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Affording Fido: A Cost Checklist for a New Pet

04/20/2015 02:16 pm ET | Updated Jun 20, 2015
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Most of us have friends and family who treat their pets like humans. They'll scrutinize pet food nutrition labels, hire the best obedience instructors and buy an overwhelming amount of toys and treats.

When their pet falls ill, many won't think twice about paying for advanced veterinary care that can cost thousands of dollars for a single surgery or course of treatment. It's not unusual to see many pet owners taking on considerable risk to their own finances.

If you are considering purchasing or adopting a pet, it's important to think through the financial burden required to give an animal a good life. Here are a few items to consider.

Do your research. The ASPCA publishes an annual estimate of first-year costs for a variety of pets. Purchase and adoption costs may vary based on species, breed and location, so read as much as you can about a specific pet choice. Check for leading adoption and rescue sites. Before you bring a pet into your home, research the behavioral, care and health history of their particular breed to make sure it will be compatible in your household. It might also be worthwhile to find a veterinarian in advance who can offer additional advice about home and medical care.

Talk to friends and family. Ask friends or family who already know about raising a breed of animal about the potential costs and risks. Most experts suggest that bringing an animal into a home should never be a snap decision; speak to those you trust about ownership and share your plans with family members who will also be living with that pet.

Estimate the cost of veterinary care. If certain species and breeds of animals are prone to specific diseases or conditions, understand those risks before you adopt or buy. Ideally, pet owners should consider setting up a veterinary savings fund whether or not they choose to buy pet insurance. Keep in mind that some breeds might not even qualify for coverage if they are prone to certain congenital or hereditary conditions, so talk to a vet about out-of-pocket costs for care over that pet's lifetime.

Include your pet in your budget. Determine whether your current budget will allow for enough disposable income or savings to cover that pet's regular costs and potential emergency spending. By the ASPCA's estimate, a large dog may cost roughly $1,800 for food, veterinary care and toys and accessories in his or her first year and $780 a year afterward. That doesn't include potential bills for major illness or accident care that might run into the thousands. If a dog of that size lives eight to 10 years, that means spending a minimum of between $7,260 and $8,820 over a lifetime. It is smart to know exactly where those funds will come from before you purchase or adopt.

Check your home or rental insurance for possible pet restrictions. Property casualty insurers will generally ask what kind of pet you're planning to bring into your home or apartment. That is because insurers worry about liability or property damage from certain species or breeds. In 2013, the Insurance Information Institute claimed that one third of all homeowners insurance liability claims came from dog bites alone. Certain types of breeds may be considered higher-risk among some insurers, so before you purchase or adopt, discuss your pet plans with your insurer to see if they will affect the price or availability of your coverage.

Consider pets in your estate planning. There are certain pet breeds -- some bird breeds and tortoises among them -- that may live well in excess of 20 years. Depending on your circumstances, and particularly if you are older or living alone, you might want to add specific instructions to your estate plan for the care and financial support of your pet if you die or become disabled. Pet trusts have emerged as a solution for this purpose.

Bottom line: Pet ownership can be one of the great pleasures in life but a big financial surprise for those who don't research and plan for everyday and emergency costs. Before taking on the new addition, do your homework and create a budget.

Jason Alderman directs Visa's financial education programs. To follow Practical Money Skills on Twitter, visit twitter.com/practicalmoney.