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The post Why a Family Should Make Major Financial Decisions Together appeared first on Penny Pinchin' Mom.
Whether or not you have the option to stay at home with your children or choose to work full or part-time, making major financial decisions with your partner or spouse can make a huge difference in your self-esteem and deepen your trust in each other. Having an equal voice in the big decisions, backed by the solid knowledge of what your joint investments and accounts hold, is a smart mom move.
Donât be scared of the words âmajor financial decisions.â Keep reading. Iâll be gentle.
Donât let fear guide you
Nothing used to make me more nervous than the idea of talking about money. And itâs not because I have a lot of it, quite the opposite. When I was single, I always paid my bills, but rarely on time. I racked up interest on my credit cards, wasting money I couldnât afford to give away. I didnât file my taxes for ten years, which cost about $5,000 to clean up.
I was at war with money. So, I was more than happy to hand over the management of the family finances to my partner as soon as we combined households.
This was a mistake. It wasnât wrong for any nefarious reason. My ex-husband remains one of my best friends. Simply put, it was a missed opportunity. But, for someone with a less trustworthy partner, handing over responsibility could lead to a major disaster.
Making decisions means sharing responsibility
Letâs start with the best-case scenario. You and your partner have a good stable relationship. Money is okay. Thereâs enough coming in that you arenât really worried about any of the basics. But who sits down and pays the bills?
If itâs you, then you know how much the taxes are and the utilities and the mortgage or rent. Maybe you balance out what you allow yourself to purchase at the grocery store by what you know is in the family checking account.
But, if your partner doesnât know the cost of living, whatâs to stop them from ordering an expensive new gadget. Maybe they make more money than you bring in, and they are super excited about the new iPhone.
Sounds like a tense situation brewing.
A new piece of electronics is tiny as far as major purchases are concerned. But spending nearly (or even over) $1,000 for the latest smartphone can set back a family making an average income when an out-of-pocket medical expense pops up in the same month. And, with a family, thatâs bound to happen.
If both partners know the familyâs finances, purchases can be coordinated and saved for. Thatâs the first step to bigger things, like buying a home, paying for college, and figuring out what kind of retirement you can look forward to.
How to get started with family finances
Talk about it. Itâs family meeting time. Say you want to pay the bills or share them. I know couples who pass the responsibility of paying the bills back and forth every six months. They have a joint checking account and set up all the bills in an online payment system that needs to be monitored. Find a method that works for you.
You might think you are really good at saving money, because you only buy sale items, but thatâs small potatoes. If you expand your thinking to future savings and layout purchases in a spreadsheet, you might have fun planning how much you can save in a month and a year. Then you get to plan what to do with those savings at your next family meeting.
For example, once you save $1,000, you can begin to think about opening an investment account, like an IRA, for retirement, or you could invest in stocks on your own.
Stuff happens: be prepared
No one wants to think about death, divorce, or disability. But, moms with kids stand to lose the most when these things happen. Knowing the state of your familyâs finances ahead of time will save you time and stress when you can least afford to waste either.
Even the most civilized divorce is a tense process. To serve or answer a divorce summons you have to know every last detail of your own and your partnerâs income, expenses, and investments.
Do you know how much your partner has squirreled away for retirement? Have a talk about what kind of future you want to have together and what expectations you have for your children. You donât just get what you ask for; you get what you plan for, too.
And, if an accident happens, your husband or wife would want you to be OK. If you and your partner donât know each otherâs bank information and logins, exchange them as a shared trust exercise. Itâs good practice, in case of an emergency and necessary should something terrible occur.
Take care of yourself
My college sociology teacher told the women in my class something Iâm going to pass on to you.
Get your own bank account and credit card, separate from your partnerâs. Pay bills on a credit card that you know you can fully pay off on a monthly basis so that you can build your own credit.
You never know when your credit score could become what saves your family from a disaster, like homelessness. And if you get used to making small and medium-sized financial decisions together, youâll be ready for the really big things.
After your initial discomfort dissipates, youâll find that having your familyâs financial facts at your fingertips gives you confidence. When you donât know how much you have and how much you spend, then your partner is your banker. And no matter how much love you share, money will always be a power issue.
