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The United States is more than a little dog crazy: The percentage of households with a canine stands at 45.5%, meaning almost one out of two have a pooch. Owning a dog can be one of life’s great pleasures, whether you choose a tiny Chihuahua puppy or a mega, full-grown Great Dane as your new best friend.

But amid imagining all the cuddles and sloppy kisses, many prospective dog parents aren’t fully prepared for the expense of owning a pet.

This can be an important consideration, given that dog ownership generally requires a significant upfront and ongoing financial investment. Start-up costs tend to run around $2,127, while ongoing annual expenses average $2,489, according to the American Kennel Club.

If you’re considering bringing home a new pooch, here’s key information to know about budgeting for a dog.

8 Costs of Owning a Dog

It’s easy to fall in love with an adorable dog and feel as if you just must make it yours ASAP. But it’s wise to do a little research first about potential bills before you bring home a new pooch. Read on for eight costs that are likely to crop up.

1. Adoption Costs

The cost to adopt a dog varies depending on the organization, dog’s age, and breed, but fees from shelters can range anywhere from $50 to $500. The adoption fee helps cover some of the cost of holding the dog and getting them ready for adoption. At some pet rescues, adoption fees also cover the cost of veterinary services, like a pet physical exam, deworming, spaying or neutering, microchipping, and common vaccinations.

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Adoption vs Buying

Buying a dog from a breeder costs considerably more than adopting one from a shelter. Depending on the type of breed and the location of the breeder, you can expect to pay anywhere from $775 to $4,750.

The purchase price through a breeder typically includes the dog’s first round of shots and deworming. However, other medical costs — such as spaying or neutering and microchipping — are not typically covered by the breeder’s fee.

Recommended: 9 Cheapest Pets to Own

2. Food and Treats

Once you bring home your furbaby, you’ll also need to factor dog food and treats into your spending budget. The cost of feeding a dog can run anywhere from $200 per year for a small dog to $720 per year for a large dog. If you decide to serve your dog premium brands, freshly made food, or a specialized diet, your food costs could be significantly higher — as much as $3,000, possibly more, per year.

3. Toys

Toys may seem like a silly little add-on, but they can play an important role in puppy development and adult dogs’ mental stimulation. Toys can help dogs fight boredom when they are left at home alone and comfort them if they’re agitated. And with toys to gnaw on, dogs may be less likely to turn to shoes for a midday distraction.

One way to save money on pet costs is to keep toys simple. For example, a basic tennis ball will satisfy many dogs. And you can grab a can of three, fun-to-chase tennis balls for about $4. However, you may want to offer your new companion a range of fun things to play with. If so, you might set aside around $100 a year for doggie toys.

4. Pet Sitters or Walkers

If you work outside the home or plan to travel without Fido, it may be a good idea to factor in the cost of a dog walker or pet sitter. You can expect to pay between $24 and $34 for a 30-minute dog walking service. Hourly pet sitter rates can run anywhere $12 to $20 per hour, while the average cost to board a dog is around $40 per night.

It may be helpful to estimate how much outside care you’ll need for your new dog and add it to your budget.

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5. Medical Visits

Dogs need regular medical care, so health expenses are another cost to consider when setting up your budget. Just like humans, dogs need blood drawn to check for diseases, routine vaccinations to prevent disease, and a general physical exam once a year to make sure their health is in working order.

The cost of healthcare for a dog varies widely depending on the type of dog, care provider, and where you live. On average, an annual vet visit can run $50 to $250, but that doesn’t include vaccinations (around $20–$80 per vaccine); medications and supplements ($10-$150 annually), and dental cleanings ($300-$1,500 annually).

6. Pet Insurance

While pet insurance won’t cover routine veterinary visits, it could come in handy if an emergency occurs with the pup. For example, a new dog could eat something that causes it to get sick or develop a bacterial or viral infection.

Many pet insurance plans will cover a portion of medicines, treatments (including surgeries), and medical interventions that aren’t tied to a pre-existing condition. The cost of pet insurance can vary significantly by your pet’s breed, age, and health history. On average, pet insurance for a dog runs around $62 a month.

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7. Incidentals

A lot of smaller expenses can come when you own a dog, such as doggy waste bags and cleaning supplies for pet-related messes. The ASPCA estimates that miscellaneous costs can average around $35 for small dogs, $45 for medium dogs, and $65 for large dogs annually.

8. Emergency Fund

It can be wise to save up an emergency fund for pet-related expenses. Having a financial cushion helps ensure you can make fast decisions about your pet’s care without worrying about how you’ll afford the bill.

