Inflation 101 for NHS Staff: Understanding the 'Hurdle Rate' of Your Wealth
- Simon Wong
- 3 days ago
- 3 min read
Updated: 1 day ago
If you’ve ever looked at your payslip as a Registrar and wondered why you feel poorer than your SHOs did ten years ago, you aren't imagining it. You’re witnessing Inflation—the silent tax that eats your hard work while you sleep.
The "Hospital Canteen" Effect
Think of inflation like this: Imagine the hospital canteen has 100 sandwiches and 100 staff members with £5 each. A sandwich costs £5.
Now imagine everyone gets a 'cost of living' pay rise bonus of £5, now everyone has £10, but there are still only 100 sandwiches.
Suddenly, everyone is bidding £8.50 for the same ham wrap. The sandwich didn't get better; your money just got a bigger number, but less powerful.
Countries print money, cash. As the world has more and more cash floating about. The price of every item on this planets is being driven up. The same numerical value of cash, becomes less and less useful. That's Inflation.
The NHS Treadmill: Why the Strikes Mattered
The recent BMA data wasn't just about 'asking for more'. It was about Restoration.
Since 2008, junior doctor pay has fallen by over 25% in real terms.
An FY1 starting on £39k today feels like they are earning significantly less than an FY1 in 2009 because the "Inflation Treadmill" has been set to a sprint while our pay was set to a walk.
The result 👉 You’re earning more 'nominal' pounds, but you’re being able to afford less for the same amount you are earning.
Your 'Hurdle Rate' - The Clinical Protocol for Cash
In medicine, we have thresholds. If a patient's mean arterial pressure drops below X, we act. You need a threshold for your money, too.
Most seasoned investors use a 3–4% 'Hurdle Rate'
The Test: If your savings account pays 2% but inflation is 4%, you are 'realistically' losing 2% of your wealth every year.
The Treatment: Any asset that doesn't clear that 4% hurdle growth rate isn't a 'safe' investment—it’s a guaranteed slow-motion loss.
'The best protection against inflation is your earning power.' Warren Buffet
As an NHS professional, you are a high-value asset. A specialized consultant or an Advanced Nurse Practitioner has pricing power—your skills are rare and hard to replace.
But Buffett’s secret is pairing that Earning Power with Productive Ownership:
Pensions & SIPPs: Your NHS pension is one of the few things that is actually inflation-linked (a massive win!).
Tax efficient investing via ISAs : Broad market index fund investing, owning a slice of the world’s 1,500 biggest companies (Global Index) means you own business assets that create business value and can raise their prices and subsequently their earnings to beat inflation.
Practical Steps for the Mess Room
Check your Stash: Cash is for emergencies (3–6 months of bills). Anything else sitting in a 1% 'Rewards' account is being eaten by the silent cost of inflation.
Look past the ‘Nominal’ number: Next time you get a pay rise, subtract 4%. That’s your real raise.
Invest in the Self ‘Engine’: Whether it's a new clinical skill or a higher paid clinical role, put your money where it can outrun the treadmill.
Invest in the Investment ‘Engine’: Let your money work for you when you sleep. Let your money compound and grow at rates higher than the rate of inflation!
The Bottom Line: You work nights, weekends, and bank holidays. Your money shouldn't be "on leave"—it should be working just as hard as you do in assets that actually grow.
What is the point in working for money, and yet letting your money disappear through time, making you work even longer just to break even.
Disclaimer
All content on this blog is provided for general financial education and entertainment purposes only and does not constitute financial, investment, tax, legal or any other professional advice. Nothing on this site takes into account your individual objectives, financial situation or needs, and you should not rely on it to make any financial decision.
You remain solely responsible for your own decisions and must do your own research, due diligence and independent learning before acting on any information mentioned or implied here. Examples, case studies and any numbers used are purely illustrative and cannot be guaranteed or replicated in your circumstances.
Investing and financial planning carry risks, and the value of any investment can go down as well as up. Before making any financial, investment or tax decisions, you should seek personalized advice from a suitably qualified, regulated professional adviser.
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