What’s the most important issue facing the veterinary profession? It’s student debt, according to the Merck Veterinary Wellbeing Study. In the study of more than 3,500 veterinarians, over 91% ranked student debt as a “critically” or “moderately important” issue facing the industry. High levels of student debt cause serious psychological distress such as depression, anxiety and panic attacks, according to the study.

So, what can be done? We’ve all read articles about the systemic problems underlying rapidly rising veterinary education costs. This article, however, is for veterinarians dealing with incurred debt and for veterinarians entering the workforce before systemic solutions are implemented.

The five timeless principles of long-term financial success are:

• Spend less than you earn.
• Control the use of debt, especially consumer debt.
• Save and invest regularly.
• Give generously.
• Set long-term goals. (And if married, be in alignment with your spouse.)

That’s it! Just five principles of success. But how do you get started? What are the first steps to effectively deal with student debt and reduce stress?

Our three-step prescription is:

• Know where your money goes.
• Manage debt and long-term investing.
• Develop and regularly review a long-term financial plan.

Let’s dig deeper into each of the three areas.

1. Know Where Your Money Goes

The No. 1 thing we see blocking young veterinarians from financial freedom is they don’t know where their money goes. Many of you will begin your career as a veterinarian, start earning “big kid” money after years of surviving on student loans and think you are set. Not so fast. By now you’ve hopefully realized that those student loans aren’t going anywhere, and yes, you are expected to pay them back.

The first step is a financial assessment that answers these questions:

• How much do you need to live on each month? Include everything from housing to insurance to Netflix.
• How much do you want to give to the people and causes you care about?
• How much do you owe in student loans and taxes?
• How much do you need to save to accomplish your long-term financial goals?

Failing to get answers to the four questions sets the stage for financial struggle and stress. It would be like prescribing treatment for a sick animal without measuring the vital signs.

If you can answer these “live,” “give,” “owe” and “save” questions, you are miles ahead of most young veterinarians attempting to make sense of their money. The next step is implementation. Many money-tracking apps make this part easy, but you must know what’s coming in each month and what’s going out. In other words, cash flow.

2. Owe and Grow the Smart Way

Once you answer the four questions and understand your monthly cash flow, you can get to work implementing better financial habits. Specific tools can help a veterinarian work smarter, not harder. Start here:

MANAGE YOUR DEBT

Student loans are no joke. According to the American Veterinary Medical Association, the average student loan debt for 2016 veterinary school graduates was $143,758. And if we assume an interest rate of 5%, then the average veterinarian has to pay nearly $7,200 a year before making a dent in the outstanding balance. To overcome this massive obstacle, you need to know your options.

All five options below involve federal student loans. We recommend working with a financial adviser or visiting StudentLoans.gov to see if your loans are eligible.

• Income-Based Repayment (IBR): For new borrowers on or after July 1, 2014, your monthly payment is capped at 10% of your discretionary income (or 15% for borrowers before July 1, 2014). Loan forgiveness is offered after regular payments are made for 20 years.
• Pay As You Earn (PAYE): Payments are calculated as 10% of your monthly income, and loan forgiveness is possible after regular payments are made for 20 years. You must not have taken a federal loan before Oct. 1, 2007, nor received a disbursement of a direct loan after Oct. 1, 2011.
• Revised Pay As You Earn (REPAYE): Payments are capped at 10% of your discretionary income, and loan forgiveness can come if regular payments are made for 20 years (and 25 years for loans taken for graduate school).
• Income-Contingent Repayment (ICR): This is the only income-driven plan that allows Parent Plus loans. Payments are the lesser of 20% of discretionary income or the standard payment on a 12-year payment schedule. ICR offers loan forgiveness if regular payments are made for 25 years.
• Public Service Loan Forgiveness (PSLF): If you work in a role that qualifies as public service, then you might be eligible for income-driven payments, which might be forgiven after 10 years of regular payments.

A warning: Don’t get bitten by taxes. Just because your student loans are forgiven doesn’t mean you won’t pay anything. If you have federal student loans forgiven under one of the above plans, then you will pay ordinary income taxes on the loan balance in the year its forgiven. (With PSLF, loan forgiveness is not taxed as income.)

INVEST FOR THE LONG RUN

Use tax-advantaged accounts to save for the long term. Giving you investment advice in a magazine would be malpractice, so here are two basic options for saving and growing your wealth.

• If you are an employee, consider participating in your employer’s retirement plan, especially if your contributions will be matched.
• If you are self-employed, meet with a professional to weigh the pros and cons of opening a retirement account, such as a SEP-IRA, Simple IRA, Roth IRA, traditional IRA or Solo 401-k. All this gets you moving in the right direction.

3. Have a Plan and Roll With the Punches

As you start your veterinary career and begin to make financial decisions for your future, you need to develop a plan. Without one, you’re more likely to get lost in financial confusion and fall behind on your most important goals.

Until now, most of your goals have been short term in nature — get through the semester, get through school and get a job. Once those accomplishments are behind you, you must think farther into the future. You will still have short-term financial goals, like a new car and a home purchase, but if you fail to think long term, your short-term decisions can interfere with long-term goals. You do not want to work for 25 to 30 years and only then figure out that you have not adequately saved for retirement.

Each quarter, consider listing your financial goals and the next action step to accomplish them. If your goal is to be debt-free, get on the right repayment plan. If your goal is to travel annually, make sure you save enough money each month to cover the trip and not have credit card bills waiting for you that can’t pay.

The Merck study included recommendations for addressing the student debt problem, one of which was that veterinarians seek the help of a certified financial planner. A CFP can help implement a comprehensive financial plan that addresses both short- and long-term needs and goals.

Don’t wait for life to happen. Be proactive and roll with the punches.

That’s it — three ways to kick-start your career and get financial peace of mind. Do not overwhelm yourself trying to do everything at once. Start simple, know where your money goes, owe and grow the smart way, and have a plan that adjusts as things change.