You might set up a dedicated savings account to cover unexpected pet-related costs, with a goal saving between $500 and $1,000 to start. Or you could simply add to your general emergency saving fund. Either way, it’s a good idea to keep your emergency funds in a dedicated savings account, such as a high-yield savings account or money market account, so you’re not tempted to dip into it for everyday expenses.

The Takeaway

More than 45% of US households have dogs as pets, which shows how beloved they are. But before you get a pet, it’s important to know the costs involved (which can add up to thousands per year) and budget wisely. Saving in advance can make adopting and then caring for a dog easier. You might look for a high-yield savings account to help your money grow for this purpose.

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FAQ

How much does it cost to buy a new dog?

The cost to buy a dog can vary widely depending on whether you adopt from a shelter or purchase from a breeder. Adoption is generally the more affordable option, with fees running anywhere from $50 to $500. The price for a puppy from a reputable breeder can run $775 to $4,750, depending on the breed’s popularity and rarity.

What is the monthly cost of owning a dog?

The average monthly cost of owning a dog ranges from approximately $64 to $248, depending on factors like size, breed, and location. These costs include food, toys and accessories, pet insurance, and grooming.

Can pet insurance save me money?

Buying pet insurance can be worth it if your pet is young and healthy or you don’t have enough savings to cover an expensive vet bill. However, it may not be a good deal if your pet is older or has health issues and/or you would be able to manage a hefty vet bill if it came up.

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SOBNK-Q425-031

Whether it’s a cozy micro-cabin or a rambling Colonial, your home is probably the single largest purchase you’ll ever make and your biggest physical asset. An investment like that is worth protecting.

That’s where homeowners insurance comes in. It gives you peace of mind that if you were to have major damage or get robbed, there would be funds to repair and restore your home. But what happens when you think it’s time to change your policy?

Here’s what you need to know about switching your homeowners insurance policy, as well as a step-by-step guide to getting it done as quickly as possible and with minimum hassle.

Can I Switch Homeowners Insurance at Any Time?

Good news: yes! No matter the reason, you’re allowed to change your homeowner’s insurance at any time. This is good, since shopping around for the right policy can save you a lot of money in some instances.

If you’re shopping for a new home as we speak, it can be a good idea to start looking at house insurance before you sign the purchase agreement. And if you’re an existing homeowner looking to save money or simply find a new policy, you absolutely can do so whenever you like. But it’s important to follow the steps in order to ensure you don’t accidentally have a lapse in coverage.

When Should I Change My Homeowners Insurance?

There are certain events that should also trigger a review of your insurance, including paying off your mortgage (your rates may well go down) and adding a pool (your rates may go up). Also, you may find you are offered deals if you bundle your homeowners insurance with, say, your car insurance; that might be a savings you want to consider.

You never know what options might be available out there to help you save some money. And since homeowners insurance can easily cost more than $2,100 per year, it can be well worth shopping around.

Recommended: Is Homeowners Insurance Required to Buy a Home?

How Often Should I Change My Homeowners Insurance?

You’re really the only person who can answer this one, but in general, it’s a good idea to at least review your coverage annually.

However, it does take time and effort. Sometimes, a cheaper policy means less coverage, so it’s not always a good deal. Be sure you’re able to thoroughly review all the fine print and make sure you know what you’re getting.

Ready to change your homeowners insurance? Follow these steps in order to ensure you don’t accidentally sustain a loss in coverage.

Step One: Check the Terms and Conditions of Your Existing Policy

The first step toward changing your homeowners insurance policy is ensuring that you actually want to change it in the first place.

Take a look at your existing policy and see what your coverage is like, and be sure to look closely to see if there are any specific terms about early termination. While you always have the right to change your homeowners insurance policy, there could be a fee involved. In many instances, you may have to wait a bit to receive a prorated refund for unused coverage.

Step Two: Think about Your Coverage Needs

Once you have a handle on what your current insurance covers, you can start shopping for new insurance in an informed way. You probably don’t want to “save money” by accidentally purchasing a less comprehensive plan. But do think about how your coverage needs may have shifted since you last purchased homeowners insurance.

For example, the value of your home may have changed (lucky you if your once “up and coming” neighborhood is now officially a hot market). Or perhaps you’ve added on additional structures or outbuildings and need to bump up your policy to cover those.

Recommended: What Does Homeowners Insurance Cover?

Step Three: Research Different Insurance Companies

Now comes the labor-intensive part: looking around at other available insurance policies to see what’s on offer. Keep your current premiums and deductibles in mind as you shop around. Saving money is likely one of the main objectives of this exercise, though sometimes, higher costs are worth it for better coverage.