A family financial meeting once a quarter or twice a year will save you from answering to your partner about your credit card bill or wondering why your debit card isnât working.
—By Nic DeSmet
The post Why a Family Should Make Major Financial Decisions Together appeared first on Penny Pinchin' Mom.
A âbusiness cycleâ refers to the periodic expansion and contraction of a nationâs economy. Also known as an âeconomic cycle,â it tracks the different stages of growth and decline in a countryâs gross domestic product, or economic activity.
business cycles . Each business cycle is dated from peak to peak or trough to trough of economic activity.
During the expansion phase of the business cycle, GDP increases and the economy grows. This phase tends to be significantly longer than the contraction phase. Since 1945, the average expansion has been 65 months, while the average contraction has lasted 11 months, according to a congressional research report. Features of expansion periods include:
• GDP growth rate of 2-3%
• Inflation around 2%
• Unemployment between 3.5-4.5%
• Bullish stock market
• Increased demand for goods and services
• Interest rates move higher
• Job creation
• Stock prices usually increase
• Increased wages
• Increased real estate values
As economic growth slows down, an economic contraction begins as the nation enters a recession. GDP growth dips below 2% in this phase.
Companies that have taken out loans may struggle to repay them, so they have to lay off workers and slow down production. As workers lose jobs, they have to cut down on spending. This creates a cycle of economic decline. Features of contraction periods include:
• GDP growth falls below 2%
• Decreased demand for goods and services
• Interest rates move lower, making it easier to borrow money
• Loss of jobs, increased unemployment
• Reduced wages because people need jobs so theyâre willing to work for less, and companies canât pay as much
• Stock prices usually decline
• Real estate values plateau or decline
Stage 1: Recession
One definition of a recession is two consecutive quarters with a decline in real GDP. A recession could actually be defined more broadly as a period where there is significant decline in economic activity throughout the entire economy.
During this stage, GDP, profits, sales, and economic activity decline. Credit is tight for both consumers and businesses due to the policies set during the last business cycle. This leads to shifts in monetary policy that lead to a recovery phase. Itâs a vicious cycle of falling production, falling incomes, falling employment, and falling GDP.
The intensity of a recession is measured by looking at the three Dâs:
• Depth: The measure of peak to trough decline in sales, income, employment, and output. The trough is the lowest point the GDP reaches during a cycle. Before World War II, recessions used to be much deeper than they are now.
• Diffusion: How far the recession spreads across industries, regions, and activities.
• Duration: The amount of time between the peak and the trough.
A more severe recession is called a depression. Depressions have deeper troughs and last longer than recessions. The only depression that has happened thus far was the Great Depression, which lasted 3.5 years, beginning in 1929.
Stage 2: Early Cycle
Following a recession, there tends to be a sharp recovery as growth begins to accelerate. The stock market tends to rise the most during this stage, which generally lasts about one year. Interest rates are low, so businesses and consumers can borrow more money for growth and investment. GDP begins to increase.
Just as a recession is a vicious cycle, a recovery is a virtuous cycle of rising income, rising employment, rising GDP, and rising production. And similar to the three Dâs, a recovery period, which includes Stages 2-4, is measured using three Pâs: how pronounced, pervasive, and persistent the expansion is.
Stage 3: Mid-Cycle
This is generally the longest phase of the business cycle, with moderate growth throughout. On average the mid-cycle phase lasts three years. Monetary policies shift toward a neutral state: Interest rates are higher, credit is strong, and companies are profitable.
Stage 4: Late Cycle
At this stage, economic activity reaches its highest point, and while growth continues, its pace decelerates. Monetary policies become tight due to rising inflation and low unemployment, making it harder for people to borrow money. The GDP rate begins to plateau or slow.
Companies may be engaging in reckless expansions, and investors are overconfident, which increases the price of assets beyond their actual value. Late cycles last a year and a half on average.
What Industries Do Well During Each Stage?
Historically certain industries have prospered during each stage of the business cycle.
When money is tight and people are concerned about the economy, they cut back on certain types of purchases, such as vacations and fancy clothes. Also, when people anticipate a coming recession, they tend to sell stocks and move into safer assets, causing the market to decline.
