Multigenerational veterinary practices and families with two or either three generations of veterinarians in them are not uncommon. But in the future, the children and grandchildren of veterinarians are going to have to be financially savvy to keep the family tradition going.
That’s a pretty clear message from our VPI®-Veterinary Economics Financial Health Study. For the next generation of veterinarians, a background with financial coursework as an undergraduate is almost as important to success in the veterinary profession as coursework in science.
When we released the study we were somewhat surprised at what it showed about our youngest veterinarians, the ones with the highest burdens of student debt. In their single-minded pursuit of one of the most difficult of professions, these young doctors did not have the financial background they needed to evaluate their best financial choices. For example, young veterinarians seem to believe their student loans make buying a practice impossible. In fact, buying a practice may be one of the best routes forward for retiring their student debt and becoming healthy financially. That may seem counter-intuitive, but it’s true, as Dr. Richard Goebel pointed out here last week.
What undergraduates with veterinary dreams should know:
High debt burdens. Almost half (49%) of associate veterinarians are carrying student loan debt, with an average balance of $112,082. For some associates, debt servicing requires nearly 40% of their monthly income. Additionally, associate veterinarians were more than twice as likely to have additional student loan debt in the family (11% vs. 23%). Associate veterinarians were more likely to have other forms of debt (auto loans, credit card). It’s critical that young veterinarians understand the difference between “good debt” – educational, mortgage and practice-ownership – and other debt, especially credit-card debt. Once you’re servicing credit-card debt, you’re putting your future at risk.
Significant numbers of veterinarians provide a secondary income in their households. Veterinarians are not all primary breadwinners in their families. While 91% of male veterinarians and 71% of female veterinarians said they were the primary breadwinners or shared breadwinner responsibility, 29% of female veterinarians and 7% of male veterinarians said their incomes were secondary. Modern families are varied and complex, making financial planning and decisions even more important. When you’re trying to plan for your children’s college costs while paying off your own student loans, the need for sound financial decisions is even more critical.
Veterinary salaries remain comfortable relative to most Americans. A third of veterinary incomes increased last year, while a fourth decreased. Mean household incomes did better. Mean personal income of veterinarians who owned practices was $110,000, while mean personal income of associate veterinarians was $84,000. By comparison, mean personal income for an American worker is $42,693 (U.S. Department of Commerce). This is the good news. Even with high levels of student-loan debt, a young veterinarian with financial savvy will be better off in the long run.
Being a veterinarian used to be a ticket to a solid middle-class lifestyle and a secure retirement — and it still can be. But only if veteriarians start their careers with the information they need to make the decisions they need to to retire their educational debt and avoid financial pitfalls as they build a solid financial future.