Practicing veterinary medicine feels a lot like you’re playing defense. The patient comes in with a problem. You use your skills to diagnose and treat the problem while taking into account the owner’s finances, owner compliance, and patient compliance. With each step, you are constantly vigilant, ready to respond to forces outside your control. When the results aren’t optimal, it leads to a frustrating experience.

This is especially true if you have a patient with a preventable disease. The parvo puppies. The obese diabetic cats. We are all aware that preventive medicine is so important for the long term health of our patients. Frontloading the effort, in the form of a vaccine or by setting healthy habits early on, really pays for itself down the line. This is why preventive medicine is such a cornerstone for the practice of veterinary medicine.

The same can be said for your money choices. You can either choose to be proactive with your money by being in “preventive mode” or you can choose to be reactive with your money by using “STAT mode.” Which is your default mode?

THE BASELINE

Our financial lives may have started with an allowance. This was some spending money, fun money. Simple and uncomplicated.

Then we hit our college and vet school years. If you’re like most vets, you came out of school with a lot of debt. This was Monopoly money because you didn’t really have to DO anything about it until you were forced to start paying it back.

Post graduation, life got more complicated. You needed to become your own money manager with your new income. This is happening at the same time that you’re also learning the ropes as a practicing veterinarian.

Let’s look at two different scenarios that play out based on your money mode.

STAT MODE

Your finances are on the back burner and fall very low on your priority list. You tell yourself you’re too busy. Since you’re making a decent salary and will probably carry your debt to your grave anyway, paying close attention to your money isn’t high on your priority list.

There was a lot of delayed gratification to get to this point. Your friends who did not get a professional degree have moved on with their lives. They’ve already been in the workforce, maybe even moving up the ranks. They’ve been traveling, bought their first homes, met a life partner. Perhaps they’ve already gotten married and have children. They certainly don’t have the mountain of debt that you now carry. You feel like you need to play some catch up.

You decide to reward yourself with some upgrades that you couldn’t afford as a broke student. Upgrade your housing. Upgrade your car. Spend a little extra on eating out, because it’s more convenient. It feels good to have a little bit of breathing room and not eat ramen all the time.

Here is the beginning of lifestyle creep, and it’s completely normal. Not necessarily good for your bank account, but it’s human nature to spend extra when you have more money to spend.

As you play catch up to your peers and move through these “adulting” life stages (buying a home, getting married, having children), your financial life gets more complicated.  Financial obligations start piling up. Well, I guess this is what adults are supposed to do, you say to yourself. The natural response to financial obligations is to work harder and earn some more money to support your lifestyle. Money solves all problems, right?

Before you know it, you’ve entered a predictable cycle. Work. Earn. Spend. (Maybe) Borrow. Repeat. There seems to be no end to this, and exhausted, you find yourself wondering how you got to this place where you’re scrambling to find money to cover an emergency, your retirement accounts aren’t well funded, and your debt is a thorn in your side. Your kids are headed off to college soon, and now you’re wondering if you’re going to have to take out loans to fund their education as you continue to pay down your own.

You did everything right. You checked off all the boxes. You’re a hard worker. How did this happen?

PREVENTIVE MODE

You decide to invest a little time and energy into figuring out your finances early on because you’ve been highly encouraged to do so (hint, hint). Work is overwhelming, but you realize that your income is your secret weapon to living a financially secure life, so you are going to use this resource as best you can.

You figure out your student debt strategy early on, based on your debt to income ratio and your realistic ability to afford the payments. You decide to contribute to your retirement account(s) because you have a basic idea of how investing works and you know that time and compounding are your best friends right now, so you want to start this ASAP. You understand your own risk tolerance level when it comes to investing your money. You keep your living costs deliberately low in order to increase the gap between earning and spending, which gives you the ultimate flexibility.