Basically, industries do better or worse depending on supply and demand, and the demand for certain products shifts throughout the business cycle. In general, the following industries perform well during each stage of the business cycle:
• Consumer staples
• Information technology
• Financial sector
• Industrial sector
• Consumer sector
• Stocks and bonds
• Real Estate
• Household durables
• Information technology
• Energy and materials
• Commodities such as oil and gas
• Bonds can be a safe haven
• Index funds
Who Should Invest With the Business Cycle?
Business cycle investing is an intermediate-term strategy, since it isnât as short-term as day trading but not as long-term as buy and hold strategies. Each stage of the business cycle can last for a few months to a few years.
the best strategy for beginner investors.
However, more experienced investors might choose to shift at least a portion of their portfolio along with the business cycle. Business cycle investing can also be a good option for younger investors because they will have more opportunities to take advantage of the ups and downs of future cycles.
Understanding the business cycle can also help people make decisions such as when to buy a home or search for a job. Itâs usually best to purchase a home, start a business, or look for a job in the early to mid-stages of the cycle.
No business cycle is identical but history shows there can be a rough pattern to which industries do better as the economy expands and contracts. Investors can take cues from which stage of the business cycle the economy is in in order to allocate money to different sectors.
One great way to invest and keep track of the market is using an online investing app like SoFi InvestÂ®. The investing platform features both active and automated investing.
For help getting started, SoFi has a team of professional financial advisors available to answer questions and offer guidance.
The information provided is not meant to provide investment or financial advice. Investment decisions should be based on an individualâs specific financial needs, goals and risk profile. SoFi canât guarantee future financial performance. Advisory services offered through SoFi Wealth, LLC. SoFi Securities, LLC, member FINRA / SIPC . The umbrella term âSoFi Investâ refers to the three investment and trading platforms operated by Social Finance, Inc. and its affiliates (described below). Individual customer accounts may be subject to the terms applicable to one or more of the platforms below.
1) Automated InvestingâThe Automated Investing platform is owned by SoFi Wealth LLC, an SEC Registered Investment Advisor (âSofi Wealthâ). Brokerage services are provided to SoFi Wealth LLC by SoFi Securities LLC, an affiliated SEC registered broker dealer and member FINRA/SIPC, (âSofi Securities).
2) Active InvestingâThe Active Investing platform is owned by SoFi Securities LLC. Clearing and custody of all securities are provided by APEX Clearing Corporation.
3) Digital AssetsâThe Digital Assets platform is owned by SoFi Digital Assets, LLC, a FinCEN registered Money Service Business.
For additional disclosures related to the SoFi Invest platforms described above, including state licensure of Sofi Digital Assets, LLC, http://www.sofi.com/legal.
External Websites: The information and analysis provided through hyperlinks to third party websites, while believed to be accurate, cannot be guaranteed by SoFi. Links are provided for informational purposes and should not be viewed as an endorsement.
Financial Tips & Strategies: The tips provided on this website are of a general nature and do not take into account your specific objectives, financial situation, and needs. You should always consider their appropriateness given your own circumstances.
The post Investing With the Business Cycle appeared first on SoFi.
Marnie and Tom live in a nice suburb in the Midwest with their two young children. Marnie’s mother, Elaine, lives about an hour away.
When the kids were babies, Marnie's mother used to drive to Marnie and Tom's every day to see her grandkids and help out. But lately, Marnie's mother's health has been declining, so she can’t drive over anymore.
One day Marnie gets an idea: What if she and Tom sell their house and move closer to her mother? Then the kids would be able to see their grandmother more often. Plus, Marnie would be able to keep a closer eye on her mother in case her health gets worse. Seems like a perfect solution.
There’s only one problem—Tom doesn’t want to move. Tom likes the neighborhood they’re in. He thinks he and Marnie paid too much for their house, but other than that he’s very comfortable.
Tom says no.
Tough decisions and zero-sum situations
Faced with big decisions like this, a couple will ordinarily try to compromise. But in this case, there’s really no half-way. Economists call this kind of thing a zero-sum situation. Someone’s going to win, and someone’s going to lose.
For over thirty years, I’ve watched couples struggle with zero-sum problems. Some more successfully, and some less so.
