The scariest time of year?

Happy Halloween! 

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Today marks the beginning of the time of year where so many of our spending habits AND eating habits change dramatically.  As a result, it can be scary to look in your bank account and on the scale!  Just yesterday I went out of my way (25 minutes to be exact) to visit a local apple orchard.  I walked out with not 1 but 3 bottles of syrup: Pumpkin Spice, Apple Butter, and Peach Cobbler!  So what if I love my protein pancakes! Don’t judge me!  This purchase made my day or hopefully my entire winter season if I plan it right!  Yes, I did come out with some delicious apples too, but let’s be clear I came for that syrup!

Our finances are another part of our lives that change from October 31st to January 1st.  Many people spend money on tons of candy to hand out to eager children disguised as their favorite character.  Then we begin spending money on a Thanksgiving feast that we have anticipated for approximately 364 days.  And less than 12 hours after that meal millions of shoppers begin their quest to find the perfect gift for everyone on their list and probably a few items for themselves.  This time of year is simply expensive.  And you could get caught unaware of all that is happening to your bank account if you don’t pay attention.  Stay tuned to my next newsletter for an exciting opportunity to learn how to manage this season.

In addition to the fall spending fiasco, we are making benefit choices because it is open enrollment season.  Companies across the nation are sharing health care and other benefit offerings available at work and you get to choose.  For many, the cost of health care is astronomical.  Sometimes the choice isn’t clear what you should do and why.  Here are a few guidelines as you consider what options to elect for 2019.

  • Review your health care spending for the last 12 months.  When you add up all your family had to pay out of pocket you can look at your choices with clarity.  A healthy family of 4 who doesn’t go to the doctor very often or only for preventive maintenance may be able to handle a higher deductible.  A single person with lots of medical expenses may want to look at a PPO with a higher premium because they know the out of pocket costs will be less on that plan. No matter what your situation is, having a clear total of your out of pocket spending is a great place to begin.

  • Understand if it makes sense to put funds for medical expenses in a flexible spending account or health savings account.  These funds are pre-tax dollars only to be used for health care.  But if you only spend $500/year do not put more than that in the account.  Typically, the flexible spending account funds will go away on Dec. 31st. The health savings account will continue to grow if you don’t use it.

  • If you have day care costs it might we worth your while to put pre-tax funds away for those expenses.  A family who spends $5,000 on child care could save $1,000 if their effective tax rate is 20%.

  • Calculate your need for life insurance.  You may want to max out what is available at work because it might less expensive than buying term life insurance outside of work.

  • If you are planning to have a child in 2019 it might be good to review your disability and maternity coverage with your company plan.  When I was pregnant I paid a higher premium for disability coverage, so I could have more take-home pay during maternity leave.

  • If you know you will have some expensive dental work to do next year consider the advantages of a plan that pays a higher percentage of the costs. 

  • For self-employed persons or anyone who has a high out of pocket health care premium at work (over $200 per family member) you may want to consider other options.  Medi-Share is a health care sharing community that could be a great alternative for many.  Everyone pays an annual household portion, members submit their medical bills to Medi-Share for payment, and the bills get paid by the Medi-Share community.  If you are a Christian looking for an alternative biblical solution to paying for health care you may want to check it out by clicking here.

 This time of year doesn’t have to break the bank or stress you out.  And it doesn’t have to be scary!  Make a plan and stick to it.  Slow down so you can make informed decisions. Give yourself the opportunity to enjoy this season and prepare for 2019.

If you want to discuss your options with me check out my calendar to find a time that works for you.

 

Plan ahead

Usually around October, November, or December companies give their employees the opportunity to change their benefits elections. Some of you may be in the middle of doing that right now like I am. I encourage you to take a closer look this year. Some things have changed across the board. Yes the cost of healthcare may be increasing for you like it does for many of us but look at what the needs of your family are as you make your elections. Next year my family will have lots of dental work. Yes we brush our teeth  but things do happen! So, now is the time to increase our dental plan so it covers a higher percentage of the work. In addition, we need to increase the amount we put into our flexible spending account. By the way, all flexible spending accounts will now have a limit of $2500. That account is funded tax free. So we don’t have to work as hard to spend that money.

