First, can we financially afford adding a pet to our family? The simplest way is to start with a budget. It is always best to slightly overstate the potential costs that will be incurred. As a CERTIFIED FINANCIAL PLANNER™ Professional, I enjoy comprehensive research and running various scenarios to determine the best solution.
Let me save you time on gathering details for your pet’s budget. Initial costs vary greatly depending on if you are adopting from the Humane Society or opting for a designer pet from a breeder. When it comes to adopting from a shelter, adoption fees range from $100 to $300, depending on age and breed. A perk of this cost is that it typically includes spaying/neutering, microchipping, and vaccination. When purchasing a pet from a breeder, expect to pay from $1,000 to more than $2,000, depending on the breed. Additional beginning expenses will include: an initial medical exam ($150), vaccination ($250), and spaying or neutering ($200). Adding a designer pet to your family will increase the initial cost by $1,600 to $2,600. Regardless of the route you take to get your furry friend, you will want to properly protect them with flea and tick prevention ($190); as well as from heartworm ($130). Miscellaneous items like leashes, crates, obedience school, licensing fees, treats and toys can add another $500.
What can I expect to pay annually?
This depends on the quality of food you are planning on feeding your pet. If you are a millennial like me, you are probably health conscious or onto the latest health craze. Why should you treat your pet differently? Here’s the breakdown based on food quality. Low to high quality food ranges from $600 to $2,700 a year, varying due to the size of your pet and if you are part of a rewards program. Additional annual costs of around $800 include: medical check-ups, licensing fees, pet medications, grooming, toys, and treats. Dog walkers charge around $20 for a 30-minute walk. We can budget effectively now that I have outlined the essential first-time costs and annual costs that we can expect to incur.
Are we prepared for the unexpected?
How would you feel if you weren’t able to afford a life-saving procedure? Owners are likely to incur at least one $2,000 to $4,000 medical emergency bill for their pet. There are multiple potential solutions to prepare for these circumstances. Option one includes setting aside monies today for a pet emergency fund. The second would be to purchase a pet health insurance policy to help cover a substantial portion of the veterinary bill, which would be dependent on the selected policy. When selecting an appropriate policy, it is key to make sure you understand the coverage, limitations, exclusions and deductibles. Be sure to discuss with the insurance provider how premiums can be affected as your pet ages and if submitting claims will have any effect on the future premiums. Pet insurance is very similar to human insurance policies in the sense that the best time to enroll is while you are young and healthy. This will help keep the premiums low and ensure coverage. According to the North American Pet Health Insurance Association, the average cost for pet insurance in the U.S. is $44.66 a month for dogs and $27.93 for cats. This is simply an average and varies based on your pets’ breed, age, location and if they have any pre-existing conditions. Keep in mind pet insurance is not for everyone. If you are considering pet insurance, you will need to consult with your veterinarian to see which insurance provider and policy best suits your needs.
Just when you thought we covered it all—have you thought about what would happen to your pets if we were to predecease them?
Pets are often thought of as family members, why shouldn’t they be planned for accordingly? Our pets should be able to maintain a similar standard of care as they have become accustomed to. We don’t want them to end up scared and alone at an animal shelter due to our failed planning. Keep in mind a pet may be part of the family, but Florida law considers animals to be property; thus, not giving you the ability to leave money to them directly. There are few options to properly plan for a pet’s care and financial well-being. The option that grants the most control and protection for your pets is a traditional trust. The Florida statute allows for traditional trusts to be established for animals. A traditional pet trust is a legal entity that appoints a caregiver, names a trustee to manage the assets, and provides instructions on how the animal will be taken care of financially if you were to become ill, disabled, or pass away. You don’t have to be a multi-millionaire to fund a traditional trust, it can easily be funded with a life insurance policy. The life insurance policyowner can designate all or a portion of the policy to the pet trust and then the remainder to go to other beneficiaries, such as children or grandchildren.
I have outlined key areas of pet ownership that effect both current and prospective owners. It is imperative to appropriately analyze the costs and responsibilities associated with a goal before diving in. We need to plan each step meticulously to stay on the path to financial freedom. The process alone can be quite overwhelming. Start the conversation today with a team of seasoned professionals that can properly address and determine solutions that best fit your needs. We at Coral Gables Trust Company look forward to leading you on the path to living your best financial life.
Michael J. Unger, CFP® is an Investment Officer and Assistant Vice President at Coral Gables Trust Company.