The Dangers of Financial Procrastination
Among the biggest financial challenges facing veterinarians is a lack of preparation — which often stems from a lack of knowledge.
Many veterinarians face financial challenges every day, often without the necessary insight on how to deal with them. Darby Affeldt, DVM, a financial adviser to veterinarians and other medical professionals at North Star Resource Group, talks about what can happen when veterinarians fail to prepare for their financial future.
What financial challenges do veterinarians face?
Darby Affeldt: A big challenge that I see veterinarians struggle with — regardless of the economy — is that they haven’t prepared well financially, in their practice or personally. Veterinarians are most often drawn to science and medicine, not business and finance. Many don’t like to deal with financial or business matters and so they put them off. Tomorrow ends up being a sum of yesterdays, and they haven’t done much planning. That’s a headwind that veterinarians continually face. Many times, I’ll meet veterinarians who “think” they have an adviser, but they don’t meet with that person regularly, or once upon a time they had their financial wellness checked. Our financial status is just like bloodwork; it’s always changing and evolving. Nothing stays static, so keeping up with financial health is analogous to getting updated bloodwork.
Can you talk more about the danger of procrastinating?
DA: That’s a great way to put it — it is dangerous. Veterinarians think they’re going to do it another day, but life can continually stand in the way of getting financially organized; there will always be an excuse. It takes discipline to make a commitment to focus on it and get it handled. Time is our ally when it comes to proper financial preparation; procrastination can seriously cause that window of time to close.
Many veterinarians start saving too late for retirement. This math equation underscores how much we need to save: 2 x 3 x 7 x 10 x 52 x 30. Do you know what that is? That’s two people, three meals a day, seven days a week, $10 per meal, 52 weeks in a year and 30 years of retirement. It equals $655,200 that a couple needs to save just to eat in retirement. That’s not including inflation, going out to eat, or cocktails either!
What other dangers stem from procrastination?
DA: Veterinarians often don’t consider or evaluate properly the risks they face, in their practice or personally. I meet many veterinarians who don’t have their income protected. Income is what pays for everything else, including retirement!
Chances are good that most veterinarians — in fact, most people — would suffer if their income suddenly stopped. The average disability lasts for 2.5 years. Veterinarians who don’t have long-term disability insurance to replace their personal income or protect their practice operations may be putting themselves at serious financial risk. A great resource is the Council for Disability Awareness (disabilitycanhappen.org). Disability is not a rare problem! I have clients who are already claiming their income protection benefits and they are only 1 to 2 years out of vet school. It’s tragic, real and a huge threat to financial security.
So, the key to financial success is preparation?
Being prepared early on is key. It means taking everything into consideration and pulling it all together. It should include current financial condition, retirement funding, risk management, portfolio and asset allocation analysis, tax considerations, exit and transition strategies and estate planning.* It could include college funding for children or grandchildren. We start with the end in mind and work back to today to ensure that day-to-day budgeting is realistic and income is more than expenses are. When veterinarians begin their careers with such a high debt load, it means they don’t have the time to make years of mistakes and missteps. Efficiency, proper preparation and discipline are critical to reach financial goals.
*Financial advisers do not provide tax or legal advice. Please consult a tax or legal professional for advice regarding your specific situation.
North Star Resource Group, 4645 N 32nd St, Suite 200, Phoenix, AZ 85018.
Darby Affeldt is a registered representative and investment adviser representative of CRI Securities, LLC and Securian Financial Services, Inc. North Star Consultants, Inc., Insurance Products and Services| CRI Securities, LLC - Securities and Investments | Securian Financial Services, Inc. — Variable Products and Securities | North Star Resource Group offers securities and investment advisory services through CRI Securities, LLC and Securian Financial Services, Inc. Members FINRA/SIPC. | CRI Securities, LLC is affiliated with Securian Financial Services, Inc. and North Star Resource Group. North Star Resource Group is not affiliated with Securian Financial Services, Inc. North Star Resource Group is independently owned and operated. Separate from the financial plan and an adviser’s role as financial planner, an adviser may recommend the purchase of specific investment or insurance products or accounts. These product recommendations are not part of the financial plan and clients are under no obligation to follow them. XXXXXXX/DOFU 5-2017