Financial Planning through the Stages of a Veterinary Career: The First Five Years

By Josh Ervasti, Partner, R² Financial Strategies

In this blog post, we will discuss some important financial planning considerations for the first five years after graduating from veterinary school.

Establish an Emergency Fund

One of the first things you should do after starting your first job is to create an emergency fund. This fund should contain at least three to six months' worth of living expenses, which will provide you with a cushion in case of unexpected expenses or a job loss. Having an emergency fund can help you avoid going into unnecessary debt and provide peace of mind.

Learn Budgeting Basics

To achieve your financial goals, it is essential to have a basic understanding of budgeting. Creating a budget will help you track your income and expenses, identify areas where you can cut back on spending, and ensure that you are living within your means. Many online resources and apps are available to help you create and maintain a budget. R² Financial Strategies has compiled a list of “Financial Calculators” to help get you started.

Get Protected

The best financial plans are only as good as their weakest link. In many cases, these weaknesses exist where people fail to protect themselves—and their families—against unexpected financial risks. Basic protections that every doctor should maintain throughout their career include Professional Liability and Veterinary License Defense coverage, Long-Term Disability Insurance, and Life Insurance.

Other types of insurance coverage that may be beneficial, depending on your specific situation, are Short-Term Disability, Student Loan Disability, Critical Illness and Professional Overhead Expense coverages. Talk to an insurance professional to learn more about which types of coverage are right for your situation.

Plan for Student Loan Repayment

As a new graduate, you are likely to have student loan debt. It is important to create a plan to effectively manage and reduce this debt as soon as possible. The AVMA provides a series of helpful videos about loan repayment strategies that should be part of that plan. Additionally, you can use the VIN Foundation’s student loan repayment simulator to explore different repayment options and determine which one is best for you.

Depending on your long-term goals, you may decide to pay down debt aggressively. But if those goals include a large capital investment, such as starting or purchasing a practice, you may opt to make lower debt payments to allow for greater immediate savings.

Start Saving for Retirement 

Starting to save for retirement early is critical to your financial future. Even small contributions made early in your career can have a significant impact due to the power of compound interest. If your employer offers a retirement plan, be sure to maximize any employer match that may be available. If you do not have access to an employer plan, consider Roth and IRA options for retirement savings.

By establishing an emergency fund, creating a budget, maintaining proper insurance protections, and having a plan for student loan repayment and retirement savings, you can set yourself on a path to a successful financial future. As a new graduate, you have many opportunities ahead of you, and by focusing on your finances early on, you can set yourself up for long-term financial success.