By Jennifer Reddinger Wolfe
Before Germany’s native Karl Friedrich Benz introduced the first automobile between 1885-1886, just about every household owned a horse. Car ownership was a luxury. Skip forward a century later, just about every household owns at least 1 car and horse ownership is a luxury. However, this modern day luxury comes with many financial responsibilities due to the fact that our equines rely on us for daily care. Let’s face it; you can dock a yacht significantly reducing expenses. You can not dock an equine. They require, and deserve a great amount of financial prudence. In addition, you owe it to yourself and your equine to foster your passion for the future. Like any other financial goal, be honest, be realistic, be real and dream big now.
1. Create a budget. Yes, the “B” word. A sound budget is the foundation for any sound financial house. Keep in mind, no one month looks exactly like the next month. Honest spending is essential when creating your optimum budget, so don’t change any spending habit for 6 months. Being honest helps in creating a factual and realistic budget, so please don’t skimp! You need to have an honest reflection of YOUR lifestyle. This time period should be long enough to account for an active show season and some inactive time. Once you have a total for 6 months, you can average a monthly budget. You will notice that there are very routine or fixed expenses, as well as, ancillary or variable expenses. For example if you board your horse, you can expect monthly board to be categorized as a fixed expense. Another example of a fixed expense is farrier services. Massage therapy and shopping excursions to your favorite tack store are great examples of variable expenses. Now that you have a budget, stick to it! I will also fall victim to “this is the cutest sheet and my horse definitely deserves it” marketing geniuses at our favorite tack stores. Yes, our horses deserve it, but they also deserve mindful spending to insure the
foundation of your financial house is strong!
2. Have an emergency fund just for your horse. This emergency fund should
be considered in the same mindset as your household emergency fund: Cash in a bank for quick and easy access in case of an emergency. For those of us that either own an equine business or own a personal equine facility, it’s reasonable to co-mingle living and equine emergency expenses. But for the individual or family that boards their horses, it’s vital to examine these expenses and set up a separate account with cash to cover 6 months of
expenses just for emergency purposes. If there is a loss of an income stream, you want to be sure it does not affect the care for your equine. Understanding your fixed vs. variable expenses will help you plan for a necessary cut back. Because you have an honest reflection on your lifestyle, 6 months gives you time to have an emergency and come back. However, if you find that you need to reduce expenses, you understand what can be reduced and have some wiggle room!
Here’s a quick list of some potential expenses you may consider:
1. Monthly board
2. Monthly training expenses
3. Monthly grooming expenses
4. Monthly supplement expenses
5. Monthly show expenses
6. Farrier expenses (every 6 weeks)
7. Veterinarian expenses (account for at least 2 times per 6 months)
8. Chiropractic care (account for this service 2 times in 6 months)
9. Massage therapy (account for this service 2 times in 6 months)
10. Shipping expenses (account for this service once a month unless you own a trailer. If you own a trailer, factor in the maintenance of the truck and trailer including gas,insurance, storage and potential repairs)
3. Save in a taxable or retail account. This money is not immediately accessible,
as it should not be cash, but invested in the market. Investing this designated money gives your savings a chance to grow and work for you over the long term. Determining the appropriate amount of savings depends on your longer equine goals and should be discussed with your financial professional in great detail. However, if you’re looking to get started, consider investing 6 months worth of your budget every year. For example, if you spend $30,000 in 6 months, add $30,000 to a taxable or retail account every year. Again, this money is for long-term equine goals and should be invested in the market giving your money the opportunity to grow and compound over time. A good example of a long-term equine goal could be the purchase of a young horse in 5-10 years that’s going to need more intense training.
4. Save for your retirement. If you’re an avid equestrian now, more than likely, you’ll be an equestrian in retirement. In fact, your equine addiction might be a reason why you want to retire as early as possible. Dreaming about retirement is the fun and exciting part of financial planning, and adding your equine makes dreaming even more delightful. Again, we circle back to step 1, where we considered our budget. Is this the budget you want to keep? Do you
expect your budget to change? If it’s changing, how so? Do you expect to spend more early in retirement and taper spending down as you age? Do you expect annual spending to stay relatively the same throughout your retirement? Keep it in today’s dollars. Your financial professional will inflate the costs for you. Retirement is such a wonderfully customized phase of your life, that there is not a magic savings rate for everyone. Some may need to save as
little as 5% and some may save as much as 20%. Some factors that aid in retirement saving include company benefits and what kind of retirement account best fits your retirement spending needs. For example, your employer may offer an option between a traditional 401k and a ROTH 401k. A close look at your retirement income need may suggest utilizing the ROTH 401k option providing greater tax advantages in retirement. It’s vital to find an advisor
that will not only encourage you to explore your retirement dreams but also help you live those dreams in a financially efficient way.
I would love to think that Mr. Karl Benz was an avid horseman and loved equine sports, and that was his motivation in inventing the car. He loved his sport so much that he wanted horses to be loved and enjoyed in every household. Do you think he envisioned cars hauling horses?!?! Perhaps. Perhaps not. Again, the dreamer in me wants to think so. But whatever the reason, I’m thankful more horses are sporting and loved. If you’re like me, then we will do what we can to love and care for them. Make them a part of your financial house.
I’m Jennifer Reddinger Wolfe, CFP, CDFA, an avid horse lover. You can contact me at (724) 680.0806 or jreddinger@wealthcarecapital.com. Please visit my website at www.wealthcarejwolfe.com
Wealthcare Capital Management LLC (“Wealthcare”) is a registered investment advisor with the U.S. Securities and Exchange Commission (SEC) under the Investment Advisors Act of 1940. All Rights Reserved.
This content is provided for informational purposes only and is not to be considered tax or investment advice. Wealthcare cannot guarantee any specific financial return results for any client or guarantee a client will in all circumstances of changing personal financial goals and market conditions be able to remain in a client’s Wealthcare Comfort Zone®.
