The dreaded b-word — budgeting — isn't exactly sexy to think about. January is a time for renewal and it's a good idea to look back at how you used your HSA funds so that you can use the information to help you moving forward.
Just because the money is sitting there in your HSA, doesn't mean you have to go spend-crazy, nor does it mean you need to be a miser and risk your health in the process. However, assessing your HSA budget will help you with your overall financial plan. So take a look at what your spending was like and do some of the following reflection to get on track for 2019.
What were the reasons behind each expense?
It's natural to freak out if you ended up spending a large chunk of your HSA funds. However, spending money can be a good thing as long as it's for a very valid reason.
Let's say your partner surprised you with a ski trip for your anniversary. You ended up breaking your leg and needed to pay out of pocket for a bunch of expenses. Yes, it sucks to spend a bunch of money on stuff like heat pads and painkillers, but it was a necessary expense.
The point is that your HSA funds are there to help you when there is a medical need. Even if you hope to set the money aside for as long as possible, accidents happen. And if that's the case, understand that you were prioritizing your health and it's ok for your budget to take a hit.
If you want to work on saving more money, then it's a matter of deciding how you can cut other expenses (it doesn't have to be health related) so you can make up for the excess spending.
What do I need to anticipate?
If you were on the other end of the spectrum — barely spending any money at all — it's not necessarily good news.
Let's say you didn't spend any money because you haven't been very active in the last few months. As in, you normally do a lot of skiing or skating weekly with friends but you were too busy with work. However, you plan on taking a bunch of trips within the next few weeks. Or your spouse is running out diabetes test strips and will be ordering a bunch soon.
In this case, it's helpful to anticipate these expenses and adjust your spending in your overall budget. Maybe you may need to set aside some funds just in case you get injured, or your usual discount store doesn't stock up in your brand of test strips, meaning you'll need to pay more at another place.
Knowing when you may spend money is helpful so you're not caught without any funds or room in your budget to pay for them.
Any spending guidelines for the future?
Understanding why you spend your HSA funds is the first step to helping you create guidelines for the future. While you don't want to spend all your money, don't deny any medical needs or opportunities to improve your health to save a few bucks. Consider creating guidelines such as "if X happens, I'll try to spend a maximum of Y" or "I will spend a maximum of X to help me improve Y."
Whatever you choose, remember that it's not just about the money, since an HSA is meant to save funds for a healthier you. And remember that in all cases when considering how much to set aside, there are tax experts and financial professionals to help you.
Whether it's for covering medical expenses, or planning bigger investments, our Future Healthy column will help support your path to retirement, no matter where you are on the journey. And for the latest info about your health and financial wellness, be sure to check out our HSA Learning Center, and follow us on Facebook and Twitter.