Make sure you are carefully comparing coverage limits, deductibles, and premiums to get the best policy for your needs. Also consider whether the policy is providing actual cash value or replacement value. You may want to opt for a slightly pricier “replacement value” so you have funds to go out and buy new versions of any lost or damaged items, versus getting a lower, depreciated amount.

In addition, it’s a good idea to stick with insurers with a good reputation. All the coverage in the world doesn’t matter if it’s only on paper; you need to be able to get through to customer service and file a claim when and if the time comes.

Fortunately, many online reviews are available that make this vetting process a lot easier. A few reputable sources for ratings: The Better Business Bureau and J.D. Power’s Customer Satisfaction Survey, and Property Claims Satisfaction Study. You can also do some of the footwork yourself by calling around to get quotes, though this is time-intensive. You might want to simply use an online comparison tool instead.

Step Four: Start Your New Policy, Then Cancel Your Old One

Found a new insurance plan that suits your needs better than your current one? Great news! But here’s the really important part: You want to get that new policy started before you cancel your old one.

That’s because even a short lapse in coverage could jeopardize your valuable investment, as well as drive up premiums in the future. Once you’ve made the new insurance purchase call and have your new declarations page in hand, you are ready to make the old insurance cancellation call. Be sure to verify the following with your old insurer:

•   The cancellation date is on or after the new insurance policy’s start date.

•   The old insurance policy won’t be automatically renewed and is fully canceled.

•   If you’re entitled to a prorated refund, find out how it will be issued and how long it will take to arrive.

Congratulations: You’ve got new homeowners insurance!

Step Five: Let Your Lender Know

The last step, but still a very important one, is to notify your mortgage lender about your homeowners insurance change. Most mortgage lenders require homeowners insurance, and they need to be kept up-to-date on who’s got your back should calamity strike. Additionally, if you still owe more than 80% the home value to your lender, they may still be paying the insurer for you through an escrow account — so you definitely want to make sure those payments are going to the right company.

The Takeaway

Homeowners insurance is an important but often expensive form of financial protection. It can help you cover the cost of repairing or rebuilding your home if you undergo a covered loss or damage. Since our homes are such valuable investments, they’re worth safeguarding. Plus, most mortgage lenders require homeowners insurance.

Sometimes, changing your policy can help you save money for comparable or better coverage. Reviewing and possibly rethinking your homeowners insurance is an important process, especially as your needs and lifestyle evolve. If you’ve added on to your home, put in a pool, bought a prized piece of art, or are enduring more punishing weather, all are signals that you should take a fresh look at your policy and make sure you’re well protected.

If you’re a new homebuyer, SoFi Protect can help you look into your insurance options. SoFi and Lemonade offer homeowners insurance that requires no brokers and no paperwork. Secure the coverage that works best for you and your home.

Photo credit: iStock/MonthiraYodtiwong

Auto Insurance: Must have a valid driver’s license. Not available in all states.
Home and Renters Insurance: Insurance not available in all states.
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SoFi Insurance Agency, LLC. (“”SoFi””) is compensated by Experian for each customer who purchases a policy through the SoFi-Experian partnership.

Third-Party Brand Mentions: No brands, products, or companies mentioned are affiliated with SoFi, nor do they endorse or sponsor this article. Third-party trademarks referenced herein are property of their respective owners.

Financial Tips & Strategies: The tips provided on this website are of a general nature and do not take into account your specific objectives, financial situation, and needs. You should always consider their appropriateness given your own circumstances.

SOPRO-Q425-010

Mark to market (MTM) is an accounting method that measures the current value of a company’s assets and liabilities, rather than their original price. MTM seeks to determine the real value of assets based on what they could be sold for right now, which in turn provides a more accurate estimate of a company’s financial worth.

MTM can be useful when an investor is trying to gauge a company’s financial health or get a valuation estimate ahead of a merger or acquisition. Aside from accounting, MTM also has applications in investing when trading stocks, futures contracts, and mutual funds. For traders and investors, it can be important to understand how this concept works.

What Is Mark to Market (MTM)?

Mark to market is, in simple terms, an accounting method that’s used to calculate the current or fair value of a company’s assets and liabilities. MTM can tell you what an asset is worth based on its fair market value.

Mark-to-market accounting is meant to create an accurate estimate of a company’s financial status and value year over year. This accounting method can tell you whether a company’s assets have increased or declined in value. When liabilities are factored in, MTM can give you an idea of a company’s net worth.

