A significant source of stress for practitioners of all ages is managing their money. New graduates often have large amounts of educational debt, while veterinarians established in their careers might be contemplating practice ownership. Others might have tuition payments for children entering college, and those nearing retirement might be concerned about their ability to fund their “golden” years. No matter the cause, financial worries can eat away at a person’s sense of well-being.
The first step to financial wellness is truly understanding your monetary situation. Many—if not most—people only think about their personal financial status when they are forced to do so for a credit application. But having a true picture of your assets and liabilities will allow you to make informed financial decisions that make sense for you.
To begin, list all the valuable things that you own, such as your car, home, stocks or bonds, savings accounts, etc. Offset these assets by listing amounts that you owe and when the debt will be paid up. For instance, if you have a mortgage on your home, list its current market value as the asset and the current amount of remaining mortgage principle as the liability. Add up the value of your assets and subtract the amount of your liabilities. A negative number is very common among young professionals just beginning their careers, so don’t despair. Repeating this exercise on an annual basis will help you track your financial progress.
Simply being aware of something will often change behavior and outcomes. If you have been diligent in depositing funds in your 401K plan, and you watch the balance growing, the positive feeling this creates will encourage you to continue to save regularly. If you are contemplating buying a new car but you have recently assessed your assets vs. liabilities and come up with a negative number, a used car might suddenly seem like a better idea. If you are blissfully unaware of your financial status, the low payment on a new car financed over 72 months might seem like the perfect way to chase your blues away. NOT!
Making smart financial decisions throughout your life can really make a difference in your future well-being.
Saving for retirement from the time of your very first paycheck is one of those smart financial decisions. The power of compounding means that if you start saving $5,000 per year at age 25 and do that for only 10 years, you will accumulate more funds by the time you are 65 years old than if you saved $5,000 per year from age 35 to 60. Financial advisors call this “paying yourself first.” Saving $5,000 a year means putting away $416 each month. It seems like a lot of money at the beginning of your career, but you will not regret it.
If you are a recent graduate, establishing a plan for paying your student loans as quickly as possible is wise, if you can afford to do so. Others might find that available federal forgiveness programs can work best for them. Because of the tax consequences of loan principal forgiveness, it is imperative that you carefully evaluate all your options before choosing your path. The AVMA and VIN have excellent resources to explore.
Becoming a practice owner can be a good financial decision if the practice is appropriately priced, because then the profit of your labor flows to you. Although the responsibilities of owning a small business might seem daunting, this is a good way to increase your net worth and annual income. Whether starting your own practice or buying shares in the practice where you are an associate, learn as much as you can about business management in order to maximize your firm’s success.
Saving for future expenses, such as for your children’s college or for a down payment for a house, requires discipline and avoidance of unnecessary expenses—but the payoff is decreased financial stress.
Life does not need to be focused on the acquisition of things. Experiences that broaden your perspective and relationships that bring you joy and connection can be of greater value.