The veterinarian's guide to budgeting: Don't buy what you don't need
During my senior year of veterinary school, our Veterinary Business professor asked us to outline a personal budget for our first year after graduation. Because I’d mentally checked out a couple of semesters prior to this class, my response to the assignment was that it didn’t much matter what my budget was. I’d be earning a measly $24,000 as an intern and would have no time to spend any of it. Whatever was left over after paying my barn rent (yes, I lived in a barn during my internship—it was pretty cozy, thanks) and acquiring bare necessities (beer, hotdogs, toothpaste) would go to our greedy government to at least hold down my ballooning student loan interest.
Of course, I failed the assignment. I wish I’d not been such a smarta** back then, and I can’t say that I’ve totally fixed that problem today. But I do see what the prof was trying to teach us.
Fast-forward to ife as a veterinarian. Even when you’re finally living the dream and the cash is pouring in, you need a budget. There are many resources out there to help you define what that budget should be—how much and where you should spend what. I may not be the best reference on this, since I’ve taken an extreme approach to budgeting that only a supremely ambitious and exceptionally lazy person could adhere to. It’s easy and requires minimal thinking: spend as little as possible, always, and then get out of debt as quickly as you possibly can. I will say that the approach is working well for me.
An example? I drive a crappy automobile. And I’m proud to say the old Chevy is still running strong. She recently got a new set of tires (on sale, from China, which means they probably meet the minimum safety standard somewhere) and an oil change, and she still purrs like a kitten (OK, maybe one with an upper respiratory infection, but a kitten nonetheless). You should see the smile on my face as I cruise down the road for pennies on the dollar compared to the idiot in the luxury car next to me. After all, fancy people in high-end sports cars go 20 mph in bumper-to-bumper traffic just like everyone else.
The time is now
The time to pare down your budget is right now. And by right now, I mean yesterday. Spending less is not going to get any easier as you get older. Big life events, such as getting married, buying a practice or a home, having children, becoming disabled, changing careers or getting a new Maltese puppy that later has an immune-mediated hemolytic crisis—these all will all affect the way you budget.
Each of these scenarios will most likely cause you to spend more money, at least for a time. And this will mean transferring some of your “cushion” income to your new long-term obligation. Which means you need cushion income in the first place. Make it a habit to review your budget quarterly or at least twice yearly, as a routine, to make sure your spending is in check. If you find yourself in the midst of a significant life-altering event, review your budget as soon as possible and adjust your spending habits accordingly. Be suspicious that a life-altering event has occurred if you find yourself:
Jumping up and down and giggling
Crying while drinking heavily
Calling all of your dearest friends within a 24-hour period
Signing on a line more than five times in five minutes
Feeding your dog “extra-special” treats, like whole hamburgers
Any combination of the above.
It’s been said that you shouldn’t buy what you can’t afford. Surely that’s a nice place to start. But if you really want to ramp up your savings, the proper philosophy would be “If you don’t need it, don’t buy it.” This may seem like a subtle distinction, but most of us really don’t understand when we can and can't truly “afford” something. Unfortunately, we tend to convince ourselves that we can afford more than we actually can. So putting purchases through the “Do I need it?” test may be a safer way to go, especially when compared with “Can I afford it?”
The word “need” is very much open to interpretation. So much so that you might be able to convince yourself you need that new diamond necklace. My personal concept of “need” is closer to that of a Tibetan monk, though there's probably some middle ground. The important thing is to actively think about what you need and don’t need. You should ask yourself the question often—as in, every time you pick something up off of a store shelf or click the “check out” button. For just about any purchase, there is a cheaper alternative, the cheapest of which is setting the item down or closing your web browser. Do you really need that seven-dollar latte in the disposable cup? How about a little extra planning and making your own coffee in a reusable travel mug, thereby saving the environment and increasing your net worth?
Be proactive. You are in control of your budget and your future. Austerity measures right now are going to pay off big time down the road. The more bare-bones you make your budget right now, the less stressful it will be to adjust later on.
Having made every financial mistake in the book, I can personally relate to the feeling you get when scraping by to make minimum payments to your creditors. And many veterinary students and new DVMs will live through those financial circumstances for some time. Breaking out of that cycle is hard. It takes active planning, foresight and steadfast commitment. You’ll even find that you have to resist social pressures that dictate when you should be spending more.
The light at the end of the tunnel is reaching a place where you don’t owe anyone anything. Or, at least, you find the freedom to choose why, when, with whom and under what terms you take on new debt. Reaching that place will make all of your efforts worthwhile.