Basic financial planning keeps graduates afloat

ORLANDO, FLA. — New graduates pay an average 5.3-percent more for student loans while starting salaries rose 3 percent in 2004.

The discrepancy makes profit plans a valuable tool for new graduates, says Dr. James E. Guenther, who presented "Basic Financial Planning for the Recent Graduate" during the North American Veterinary Conference in January.

"Everything veterinarians do must benefit three things: themselves, family and the profession," Guenther says.

Basic financial planning also will help maintain the lifestyle DVMs have in mind, he adds. Guenther assured listeners that their careers are necessary outlets to make a living and a way to prepare for life goals.

"We prepare for the lives of our patients but often not for ourselves," he says.

A "dream team" should be put in place to create a more comfortable life, Guenther says. He advises graduates to maintain the following financial experts:

• Contract attorney,

• Certified public accountant,

• Banker,

• Insurance agent,

• Certified financial planner,

• Practice consultant.

No excuses

"Common excuses not to prepare for the future include not enough time, too complicated and busy planning for other people," Guenther says.

At some point, excuses must come to a halt in order to plan for a stable life. To get started, have personal cash flow analyzed, keep an emergency fund, create a will and maintain insurance.

"Keep in mind when you want to buy a house, a practice, have children and retire," Guenther says.

When thinking about wills and guardianship, consider who will care for your children if you and your spouse face an untimely death, Guenther says. Keep at least three months worth of emergency funds, he adds.

Investment basics

To start investing, Guenther advises saving 5 percent in a money market account, opening a savings account and purchasing investment and home equity accounts.

"Do not consider credit cards as a source for emergency funds," Guenther says. "Ten years ago, the average credit card debt for a family was $3,200; now the debt has increased to $9,600."

When looking for a place to begin, start with emergency funds, then span out into investments. Make a goal of paying credit card debt on a monthly basis, he adds.

"A $.30 debt may evolve into a $8 debt when interest is added," he says. "Consider the age of your children and how much debt you owe. Summarize cash flow, then manage money accordingly."