Some classic zero-sum problems for couples involve whether or not to move—often for one partner’s career—and whether or not to have another child. But there are lots of others.
For thirty years, I’ve watched couples struggle with zero-sum problems. Some more successfully, and some less so. Today, we’re going to talk about what works, and what doesn’t, when you’re faced with one of these situations.
Three ways not to make tough decisions as a couple
First, let’s talk first about what doesn’t work. There are three main approaches that don’t work. Unfortunately, most couples try all three:
Mistake #1 – Trying to convince your partner they'll be better off
The first mistake is to try to convince your partner that they’ll be much happier if they do things your way. In Marnie’s case, this might involve demonstrating to Tom all the wonderful things about the neighborhood she'd like to move to. Wouldn't Tom be better off there?
No one likes to be told they’ll be happier if they just do things your way.
Here’s the problem: No one likes to be told they’ll be happier if they just do things your way. It's better to assume each person has good reasons for feeling the way they do. And that those reasons aren’t likely to change. In couples therapy, we call this "staying in your own lane."
Mistake #2 – Suggesting there's something wrong with your parnter for disagreeing
The second thing that doesn’t work is to suggest there’s something wrong with your partner. Otherwise, they'd see it your way. If only they were less anxious, less obsessive-compulsive, less oppositional, less stuck in their ways, or less damaged by unresolved childhood trauma. Then they’d surely agree with you!
A lot of people get sent to my office for therapy by their spouses for just this reason. Believe me when I tell you, it doesn’t work.
A lot of people get sent to my office for therapy by their spouses for just this reason. Believe me when I tell you, it doesn’t work. It usually just leads to a lot of bad feeling.
Mistake #3 – Appealing to your partner's love
The third thing that doesn’t work is to appeal to your partner’s love and insist that if they really love you as much as they say they do, they’ll give you what you want. Almost every couple tries this.
Marnie is no exception.
“Tom,” she says, one night as they're getting ready for bed, “Don’t you see how I can’t sleep at night worrying about my mother? I can't stop thinking about how she’s missing out on so much of our kids’ lives. Can’t you see what this is doing to me? Don’t you love me?”
“The answer’s still no,” says Tom. “And it has nothing to do with whether I love you or not.”
I'd be inclined to agree. Just because you love someone, that doesn't mean you're responsible for giving them everything they want.
A better way to make tough decisions as a couple
The good news is there’s a much better method. There are three steps involved.
Step One: Let’s make a deal
In business, this would be a no-brainer, right? You’d never ask someone to give you something you want for free. Instead, you’d find out what their price is.
In marriage, it’s the same thing. The main question is: What’s going to motivate the other person to do a deal?
Let’s see what happens when Marnie tries this approach.
One night in bed, just before they turn off the lights, Marnie turns over to face Tom.
“Tom, what can I give you to make you agree to move?” she asks.
Tom is silent.
“A promise to never complain ever again about you watching TV?”
Tom smiles. “It’s going to cost a lot more than that,” he says.
Marnie thinks some more. “How about if I agree to spend every Thanksgiving and Christmas with your family?”
Tom shakes his head. But now Marnie has the idea. She’s not asking for favors anymore. She just wants to do this deal.
“I'll do all the cooking and cleanup three times a week,” she says. "And we spend Thanksgiving and Christmas with your family."
Tom raises an eyebrow. Now he knows she's serious. "Let me think about it,” he says, and turns off the light.
Time for Step Two.
Step Two: The $64,000 Question
The following night, Tom is sitting at his laptop paying bills. Suddenly it hits him. “Marnie,” he says, “I think I see a way to do this. If we’re going to move, let’s get a smaller house and start saving money again. What do you think?” Marnie’s actually been hoping for a bigger house. It’s painful to hear that this is what Tom wants. But hey, now he’s named his price. That means he’s in the game.
To me, this looks promising. Marnie gets something she wants very much. And she pays for it, fair and square. Same thing on Tom’s side.
Marnie thinks for a minute.
“Let’s see what we can find,” she says.
Step Three: The Price is Right
Now comes the fun part.
The following Sunday, Marnie and Tom drop the kids off with her mother and start house-hunting in earnest. After a few weekends, they find a house they both like well enough. It breaks Marnie’s heart to be downsizing, but it was the only way to make things work. And it helps that once they find a place Tom likes, Marnie gets him to agree to new cabinets and closets.