Also, review your life insurance needs. Maybe your income has increased or your family dynamic has changed. It is always a good rule of thumb to have 8 to 10 times your income in life insurance if someone else depends on your income. Purchasing life insurance through your employer is always the least expensive avenue to take. It literally costs pennies to go from 1X to 2X your income in most cases.

Finally, take an overall assessment of your household’s medical needs. You may want to calculate the amount of prescriptions, doctor visits, and preventive care your family needs next year and plan for it. Use a flexible spending account that avoids taxes or set up a health savings account if your company provides it. Otherwise, set up your own account for medical expenses so you always have a way to take care of your health. You can do the same for any dependent care spending. Your company may provide a tax free dependent care account up to $5000 so take advantage of that savings as well.

Your health is vital so you must take health care seriously. No matter what happens in the White House, I encourage you to do what is in your control to stay in your best health possible. Ultimately, remaining healthy affects your budget for life…

It's That Time Again

Every year between October and November companies begin to notify employees about benefit renewal. During this time you can modify your benefit elections for the upcoming year. Although medical benefits are one of the main elections that many people are concerned about, don’t forget to take advantage of some other benefits your company may offer. Dependent care accounts (DCAs) allow families who pay for child care to save before tax dollars up to $5,000 per year for dependent care expenses. You can access the account for reimbursements with your receipts and/or pertinent documentation for child care, nursery school, or at-home care for dependents. If you put $5,000 for the year 2012 or $416.67/month into this account it will come out of your paycheck prior to taxes. Therefore, your taxable income is reduced by $5,000 for the year. Not only is it an automatic savings account, but it is advantageous on your tax returns. Be sure to only designate the exact amount you will need because the funds do not roll over to the next year.

Also, check into term life insurance. Group plans are by far the least expensive way to pay for life insurance. You need 8-10 times your income so that the ones you love are financially taken care of when you are gone.

Most importantly, you need to evaluate your medical care. Look back over 2011 and see how much you spent on medical needs. Review the choices available so you spend the least amount of money but get the most benefit for you and your family. I love HSAs because they are savings accounts that grow tax-deferred but you can use the funds on medical expenses. You can keep this account until you turn 65 at which point you can use the money for anything you desire after you pay the taxes!

Take action today! Know your options and make sound decisions concerning your benefit choices. It will pay off in the long run!

Financial Fitness at Work

When I worked in corporate America, my husband and I had a lot of debt! We started our marriage with $60k and it climbed to nearly $100k in a few short years. We desperately needed someone to educate us on how to get out of this hole. We felt alone and didn’t know who to turn to. We were also naïve about the process of getting out of debt. Simply put, we were young and stupid! One day the light bulb went on when we listened to the Dave Ramsey Show on the radio. For the first time, we felt inspired about money management and we gained a little glimmer of hope. We began to read books, take classes, and even talked with other people about money matters and debt. The more knowledge we gained the more excited we became about our financial future!

Dave Ramsey however, is in Nashville, TN. He won’t sit down with you and help you work through your personal budget and debt reduction plan. In addition to that, neither of our workplaces provided this insight, education, or push to succeed with money. Sure, you could learn about your 401k or health care options, but who would teach me about getting out of debt at work? No one!

Wouldn’t it be nice to go into work and sit down with your personal coach for an hour to work on your finances right there on site? Or how would it feel to attend a financial workshop on your lunch hour.  You would feel that your employer cares about these issues and is willing to provide you with the resources to truly get free, wouldn't you? 85% of American workers would love their employers to provide financial education as a benefit to them, however only 20% believe they will get it.

This is why I have created Financial Fitness at Work! Maybe your employer hasn’t helped you up to this point but now Tailor-Made Budgets can be the resource you’ve needed all along.  If you want to see this life-changing information available at your workplace, email me.  To find out more about the program click here…