How to manage the rising costs of being a pet parent

Financial planner Rich Arzaga never expected to spend so much money on his 11-year-old, Leo. Especially since Leo isn't his son, but a flat-coated retriever.

A recent medical battle for Leo led to two different hospitalizations, adding up to a total of $20,000. That's a lot of money for a furry friend well into his lifespan. But the investment paid off. Leo received treatment for various conditions, and is recovering well.

"The decision wasn't an easy one," says Arzaga, of Monument, Colo., about covering the big price tag. "But we felt he deserved the chance."

How much does it really cost to own a pet?

Caring for a dog over 15 years can now cost anywhere from $22,125 to $60,602, according to Synchrony's Pet Lifetime of Care Study, up 11.65% from the same study three years prior. Cat owners can expect a range of $20,073 to $47,106, up 19.4%.

First-time pet parents might expect a few bills beyond daily bowls of kibble. But the reality is far more extensive: training, boarding, grooming, high-end food, insurance, out-of-pocket medical expenses, and much more.

Arzaga is experiencing first-hand what many pet owners do. It's all part of a society-wide trend: our pet companions feel like real family members, for whom we would do anything. But at the same time, our deep love for our pets shouldn't drive us into debt.

Here's what the experts recommend for handling pet costs the right way.

How do you start a pet emergency fund?

Start by setting aside a small, automatic amount every month, even $50, in an account dedicated to your pet. That way, when surprise expenses come along, you will already have prepared for them.

Every financial planner drives home the importance of establishing an emergency fund for yourself and your family, typically in the range of 3 to 6 months' worth of expenses. A pet emergency fund works the same way, just on a smaller scale.

"A pet emergency fund, even $50 a month on autopay, buys the ability to say yes on the worst day without touching a credit card," says financial planner Matt Chancey of Winter Park, Fla. "Fund these first, and without guilt."

As far as where to keep those funds, it's always smart to consider higher-yielding accounts that earn you interest in the meantime. With Current's Savings Pods, you can earn up to a 4.00% annual bonus and designate pods for specific savings goals. You can also turn on round-ups on purchases to automatically add the extra cash to your Savings Pods.

Which pet expenses are worth cutting?

Cut the splurges your pet will never notice, and put that money toward preventative vet care instead. A lot of pet spending goes to the wrong things, says Chancey.

"The $80 leash, the boutique treats, the decor-grade bed your dog will drag into the yard," he says. "Your dog doesn't know what the leash cost. Cut this category to zero and your pet will never notice."

Instead, you want to maximize what's truly priceless: the number of years you have with your pet. That means regular, preventative vet care, which will spot and address any health issues early on.

There's a reason vet care is the biggest budget category for dog owners, at 31% of spending, according to the American Pet Products Association. Nationwide, that makes for a projected $42.4 billion this year on vet care and product sales.

Is pet insurance worth it?

Pet insurance protects you from the heart-wrenching scenario of having to make a life-or-death decision based on cost. No one wants to be put in that impossible position, and coverage means you won't have to be.

Given how attached we are to our pets, it's surprising how few owners have insurance. Only 4.27% of pets are covered, according to the North American Pet Health Insurance Association, meaning more than 95% of pets are going without.

It's true that the costs of such insurance are higher than ever. The average annual premium for dogs is now $836, according to NAPHIA's State of the Industry report. And premiums typically get hiked every year, since older pets obviously encounter more health problems.

To find and compare what's available in your area, check out NAPHIA's pet insurance finder.

Does your credit score affect pet insurance costs?

It can. Depending on your location, since each state has its own regulations, insurers may take credit scoring into account when offering coverage or setting pricing, according to credit agency Experian.

You might not think your credit score has anything to do with getting insurance for little Fido or Fifi. But it could be costing you, which means improving your score can only help in your pet insurance search.

If your score could use some improving, consider a secured card, such as Current's Build Card, which could help minimize risks of debt because you can only spend the amount of money available in your account. Your on-time monthly payments are reported to the three major credit bureaus (Equifax, Experian and TransUnion) and can help build your credit history. Members have seen an average 81 point credit score increase six months after using the Build Card.

The payoff of planning ahead

As for the adorable retriever Leo, he's on the mend and loving life. Arzaga was happy to pay any bill to keep Leo around.

"For us, it feels like a good investment in our family—and in our soul," says Arzaga. "I don't know if I would ever be able to forget not giving Leo and our family this chance."