Decision making builds strong relationships
A good deal will have both of your dreams in it. That’s important, because it means you’re both fully in. You never know how a move like this is going to work out. If it goes well, you both share the satisfaction. If not, you share the blame.
A good deal will have both of your dreams in it.
One sign of a good deal is that in the end, neither of you got everything you wanted. The final result didn’t look exactly like what either of you originally had in mind.
But hey, isn’t that the case with anything creative? Eventually you have to face reality. And in a couple’s relationship, reality often takes the form of the person next to you in bed.
Sometimes life brings you to a fork in the road, where no compromise is possible. When that happens, assume you’ll need to do some serious deal-making—as if your relationship depended on it. Which in fact, it will.
Eventually, you have to face reality. And in a couple’s relationship, reality often takes the form of the person next to you in bed.
As Yogi Berra famously said, “When you come to a fork in the road, take it!”
In the long run, how you settle the issue may matter more than which fork you take.
5 Neglected Expenses That Can Ruin Your Vacation Budget
With the weather warming up, summer vacation isn’t too far away. If you haven’t already, it’s time to start a vacation budget and account for everything you’ll be paying for that week.
After all, you don’t want to have to cut your relaxation time short because you forgot that you actually have to pay for gas.
But there are other financial surprises too, ones that perhaps you don’t think very much about when sitting down to create your budget. Here are a few that maybe you have not taken into account just yet, but absolutely need to.
Let Mint.com help you create the perfect vacation budget.Â Click hereÂ to get started!
Despite free public parking not being a popular idea among money-hungry companies for a while now, a lot of us still forget that we have to pay for the damn thing. This may be a few bucks or a few dozen bucks, but either way you can’t forget it when budgeting for your vacation.
Do the research to find out the charges for each place you’re staying or going to. Going to see a ball game? How much does the park charge to park? Going to take the train into the city? How much do they charge and, if need be, how much does valet parking cost?
Add those up, and you might be surprised how much not actively driving your car can run you.
These days, Wi-Fi is just about everywhere, and just about everydiv uses it. While the airport Wi-Fi might be free, the hotel you stay in might want a few bucks extra for use of their signal. This is especially true in nice, upscale hotels, where Wi-Fi access could run youÂ $10-$20 a day.
So either annoy your family by checking into some rinky-dink motel, where Wi-Fi is free but everything is roach-ridden and moth-eaten, or factor in the money necessary for Junior to use his iPad on the coziest bed he’s ever slept on.
The Food Bill
Even though it’s part of our daily lives, many people don’t think about food when punching out their budget. And if they do, they vastly underestimate how much stomach fuel actually costs.
This goes for vacations as well. You should find out what restaurants in the area typically charge, so you don’t get blindsided by the high cost of steak. If you’ve rented out a house with a kitchen and fridge, take some time to deduce how much you and your family spend on food at home.
Then, take that total and add a bit more to the food budget. It’s vacation time, after all, and for many, relaxing and unwinding means more burgers and s’mores than during a regular workweek.
Checked Bag Fees
If there’s one thing all travelers can agree is pure evil, airlines charging people to check in their bags has be it. Some airlines, such as Southwest, will let customers get away with someÂ checked bags for free, but expect to fork over $25 or more for each additional one.
Checked bag fees need to be part of your budget every time, because it’s never, ever going away. Airlines make too much money off of it to abandon it simply because we don’t like it.
Either pack minimally, ensuring that you can get away with nothing but carry-ons and maybe one or two checked bags, or put a couple hundred bucks aside in the budget for the over packers in your family.
There was an episode ofÂ Full HouseÂ where Danny Tanner attempted to script the family’s Hawaiian vacation to the letter — every activity planned ahead of time, strict time limits on said activities, and naturally every penny accounted for.
This almost never happens. Vacations aren’t nearly that organized, and you will have some unpredictable moments, not to mention costs that you didn’t see coming. Maybe your children see an ad for horse riding trails and immediately start begging you to let them ride the horsies.
Sadly, horsies aren’t cheap, but thisÂ isÂ a vacation, so why not let them indulge?