Every major life change is accompanied with intentional financial choices. You negotiate your pay and maximize your income potential. You automate your finances as best you can in order to streamline the process of saving and investing. Big purchases (house, car) and small (eating out for lunch, the random item from the $1 section at Target) are made purposefully and with intention. If you decide to get married, you find someone who has a similar money mindset, and you work as a team to reach your financial goals.

SPECIFIC EXAMPLES

Here are some specific examples that show how you would approach a personal finance issue using these two different modes:

Example #1: Paying down student loan debt

STAT: You see the monthly amount due and you automatically pay it. You’re pretty sure you’re on a forgiveness program, but you’re not 100% sure how it all works. You’re crossing your fingers that it will eventually work out in your favor. In the meantime, the entire issue is causing a lot of background stress.

Preventive: You assess your loan repayment strategy and see if it even makes any sense in your situation. Are you positive that you’re doing this in the most cost efficient way? You become an expert about your own student loans, and you make the appropriate changes to your strategy. Now you’re much more in control of this situation. (Check out this post for some student loan resources).

Example #2: Dealing with emergency expenses

STAT: You put those expenses on a credit card and hope that you can pay it off in a decent amount of time. This happens over and over again as a lot of “emergency expenses” seem to come up all the time.

Preventive: You know the difference between true emergency expenses and expenses that you could have prepared for earlier. You find out your emergency fund number, and you start saving monthly in order to reach that goal within a reasonable time frame.

Example #3: Saving for retirement

STAT: You haven’t paid much attention to saving for retirement because your loans are still huge and it seems so far off. You get a little older and finally take a look at what you have saved. You’re pretty sure that this isn’t enough, and now you’re starting to panic.

Preventive: You understand the importance of saving for retirement early on. You look into all the different retirement account options (workplace, individual) and decide that you’re going to make this a priority with your money. You are saving a certain percentage of your income diligently, investing in low cost index funds. Time and compound interest work in your favor over a period of decades, leaving you a sense of security for your future self.

WHAT DO MOST PEOPLE DO?

Most people fall in the STAT category. Money appears in the checking account, and we use that money to pay for the current lifestyle we lead, whether or not we can actually afford it. Money goes out, and we cross our fingers that there is enough to cover our monthly expenses. There’s that moment of relief when the new paycheck comes in, then the cycle starts all over again. Living paycheck to paycheck is not a happy place to be.

However, once you make that mindset shift and take on a more proactive (“preventive medicine”) role with your money,  the difference is huge. Instead of always reacting to your money situation, you’re the one in the driver’s seat, directing your own money where you want it to go. Your efforts result in building wealth and financial security, for you and your family. You are less likely to feel like a victim to circumstances outside your control if you have a firm financial foundation.

It’s not too late to make this change! Rarely do any of us have this kind of money mindset from the very beginning; I certainly didn’t. If you find yourself in STAT mode with your money, start making that shift so that you can reap the benefits of preventive financial medicine. Your future self will thank you!

Have you found yourself switching from STAT to preventive money mode? If so, what were the circumstances? Comment below!

2 Comments

  1. The Vetducator on May 8, 2019 at 12:27 pm

    This is a great overall concept to get people on board with! I wonder if those who come out after internship/residency feel even more entitled to lifestyle creep because they’ve been putting it off for even longer. I tried following The Whitecoat Investor’s advice (although this far predates his appearance) to “live like a resident” for a few years after finishing and I am glad I did. But I also remember thinking, “I don’t understand, I was fine on a salary of $26k, now I’m making $80k, so where is the $54k difference going?!?” Wish we had Mint back then.

    • RLDVM on May 8, 2019 at 9:00 pm

      Being married to a physician myself, I completely get the delayed gratification piece that goes with lifestyle creep. I wouldn’t be surprised to see the same phenomenon with veterinary specialists who have had to put in those extra years of training. Good for you that you “lived like a resident” while earning a higher salary! I also wish that I had tracked my expenses better from the get-go….better late than never!

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