do that next.
Total Value versus Cost Adjusted Value
First, you need to determine the Total Value of each contract. Then, you need to subtract all the costs you plan on incurring for each contract. Doing so, will give you your Cost Adjusted Value.
How to Calculate the Total Value
We’ve covered how to calculate the Total Value of pay packages extensively in many of our previous articles. Therefore, we’ll provide a basic overview here. If you’d like to discover more, then here is a list of articles you can review:
- How to compare travel nursing pay packages
- Sample breakdown of travel nursing pay package
- Travel nursing blended rates demystified
- How much do travel nurses make?
To determine the Total Value, you need to add the value of every compensation variable together. In order to do that, you need to break every variable down to a common denominator. The best common denominator is an hour.
Simply put, you need to determine the hourly value of every compensation variable and add them all together. Doing this will give you the Total Hourly Value of the contract or the Total Blended Rate. Then, you multiply the Total Hourly Value by the total number of hours in the contract to obtain the Total Value.
Note that you have both the Total Value and the Total Hourly Value at this point.
How to Calculate the Cost Adjusted Value
Now that you have the Total Value, you can work on calculating the Cost Adjusted Value. Similar to calculating the Total Value, you’ll need to add up the value of every cost you plan to incur for the contract.
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Again, you’ll need to get all the costs into a common denominator. For the costs, you can either use the total value of the cost for the entire contract or you can break all the costs down to an hourly value.
Once all the costs are in a common denominator, you can subtract them from the Total Value. The result is the Cost Adjusted Value.
The higher the Cost Adjusted Value, the more you stand to gain from working a contract. Knowing this allows you to truly understand the real monetary difference between contracts so you can make the best financial decision or at least understand what you stand to gain or lose on a contract.
Example of Getting Costs Into a Common Denominator
We’ve covered how to run these calculations in many previous articles. Here is a quick example.
Let’s say you’re evaluating a travel nursing contract for 13 weeks and 36 hours per week. That’s 468 total hours.
Next, let’s say you will incur a cost of $1,300 per month for maintaining your tax home. There are several ways you can get this value into a common denominator of Hours or Total Cost.
For example, 13 weeks is 3 months. Therefore, you can multiply the monthly cost by 3 to obtain the Total Cost in this case.
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Alternatively, you will work approximately 156 hours per month on this contract. Remember, there are 468 total hours and 3 months. You divide 468 by 3 and get 156. Now, you can divide $1,300 by 156 to get $8.33 per hour.
Use the Ultimate Travel Nursing Pay Calculator
If you’re worried that running these calculations might take you too much time, then we’ve got you covered. If you’re worried that you will make mistakes or that you don’t thoroughly understand how to run the calculations, then, again, we’ve got you covered.
Simply use our free travel nursing pay calculator to guide you through the process and run all the calculations for you. All you have to do is input the information and the calculator does the rest.
You can save your pay packages and revisit them any time you’d like. You can even run side by side comparisons of 2 pay packages. Moreover, the calculator provides negotiating tips and expert guidance so you’re never caught off guard. Check it out!