The trick is to not indulgeÂ tooÂ much. Don’t do everything that sounds fun, because the inevitable overdraft charges on your bank account won’t be very fun. Leave enough room in your budget for unplanned, spontaneous activities, and stick to that window as closely as you can.
This way, you and your family will have a great, fun vacation, and you won’t still be paying for it months and months later.
Mint.com can help create a complete vacation budget just for you and your family.Â Click hereÂ to sign up and start!
The post 5 Neglected Expenses That Can Ruin Your Vacation Budget appeared first on MintLife Blog.
When Craig Hynd and his fiancÃ©e brought home their new Lhasa Apso puppy Chewie, they knew the addition to their family would be worth itâbut they didn’t quite understand the true cost of owning a dog. As new homeowners, “we didn’t have a lot of money to spare on a month-to-month basis,” Hynd says, “but we also love dogs and felt that we could afford to bring one into our home.”
To make sure they were financially on the mark, Hynd, a marketing executive for HR software company Youmanage, decided to do some research on how to afford a dog on a budget, shortly after Chewie settled in. He was glad he did: He found that the costs of dog ownership added up to much more than he originally anticipated. Fortunately, there was still time for him to adjust.
But Hynd’s foresight is not always top of mind for new dog owners. Getting a dog can be an emotional, knee-jerk decision, and you may not think about the expenses that go along with it or how to budget for a dog. The cost of owning a dog over the average lifespan of 12 years ranges from $5,000 to $20,000. The majority of dog owners underestimate this figure.1 That’s the kind of misunderstanding that can leave you short on funds for things such as vaccinations and preventative careâeven food and toys.
So when asking yourself the question, “How much money should I budget for a dog?” you’ll be glad to know that a little financial preparation can go a long way toward making sure you’re ready for the responsibilities that come with pet ownership. The information that follows can help you and your new pooch share a happy, healthy friendship for years to come.
Welcome home: First-year costs for your pup
“Before getting my dog, I made sure to save as much money as possible,” says Danielle MÃ¼hlenberg, a professional dog trainer and blogger at PawLeaks, a site that focuses on dog training and dog behavior. MÃ¼hlenberg paid $1,300 for her 115-pound rottweiler Amalia. A safe approach when thinking about how to budget for a dog is to “always put away more money than you’ve calculated in your budget, so you won’t be overwhelmed by any surprise costs,” she adds.
MÃ¼hlenberg outlines the first-year expenses new dog owners should expect as they resolve how to afford a dog on a budget and some suggestions on managing costs:
Purchase/adoption fees and dog license
The purchase of a purebred puppy from a breeder can cost anywhere from $800 to $1,500 or moreâwhich makes a pure-blooded hound the most expensive type of dog to own. At the other end of the spectrum are the many shelter or rescue dogs in need of a home; they can generally be adopted for as little as a few hundred dollars. You will also need a dog license to bring home your pup, which runs from $10 to $20 on average (and needs to be renewed annually).
- Pro Tip: Once you bring your tail-wagger home from the shelter or breeder, research local vets. Offices in one neighborhood or town can be much pricier than what you’d find if you’re open to a commute.
Upfront medical costs
It can cost between $200 and $800 to spay or neuter a dog at a veterinary clinic. You can typically pay less at a shelter or humane society, where such procedures are often subsidized by donations. In other costs, puppies need an initial exam and special vaccinations that typically run between $75 and $100 (rabies is the only shot required by law, however). Microchipping, while not mandatory, is recommended to help identify your pet if it’s lost or stolen. This procedure costs around $40.
- Pro Tip: Plan to have your dog spayed or neutered. Otherwise, you may pay higher boarding fees and license fees, as well as release fees if your pup is taken in by animal control.
Comfort, training and grooming supplies
Expect to spend another few hundred dollars for a collar and leash ($6 to $50), food bowls ($10 to $50), waste bags ($6 to $20), a crate and bed ($25 to $250), doggie shampoo and brushes ($5 to $10), training pads ($16 to $35), toys ($10 to $200) and the first month’s supply of food ($40 to $60).
