Note: This post originally published in December 2018. It has been updated for 2019.

According to the Merck Animal Health Veterinary Wellbeing Study, one of the biggest stressors in a veterinarian’s life is money. One could argue that this is a top stressor for almost anyone, but veterinarians are especially prone to financial stress.

Why? Well, I would bet that one reason is because new graduates are coming out of school with an enormous amount of debt, far exceeding the recommended 1.4:1 debt-to-income ratio. According to the latest numbers from the AVMA, the graduating class of 2019 has a debt-to-income ratio of 1.86:1. The mean starting salary was just shy of $85,000, while the mean debt for US graduates was about $149,877. The mean debt had decreased from the class of 2018, likely due to the increased number of veterinary graduates who had zero debt upon graduation (17% in this survey).

The numbers are even worse for US students that attended the two Caribbean schools, Ross University and St. George’s University. They graduated with a mean debt of over $274,942. Compare this with nonresident graduates of US veterinary colleges, who had a mean educational debt of $184,931.

This is not an auspicious way to start out one’s career.

Veterinarians that are mid-career are usually juggling multiple financial obligations at the same time. They may STILL be dealing with large student loan debt burdens. They are likely to be homeowners. If they are married, then they have married into their partner’s current financial situation. They’re figuring out how to save for retirement. They may be raising children, which carries its own hefty price tag. There is the possibility of taking out even more student loans in the form of parent loans for their children. In the midst of this, they are also figuring out how to care for elderly parents.

Finally, you have late career veterinarians that are close to retirement. They may or may not be financially prepared for this milestone, possibly delaying retirement because they cannot sell their practices or they simply cannot afford to be retired.

Regardless of your life stage, there is always room for improvement in your financial life. Your finances don’t fix themselves. You are the one behind the wheel, and so it will be up to you to make some changes if you want to reach any specific financial goals. As we close out 2019 and look forward to the new year (and new decade!), it’s an opportune time for a fresh approach to your finances.

If you are just starting to dip your toes into personal finance, here are some resolutions that you can start today.  You get to pick and choose what you’d like to work on. Just picking one will be a financial win; choosing to fulfill all of these resolutions will be even more rewarding.

FIVE FINANCIAL NEW YEAR’S RESOLUTIONS

1. Calculate net worth

Do you know your worth? Of course, I’m not talking about your worth as a human being- that’s immeasurable. But every single one of us can calculate our net worth, which is simply our assets minus our liabilities.

Coming out of school, it’s expected that you will have negative net worth. This is not anything to be ashamed about- it’s reality. However, how you treat and manage your money will have a huge impact on how your net worth progresses over time.

One thing to remember is that this number will fluctuate, and it will not always move in a positive direction, even if you’re being financially responsible. For example, stock market volatility will have a larger impact on your net worth if you are heavily invested in the market. If you have built a sizable retirement account, then you can expect times when your net worth goes down during a bear market before it goes back up again. The key is that your net worth is trending upwards over time.

What I find most useful about net worth is that it forces you to gather every single financial account that is in your name. Having this information in one place automatically makes you more organized about your finances. It’s difficult to measure progress without knowing your starting point.

Want a snapshot of your financial situation, including your net worth calculation? Download this free template!

2. Figure out your student loans

The student loan landscape has evolved drastically since I graduated in 2003. Graduates are now saddled with more debt than ever. The rules and regulations regarding loan repayment has made this a topic that even professional financial advisors have little capacity to handle. It is truly a system that is stacked against the borrower.

The bigger your loan, the costlier your mistake if you aren’t using the right repayment strategy. This is where you need to be aggressive and be your own advocate. Thought you enjoyed those Black Friday deals? Well, you could have saved yourself a whole lot more money if you were simply in the right repayment plan. So make this a priority if you are carrying student loan debt.

If you have other debt, like credit card debt, figuring out how to pay this down is also a high priority. If you are carrying a balance month to month and are unable to get a handle on paying this down, this is considered a financial emergency and needs to be handled sooner rather than later.

If you need some help with figuring out your loans, check out these resources.

3. Track expenses/making a spending plan (aka budget)

I know, I know. This seems like the most tedious, boring thing ever. But if you have any financial goals that involve saving money, this is going to give you the most bang for your buck. It’s actually a very eye-opening experience. You will see your spending habits right there in front of you, which may or may not align with what you actually value in life. You may be slightly horrified. That’s okay. We’re all human, and we’re not wired to do this sort of self-analysis.

I started tracking our own expenses when it seemed like we were going through our money faster than I liked. It is not a coincidence that this happened when we were new homeowners with a new car and added a couple more kids to the family.

Making an actual spending  plan took this to the next level, and now I was legitimately starting to manage our money rather than just tracking it. Big difference.

Read about the YNAB (You Need A Budget) approach to money management. It may completely transform the way you do money.

4. Aim to save at least 20%

Some of us are savers. Some are spenders. No matter your natural tendencies, with the advent of technology, anyone can be an automatic saver. Think of it as another necessary monthly payment, like your mortgage/rent, your cell phone bill, or your student loans. You take care of your obligatory monthly payments, then you need to figure out how to live off of the rest.

When you automate your savings, you are paying yourself first, and that’s powerful.

The earlier you create this habit, the easier it is. If you’re automatically spending everything as soon as it hits your bank account, then you will need to start small and build up. And if you’re already a good saver, there’s no reason to stop at 20%…go ahead and knock yourself out by saving as much as you’d like.

Personally, I don’t think that 20% is enough, which is why I say to save at least 20%.

Because what are you exactly saving for? Well, an emergency fund is never a bad idea. Neither is saving for retirement; the earlier you do this, the longer you will have magic of compounding work for you. If you run out of tax-deferred space for retirement savings, then you’ll need to start a taxable account. If you’re on a repayment plan that will result in a tax bomb at the end of the repayment period, then you will need to save for that. If you want to own property, either a home for yourself or investment property, you will need to save for that. If you have kids, save money beforehand so that you have a financial cushion. Saving for college should really start ASAP.

Let’s face it, there are countless things we should be saving for. Your savings really represent opportunity- an opportunity to use your money to build your net worth and give Future You some really wonderful opportunities to stress less about money.

Make sure you check out other ways to automate and simplify your financial life.

5. Learn about investing

Investing is taking savings to the next level. You already have the ability to invest when you open up a retirement account, such as an IRA or a workplace account 401(k) account.

I will admit- I was scared of investing and initially let my husband handle it. Educating myself about investing has proven to be very empowering. The key is to find an investment style that makes sense to you. Personally, I ascribe to passive index fund investing due to its simplicity. Other people like to be more hands on with their investing. Still others find that they enjoy other avenues of investing, such as in real estate or in business. No matter what you choose, aim to be diversified in order to mitigate risk.

Reading a good book about investing is great first step to getting comfortable about the subject. Here are a few books that can get you started.

CONCLUSION

There you have it: 5 financial New Year’s resolutions that can help you get on track with your personal finances. Focus on one thing at a time, and your financial situation will improve as a result. Even those who have a good handle on their finances can always optimize what they have by revisiting these 5 goals.

I am a firm believer that reducing your financial stress will increase your overall wellbeing. If you feel that you can benefit from a little less stress when it comes to money, take action today! Your Future Self will thank you!

Do you have any personal finance goals for this upcoming year? Comment below!

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