Saving for Medical Expenses

If formal pet health insurance or enrollment in a veterinary discount program is not a good fit for your situation then another thing to consider is saving for medical expenses in advance. If you are in a financial position to be able to save anything toward future medical expenses then having a dedicated savings plan is the way to go.

My personal favorite way to do this is to have a savings account that is dedicated to only pet medical savings and nothing else. Ideally that account would not be attached to your primary bank account, but would give you instant access to your money.

High Interest Savings Accounts

My personal favorite bank to use for this is Ally Bank. Ally pays high interest rates on their savings accounts, with no minimum deposit requirements and no minimum balance requirements either. The savings accounts do not provide instant access to your money to spend though, so you would also want one of their free checking accounts, which comes with a debit card.

One of the best features of the Ally savings accounts is their “buckets” program. The savings account has a feature that lets you set aside specific amounts of money in individual “buckets” to save for individual goals. But, because all of your savings is in a single account, you’re able to accrue more interest because your interest is earned on the total amount in the account. With buckets you can keep your savings in a single account, even if you’re setting aside money for multiple cats and want each cat to have their own dedicated amount of money.

Once you have the savings and checking accounts set up you can start putting money into your savings account for your cat. The checking account should not get any money into it, because the savings account is where you are going to earn all the interest on your savings.

When something happens and you need to spend that money, you can do an instant transfer of the amount you need from the savings to the checking account, then use your debit card to pay for services.

In the past I have used this method and set aside my normal monthly amount for pet care into the savings account, because even if I had to spend the money at the end of that month I still earned a little bit of interest while the money was sitting in the account. Over time I was able to carry some balance over from month to month, earning even more interest. It has never been a lot, but every penny helps.

Cash-Back Credit Cards

If you’re pretty well-disciplined in your spending habits, another way to start setting aside money for pet expenses is to use a cash-back credit card. Obviously there are restrictions based on which cards you can qualify for, and what the available limit is.

The way I use the card is:

  • Charge absolutely every expense possible to the credit card
    • Utilities, grocery bills, gas, lattes, vet bills, cat supplies, etc.
  • Pay off the entire balance every month so I don’t pay interest
  • Collect the available cash-back benefit every time it’s available
    • My card lets me collect every time I reach $25.00
  • Receive a bonus by depositing my cash-back bonus into my Ally Savings account
    • Even more free money!
    • This is a bonus specific to the card/bank I’m using but other cards may have similar relationships with other banks

By using this method I’m not spending any more money than I normally would, and I’m not paying any interest to the credit card company. Through the cash back rewards I typically earn enough to cover a couple of regular vet visits each year.

Using the Stock Market

If you’ve got enough money set aside in general savings and you want to try your hand at earning a bit more through investing in the stock market you could try something like M1 Finance. I like M1 Finance for investing because for all “normal” people (AKA “not already filthy rich”) you don’t pay any fees to trade or purchase stocks. They have an easy-to-use website and app, and they have pre-made portfolio options so that you’re not stuck learning everything about investing on your own.

If you’re interested in learning about investing I’d suggest starting with the Investopedia website. They have a lot of very helpful information.

Overall, using the stock market is a terrible thing to do unless you’ve got enough discretionary income that you can afford to lose anything you’ve invested.

Cautions and Advice:

  • Do not invest any money that you cannot afford to lose
  • Investing in the stock market is inherently more risky than putting money in a high-interest savings account
  • You won’t have immediate access to your money
    • Markets must be open for you to sell stock
    • Transfers aren’t instant from the investment account to your bank account
  • Don’t pick individual stocks unless you have a solid understanding of trading practices
    • Mutual Funds, Index Traded Funds, and similar portfolios are almost always a better/safer choice than individual stocks
  • Bonds are a safer alternative to stocks – lower risk, but also lower reward