- Pro Tip: Supplies like a dog crate or bowl can be found secondhand for a lower cost, sometimes for free. Check online listings for yard sales and giveaway events, where used or unwanted items are given away instead of being sold or thrown away.
Lost time at work
A new puppy needs a lot of attention, which can add to the cost of owning a dog. One in five dog owners took time off from work to care for a new puppy.2 Some puppies have a harder time on their own and can chew up your home and belongings, so it’s worth knowing this upfront in case your pup needs a sitter.
- Pro Tip: Prepare for “puppydom” ahead of time by banking extra personal days or asking about short-term, work-from-home opportunities.
Ongoing expenses for your furry companion
Annual, ongoing costs of owning a dog can vary widely depending on your situation. Why the disparity? It’s due mainly to dog size. For instance, larger dogs eat more food, and if you’re the type of owner that chooses premium kibble over a lower-cost option, that can really add up. Groomers also charge more for larger dogs because of the extra time and care needed to handle them.
MÃ¼hlenberg spends about $1,200 per year on her Rottweiler’s high-end food and another $600 annually for twice-weekly social training sessions. A pricey diet and puppy play camp may fall in the “nice to have” category of dog ownership for some. Dog owners worried about how to afford a dog on a budget can minimize these costs by choosing less expensive canned food and kibble or by making their own dog food. To save on other expenses, MÃ¼ehlenberg grooms her dog at home, makes her own toys and treats and buys pet supplies in bulk.
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To get a handle on how to budget for a dog, here are some of the biggest costs annually that dog owners need to plan for:
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To help relieve the financial burden of how to afford a dog on a budget, you may want to open a savings account for emergencies. MÃ¼hlenberg puts a few hundred dollars aside each month, which can be tapped for unplanned household repairs due to any damage the dog may cause, dog sitting for unexpected travel or illness or other pup-related surprises. The Discover Online Savings Account is one place to hold cash for a dog-only emergency fund and grow your savings.
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Invest in keeping your pooch healthy
As you can see, there are a lot of annual costs to consider when determining how to afford a dog on a budgetâand they can really add up, particularly when a pooch gets sick or is involved in an accident. Preventative care such as flea, tick and heartworm medication, which can cost a total of $64 to $320 monthly, and regular vet visits can decrease the risk of an expensive health condition.3
For larger or recurring costs, consider pet insurance (an annual policy costs about $360 to $600).2 Some unexpected expenses can be offset by a pet insurance policy, which “is kind of like a forced savings account,” says Sara Ochoa, DVM, veterinary consultant for product review site DogLab. “You pay the insurance company, and they will pay for most of your pet’s medical bills.” This might go a long way in resolving how to budget for a dog.
For example, a typical pet insurance policy may cover accidents, illness and conditions that are genetic, congenital and chronic, as long as these conditions were not present at the time the policy was purchased.5
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âAlways put away more money than you’ve calculated in your budget, so you won’t be overwhelmed by any surprise costs.”
Ochoa is often able to witness the financial benefits of pet insurance firsthand. She cites one example of a client whose dog had emergency surgery and spent a few nights in the hospital. According to Ochoa, the bill would have cost the owner around $7,000. With their pet insurance, they paid somewhere around $1,000.
Create a happy home for your four-legged friend
In the end, how to budget for a dog just takes some advance planning and preparation, which can help manage the upfront costs and monthly cash cushion required to ensure a happy and healthy dog. By understanding the cost of owning a dog as much as possible, you’ll have less financial stress and more time to focus on play time with your pup.
“Even with the associated costs,” Hynd says, “I don’t for one moment regret our decision [to bring Chewie home].” MÃ¼hlenberg agrees: “Bringing a dog into my life has always been a goal and dream of mine. The love and affection you receive back from a dog are priceless.”
1“The True Cost of Owning a Dog or Cat,” Credit.com
2“The True Cost of Getting a Puppy in 2019,” Rover.com
3“The True Cost of Getting a Dog,” Rover.com
4“5 Reasons to Get Your Dog Licensed,” Cesar’s Way
5“Pet Insurance Coverage: What You Need to Know,” ConsumersAdvocate.org
The post Fido-Proofing Your Budget: Managing the High Cost of Owning a Dog appeared first on Discover Bank – Banking Topics Blog.
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