Ahh I can already envision it. The idyllic suburban home with the large fenced in yard perfect for your little furry friends. The pup playfully barks at the neighborhood kids while the cat sits quietly perched in the front window. It’s what Americans dream of. Should this be your dream?
The answer is most likely not. At least not until you have more financial assets under your belt.
I already knew as I began to type this article it will be contentious once it’s published. Pets are considered family members by many people with emotional attachments to boot. Yet the sad fact is your pet is probably doing more damage to your portfolio than the pictures you post on Instagram portray. I mean who wants to think of the cute new puppy as a ravenous gold digger? Yet Fido is probably digging that hole in the backyard to find your buried stash so he can get the new chew toy he’s been eyeing at the local pet store.
Let’s take a deeper look at why pet ownership comes in at #5 on my list of strategies to help you GET MAD WEALTH!
The ASPCA lists the average cost for a few pet types. Obviously there will be people with actual costs that differ, but for the sake of this article these are the numbers we will use. What they don’t list is the cost of acquiring a pet which can be substantial depending on what type of animal you choose so we will adjust for that in our example. Also most people with pets have more than 1 as evidenced by data from AVMA. So we will use 2 pets(1 dog and 1 cat) for the average household in our example. Here is what you can expect for a 5 year summary.
Medium Dog | Cat | Cost Per Year | |
Year 1 – Incl Pet Purchase | $2,080 | $1,335 | $3,415 |
Year 2 | $695 | $670 | $1,365 |
Year 3 | $695 | $670 | $1,365 |
Year 4 | $695 | $670 | $1,365 |
Year 5 | $695 | $670 | $1,365 |
Total | $4,860 | $4,015 | $8,875 |
Wow that added up quickly over 5 years. But your pet is likely to live 8-12 years so keep that in mind. But regular readers will know that you have forfeited the opportunity cost of earning money for the sake of your family pet. So pull up the financial calculator we shall.
If we invested the money starting in year one earning a 8% rate of return making monthly additions spent on each pet you would have $28,390 in cash to your name after 10 years. But of course the original pets sadly passed after 10 years and you replaced them both with two more pets forfeiting another $28,390 over twenty years total. After it’s all said and done you voluntarily forfeited $56,780 over 20 years for your little companion. Coincidentally that is very close to the median yearly pay of an American worker. To me that sounds like you gave yourself another year of work. I bet you never would have thought you worked for 1 year out of 20 just to afford your pets. If you make even less money you will be forfeiting substantially more years of your freedom to have a pet. So when thinking of buying your new furry companion please keep these numbers in mind. Also I’d implore you to set aside the money towards a child’s college education fund instead, or even your own retirement.
If you make really good money, have a considerable nest egg, and passive income covering most if not all of your expenses then by all means have a pet and enjoy it. Interested in finding out how much your furry fluffy friends cost each year? Use our free budgeting app to get started tracking pet expenses easily.
One last thing to get your mind thinking…
Now let’s compare pet ownership across 3 different income groups after estimates for taxes, and housing which I like to call Remaining Discretionary Income(RDI). All 3 people have the exact same cat, and dog. Look at the Low Earner who likely has minimal savings and an already below average job earning 40,000/yr. After taxes let us assume this average person is left with 30,000 for the year. Housing takes up another $800/mth leaving $20,400 for the year to spend on food and other necessities. Now compare this pet owner to an Average and High Earner in the graph below.
Low Earner | Average Earner | High Earner | |
| Gross Income | $40,000.00 | $85,000.00 | $150,000.00 |
| Tax Rate | 25% | 30% | 40% |
| After Tax Income | $30,000 | $59,500 | $90,000 |
| Yearly Housing Costs | $9,600 | $14,400 | $21,600 |
| Housing % of After Tax Income | 32.00% | 24.20% | 24.00% |
| Remaining Disretionary Inome(RDI) | 20,400.00 | 45,100.00 | 68,400.00 |
| Year 1 Pet Ownership % of RDI | 16.74% | 7.57% | 4.99% |
| Subsequent Years of Pet Ownership % of RDI | 6.69% | 3.03% | 2.00% |
The Low Earner is considerably more burdened in this example by their pets. Since both the human and pet need a place to live these are costs that must be paid.
The Low Earner is consuming 16.7% of their RDI. Each year after the pets would consume 6.7% of RDI. Compare that to a person who takes home $150,000/yr. The percentage of income taken up by the pets is comparatively lower. So you may think since others in your neighborhood have a pet you should have one too. That’s just not the case. You may have no idea what some of your neighbors make, nor their financial situation.
Furthermore the Low Earner is already substantially more burdened in this example by housing costs than their higher earning counterparts. It always baffled me when people struggling financially would have an expensive pet such as dogs or cats. Sometimes up to 3-4 pets which is astounding. What most people fail to realize is that becoming rich isn’t done overnight. If you work hard, save, invest, and spend money wisely you could start to breath a little easier over time. This is true for anyone outside of those living in the poverty level where there is a struggle to just get food on the table. Understandably the pet provides happiness to just about every owner. But generally you could get the same social benefits from a good friend, or family member while costing you nothing!
Now this doesn’t mean you should give up the idea of ever having a pet. Just be sure to get your financial house in order first before making the commitment. Remember that pets are optional and require a huge commitment. And if you decide to get one anyway understand that you are sacrificing part of your financial well being in return.
Also one of the best ways to make an impact is to donate some of your time/skills to any of your local, or national pet friendly organizations. The next best option is to donate some money, and since you’ll have control over exactly how much you choose to donate it will be easier to manage your finances. You might even qualify for some tax benefits as a result, but speak with a qualified professional about this first(did I mention we offer tax planning?). Hopefully this puts a new perspective on the costs, and responsibilities of owning your favorite furry companion.
