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What smart veterinarians do financially

Retirement accounts and budgets can put you in a more comfortable fiscal position. Those aren’t your only choices.


After working with many veterinarians, I have distilled some common denominators when it comes to successful practitioners. These are not all-encompassing behaviors, but they seem to be the smartest personal finance actions that a successful veterinarian can undertake.

1. Take full advantage of the unique retirement accounts available to them.

For higher-income practice owners who want to save more and pay less in taxes, a cash balance pension along with a profit-sharing 401(k) is a terrific tool. This combination can potentially save over $100,000 in taxes depending on the specific situation.

For smaller practice owners, using a SEP (Simplified Employee Pension) IRA allows for greater contributions than a traditional or Roth IRA while also carrying lower costs than a typical 401(k). What’s important is to consider both the positives and negatives when evaluating a SEP IRA. It requires mandatory contributions to full-time employees, but depending on how many full-timers are on the payroll, the net benefit of setting up the plan can be eroded.

The traditional 401(k) tends to be more expensive, but matching employee contributions is not required.

A SIMPLE (Savings Incentive Match Plan for Employees) IRA is easy to set up and administer. It provides employees with additional flexibility and retirement savings options. The matching guidelines from the IRS for a SIMPLE IRA are as follows:

  • Match each employee’s salary reduction contribution on a dollar-for-dollar basis up to 3% of the employee’s compensation (not limited by the annual compensation limit).

  • Or make non-elective contributions of 2% of the employee’s compensation up to an annual limit of $280,000 for 2019 ($275,000 for 2018). It’s subject to cost-of-living adjustments in later years. If you choose to make non-elective contributions, you must make them for all eligible employees whether or not they make salary reduction contributions.

For relief and consulting veterinarians, a SEP IRA or solo 401(k) are great tools, as the aforementioned matching is obviously not an issue. Additionally, if you are a staff veterinarian who takes advantage of the 401(k) at your practice, you can still contribute to a traditional IRA. Just keep in mind that your contributions might not be tax-deductible depending on your income level.

2. Work with a financial adviser who is knowledgeable about the occupation.

An animal that needs to visit a dermatologist or cardiologist for a specific medical condition would not be taken to a general practitioner. Why would obtaining financial advice be any different?

Working with an adviser who understands the challenges and goals faced by veterinarians makes the discovery and planning process much more impactful. An adviser who works specifically with veterinarians would help with matters such as:

  • Planning to sell a practice and live without a consistent paycheck.

  • Planning to buy out a retiring owner.

  • Developing a systematic savings and investment plan.

  • Saving more on taxes than just utilizing the company retirement plans.

  • Defining specific goals, such as home ownership and paying off student debt.

3. Budget everything except for one thing.

Budgets serve a noble purpose, as they are keys to financial freedom. Marketing, however, is an expense that calls for a far more lenient approach to spending. Why? Because if you were told you could spend $5 on something and make $10, how much money would you spend? As much as you possibly could!

The same philosophy applies to marketing at the practice level. If Facebook advertisements, direct mail, search engine optimization and newspaper advertisements are returning a profit, the goal should be to figure out the most profitable marketing campaign and then run it until it’s no longer profitable.

On the personal side, successful veterinarians budget, monitor, evaluate and repeat at least quarterly. Just as life evolves, a financial plan should, too.

4. Write a business plan.

Having a written business plan for your practice doubles your chance of success, according to a survey conducted by Small Business Trends. Without a written business or personal financial plan, you don’t have any actionable steps that are executable.

When you have a plan that you can reflect on and see, concretely, how to fulfill your personal or business goals, your chances of achieving those goals skyrocket. The mental commitment of taking the time to outline where you are now and where you want to be in the short, medium and long term will make you disciplined and accountable for reaching those destinations.

5. Ignore investment noise.

No matter what side of the political divide you stand on, ignoring the investment noise or shinny object of the day is key. Fear, greed and Wall Street pundits can cause you to deviate from a sound financial plan. The only deviations you should consider are those based on your specific life events and goals.

Recessions and market crashes will continue to occur. Trying to time these events is almost impossible, even for some of the smartest people in the world. The real determinant of creating wealth is time spent invested, not trying to time the markets.

6. Put efficient systems in place.

Veterinarians who utilize technology and systems tend to be more organized, have more productive time and generate more revenue. Patient intake, records, CRM and practice management software are more efficient when systems are in place. If any tasks can be automated or systematized, chances are the initial time commitment to do that will save time and generate greater profits for years to come.

For a comprehensive review of your personal situation, always consult with a tax or legal advisor. Neither Cetera Advisor Networks LLC nor any of its representatives may give legal or tax advice.