Mark to market is also used to establish the fair market value of certain investments, which has implications for investors, particularly those using margin accounts, where the value of the securities in the account can impact an individual’s ability to trade.

How Mark-to-Market Accounting Works

Mark-to-market accounting works by adjusting the value of assets based on current market conditions. The idea is to determine how much an asset — whether it be a piece of equipment or an investment — could be worth if it were to be sold immediately.

If a company were in a cash crunch, for example, and wanted to sell off some of its assets, mark to market accounting could give an idea of how much capital it might be able to raise. The company would try to determine as accurately as possible what its marketable assets are worth.

In stock trading, MTM is determined for securities by looking at volatility and market performance. Specifically, you’re looking at a security’s current trading price then making adjustments to value based on the trading price at the end of the trading day.

There are other ways mark to market can be used beyond valuing company assets or securities. In insurance, for example, the MTM method is used to calculate the replacement value of personal property. Calculating net worth, an important personal finance ratio, is also a simple form of mark to market accounting.

Mark-to-Market Accounting: Pros and Cons

Mark-to-Market accounting can be useful when evaluating how much a company’s assets are worth or determining value when trading securities. But it’s not an entirely foolproof accounting method.

Pros of Mark-to-Market Accounting

There are a few advantages of mark-to-market accounting:

•  MTM can help generate an accurate valuation of company assets. This may be important if a company needs to liquidate assets or it’s attempting to secure financing. Lenders can use the mark to market value of assets to determine whether a company has sufficient collateral to secure a loan.

•  MTM can help mitigate risk. If a value investor is looking for new companies to invest in, for example, having an accurate valuation is critical for avoiding value traps. Investors who rely on a fundamental approach can also use mark-to-market value when examining key financial ratios, such as price to earnings (P/E) or return on equity (ROE).

•  It may make it easier for lenders to establish the value of collateral when extending loans. Mark to market may provide more accurate guidance in terms of collateral value.

Cons of Mark-to-Market Accounting

There are also some potential disadvantages of using mark-to-market accounting:

•  It may not be 100% accurate. Fair market value is determined based on what you expect someone to pay for an asset that you have to sell. That doesn’t necessarily guarantee you would get that amount if you were to sell the asset.

•  It can be problematic during periods of increased economic volatility. It may be more difficult to estimate the value of a company’s assets or net worth when the market is experiencing uncertainty or overall momentum is trending toward an economic downturn.

•  Companies may inadvertently devalue their assets in a downturn. If the market’s perception of a company, industry, or sector turns negative, it could spur a sell-off of assets. Companies may end up devaluing their assets if they’re liquidating in a panic. This can have a boomerang effect and drive further economic decline, as it did in the 1930s when banks marked down assets following the 1929 stock market crash.

Mark to Market in Investing

In investing, mark to market is used to measure the current value of securities, portfolios or trading accounts. This is often used in instances where investors are trading futures or other securities in margin accounts.

Margin trading involves borrowing money from a brokerage in order to increase purchasing power.

Understanding mark to market is important for meeting margin requirements to continue trading. Investors typically have to deposit cash or have marginable securities of $2,000 or 50% of the securities purchased. The maintenance margin reflects the amount that must be in the margin account at all times to avoid a margin call.

In simple terms, margin calls are requests for more money. FINRA rules require the maintenance margin to be at least 25% of the total value of margin securities. If an investor is subject to a margin call, they’ll have to sell assets or deposit more money to reach their maintenance margin and continue trading.

Futures are derivative financial contracts, in which there’s an agreement to buy or sell a particular security at a specific price on a future date. In futures trading, mark to market is used to price contracts at the end of the trading day. These adjustments affect the cash balance showing in a futures account, which in turn may affect an investor’s ability to meet margin maintenance requirements.

Mark-to-Market Example

Futures markets follow an official daily settlement price that’s established by the exchange. In a futures contract transaction you have a long trader and a short trader. The amount of value gained or lost in the futures contract at the end of the day is reflected in the values of the accounts belonging to the short and long trader.

So, assume a farmer takes a short position in 10 soybean futures contracts to hedge against the possibility of falling commodities prices. Each contract represents 5,000 bushels of soybeans and is priced at $5 each. The farmer’s account balance is $250,000. This account balance will change daily as the mark to market value is recalculated. Here’s what that might look like over a five-day period.

Since the farmer took a short position, a decline in the value of the futures contract results in a positive gain for their account value. This daily pattern of mark to market will continue until the futures contract expires.

Conversely, the trader who holds a long position in the same contract will see their account balance move in the opposite direction as each new gain or loss is posted.

