Financial Planning for Pet Owners

For most American households with pets, owners consider their pets members of their family. And this means spending a good chunk of the household budget on their care. In 2019, it was estimated that Americans spent more than $50 billion per year on their pets. Yet every year, millions of pets are surrendered because the owners did not have the resources or provisions in place to care for the animals when the owners died, became disabled, or could no longer afford them.

Thankfully, pet owners can use traditional financial planning instruments to ensure their pets’ needs will be met in the future, whatever that looks like. Here are four things to consider.

1. Affordability and Budget for a Pet — To make sure you can afford the range of needs and costs a pet can incur during their lifetime, you need to make space for them in your budget. Initially there will be the cost of purchasing the animal from a breeder or adoption from a shelter. Next come any spay/neuter surgeries, vaccinations, yearly medications, dental cleanings, other vet bills, food, toys, crate/leash/cage/aquarium, litter, grooming tools and services, training, dog-walking services, boarding, and finally burial or cremation, not to mention any emergency vet care or costs to replace damage to your home or possession! Budgeting ahead of time for these costs will not only improve a pet’s life, but it will also save you from having to compromise your own finances—like not being able to pay rent—to pay for a pet.
     
2. Pet Insurance — Pet insurance is best used to fund extraordinary and unexpected veterinary costs. To get the most out of pet insurance (meaning it works in your financial favor), secure a plan when your pet is young. Insurance won’t cover pre-existing conditions, and some exclude care for conditions that certain breeds are known to develop. You will incur expenses and submit paid receipts for reimbursement. Policies can cost as little as $16/mo. but the average is closer to $45/mo.
     
3. Disability Insurance for Owners — Your disability insurance coverage should be sufficient to continue to pay and care for your pet should you not be able to work for an extended amount of time. Not having this coverage risks your pet’s wellbeing if your income is drastically cut due to job loss.
     
4. Estate Planning — Living trusts, life insurance plans, annuities, and wills should all account for the continuing care of your beloved pets. Outline who will care for your pet when you are no longer able, and then provide for that care through your life insurance policy, annuity, living trust, or other estate planning mechanism. Many states allow for pet protection agreements, wills, powers of attorneys, and letters of instruction.

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