Mark to Market in Recent History

Mark-to-market accounting can become problematic if an asset’s market value and true value are out of sync. For example, during the financial crisis of 2008-09, mortgage-backed securities (MBS) became a trouble spot for banks.

As the housing market soared, banks raised valuations for mortgage-backed securities. To increase borrowing and sell more loans, credit standards were relaxed. This meant banks were carrying a substantial amount of subprime loans.

As asset prices began to fall, banks couldn’t sell those assets, and under mark-to-market accounting rules they had to be revalued. As a result banks collectively reported around $2 trillion in total mark-to-market losses.

During this time, the U.S. economy would enter one of the worst recessions in recent history.

Can You Mark Assets to Market?

The U.S. Financial Accounting Standards Board (FASB) oversees mark-to-market accounting standards. These standards, along with other accounting and financial reporting rules, apply to corporate entities and nonprofit organizations in the U.S. But it’s possible to use mark-to-market principles when making trades.

If you’re trading futures contracts, for instance, mark-to-market adjustments are made to your cash balance daily, based on the settlement price of the securities you hold. Your cash balance will increase or decrease based on the gains or losses reported for that day.

If the market moves in your favor, your account’s value would increase. But if the market moves against you and your futures contracts drop in value, your cash balance would adjust accordingly. You’d have to pay attention to maintenance margin requirements in order to avoid a margin call.

Which Assets Are Marked to Market?

Generally, the types of assets that are marked to market are ones that are bought and sold for cash relatively quickly — otherwise known as marketable securities. Assets that can be marked to market include stocks, futures, ETFs, and mutual funds. These are assets for which it’s possible to determine a fair market value based on current market conditions.

When measuring the value of tangible and intangible assets, companies may not use the mark-to-market method. In the case of equipment, for example, they may use historical cost accounting which considers the original price paid for an asset and its subsequent depreciation.

Meanwhile, different valuation methods may be necessary to determine the worth of intellectual property or a company’s brand reputation, which are intangible assets.

Mark-to-Market Losses

Mark-to-market losses occur when the value of an asset falls from one day to the next. A mark-to-market loss is unrealized since it only reflects the change in valuation of asset, not any capital losses associated with the sale of an asset for less than its purchase price. The loss happens when the value of the asset or security in question is adjusted to reflect its new market value.

Mark-to-Market Losses During Crises

Mark-to-market losses can be amplified during a financial crisis when it’s difficult to accurately determine the fair market value of an asset or security. When the stock market crashed in 1929, for instance, banks were moved to devalue assets based on mark-to-market accounting rules. Unfortunately, this helped turn what could have been a temporary recession into the Great Depression, one of the most significant economic events in stock market history.

Mark to Market Losses in 2008-09

As noted above, during the 2008 financial crisis mark-to-market accounting practices were a target of criticism as the market for mortgage-backed securities vanished, and the value of those securities took a nosedive — contributing to the Great Recession.

In 2009, however, the FASB changed its stance on market-to-market practices for certain securities, specifically allowing banks greater flexibility in how they valued illiquid assets like mortgage-backed securities.

The Takeaway

Mark to market is, as discussed, an accounting method that’s used to calculate the current or real value of a company’s assets and liabilities. Mark to market is a helpful principle to understand, especially if you’re interested in futures trading.

When trading futures or trading on margin, it’s important to understand how mark-to-market calculations could affect your returns, and your potential to be subject to a margin call. As always, in more complex financial circumstances, it can be beneficial to speak with a financial professional for guidance.

Invest in what matters most to you with SoFi Active Invest. In a self-directed account provided by SoFi Securities, you can trade stocks, exchange-traded funds (ETFs), mutual funds, alternative funds, options, and more — all while paying $0 commission on every trade. Other fees may apply. Whether you want to trade after-hours or manage your portfolio using real-time stock insights and analyst ratings, you can invest your way in SoFi's easy-to-use mobile app.

FAQ

Is mark-to-market accounting legal?

Mark-to-market accounting is a legal accounting practice, and is overseen by the FASB. Though it has been used in the past to cover financial losses, it remains a legal and viable method.

Is mark-to-market accounting still used?

Yes, mark-to-market accounting is still used both by businesses and individuals for investments and personal finance needs. In some sectors of the economy, it may even remain as one of the primary accounting methods.

What are mark-to-market losses?

Mark-to-market losses are losses incurred under mark-to-market accounting, when the value of an asset declines, not when it is sold for less than it was purchased.

Photo credit: iStock/Drazen_