Wage Up! Creating a successful spending budget in 3 easy steps

Recently, we wrote about getting New Year's financial resolutions back on track, even if they fell to the wayside pretty early in the year. But that got me thinking about how these annual promises might not be necessary if you have a solid, no-nonsense budget in place.

A household budget is one of the most important elements in a financial plan. But things can get complicated real fast if you search online for how to create one. There are several different budgeting methods to choose from and even more apps and tools designed to help you do it.

But no method or app can solve the most significant challenge with budgeting: sticking to it. While overcoming that obstacle is ultimately up to you, simplifying the process can help make the process much less daunting. Here's how to do it.

Three simple steps to creating a budget

The easier it is to budget, the more likely you are to stick with it. To help, we've broken down the process into three straightforward steps.

1. Outline your "why"

If you want to budget because you know it's the right thing to do or you want to improve your money management, you're probably going to have a hard time sticking with it. As with any goal, it's important to be as specific as possible with your reason.

For example, maybe you're tired of living paycheck to paycheck, and you'd sleep better at night knowing that you have a $1,000 emergency fund in case something unexpected happens. Or you want to buy a house and need to save a certain amount each month for a down payment.

Whatever your reason, write down why you want to budget and how much you want to make available for financial goals each month. Most importantly, make sure your goals are relevant and achievable. The last thing you want is to get a few months in and give up because you realize you were too optimistic.

2. Budget your way

At the most basic level, a budget is designed to help you spend less than you earn. But there's no one right way to do it. If using a set budgeting method or an app helps you stay on top of your budget, go for it. But don't think that you need to do it any of those ways to be successful.

Everyone is different in how they handle money, and the most successful budget is the one that you'll stick to. This step will require some due diligence to get right, especially if you've never budgeted before and don't know what works for you.

Research various budgeting methods and apps and try a few of them out. Depending on your preferences and organizational skills, you can go as simple or as complicated as you'd like. You can also consider making your own adjustments to an existing method to make things easier.

3. Make adjustments as needed

The toughest part about budgeting is staying accountable to yourself, and it's especially hard if you feel like your budget isn't helping you accomplish your goals.

The important thing is that it doesn't need to be all or nothing. Just because you chose a specific method or app doesn't mean you have to stick with it. Don't be afraid to make some adjustments to your budget as you go to make it more effective and easier to maintain.

For example, if you set your grocery budget too low and find that you're always going over, you may feel like it's not working. Instead of giving up, though, try increasing it a little. While it's not what you originally planned, it's still progress.

The bottom line

It's always a good idea to have a household budget, but creating one can be daunting. If you want yours to be successful, make it as personal as possible. Define your reasons for budgeting and what you want to accomplish with it, then determine how you're going to do it.

If things change or you decide that it's not working, make some adjustments instead of quitting. It can take a while before you find the best process for you, but it will be worth it as you use it to achieve your goals.


Whether you're spending steadily or saving for something, Wage Up! is where we highlight the latest services available to buy with your HSA, every Monday on the HSA Learning Center. And for everything else about your health and financial wellness, be sure to follow us on Facebook and Twitter.

Future Healthy: 7 retirement mistakes to avoid when you're young

When retirement is decades away, it's easy to put it on the proverbial back-burner in favor of more-pressing money needs and goals. But without a good retirement strategy now, you could be left working longer than you want.

While there's a lot of good advice out there about what to do to prepare for retirement, it's also essential to know what not to do. (As always, this is just one person's experience - we make no claim to provide legal or tax advice, so always plan to speak with a financial or tax professional before making any decisions.)

Retirement mistakes can cost you money. If you're guilty of any of these mistakes, don't worry. Getting back on track sooner than later can help you still achieve your goal.

1. Not having a plan at all

Do you know when you want to retire and how much money you'll need by that time to stop working? If so, do you know how much money you'll need to save each year to reach that goal?

If you've said no to either of these questions, it may be a good time to use an tax savings calculator or work with a financial adviser who can help you create a plan. Because without a plan, you have no idea whether you're on track.

2. Keeping your savings rate the same each year

Retirement experts recommend saving 10-15% of your gross income for retirement. But even if you're already there, it may not be enough based on your goals.

So as you receive a raise each year from work, up your retirement contributions to improve your chances of being ready when you want to be.

3. Not taking your employer's 401(k) match

Many employers offer a 401(k) or similar retirement plan, and many of them match some or all of your contributions. If you're not getting the full contribution match on your 401(k), you're missing out big time.

Not only is that match an immediate 100% return on your investment, but it also boosts your savings rate. For example, if you contribute 10% of your salary and your employer matches up to 5%, your overall savings rate is 15%.

4. Dipping into your retirement

Whether you have a 401(k) or an IRA, it's rarely a good idea to borrow from or cash out your retirement plan. If you're in dire straits, first consider other options like personal loans, credit cards, and asking friends and family for help.

While these may not sound like ideal alternatives, they'll typically cost a lot less over time than the opportunity cost of taking retirement money out of the market.

5. Investing too conservatively

You may feel rattled by the prospect of a recession and how it can affect your retirement savings. But if you still have 15, 20 or 30 years until you leave the workforce, it's generally best to invest your retirement funds aggressively.

That's because everything that goes down in financial markets must come up. Despite several recessions and depressions over the decades since the "Composite Index" was founded in 1923 — it later evolved into the S&P 500 — the average annual return is roughly 10%. So keep your money in the market and invest with the distant future in mind and you won't regret it.

6. Using whole life insurance

Insurance agents will tell you all about how whole life insurance can insulate you from the stock market and provide consistent, safe returns.

But whole life insurance is outrageously expensive if you want to get any real value out of it, and you stand to lose the policy if you can't afford it later on in life. Stick with term life insurance and invest in your retirement accounts.

7. Prioritizing college savings over retirement

If you have young children, you may be wondering how you can help them pay for college. That's especially the case if you're still chipping away at your mountain of student loan debt. But, while student loans are always going to be an option for college students, there's no such thing as a retirement loan. So take care of yourself first then you'll be in a better position to help your children.

The bottom line

Everyone is different, so your retirement goals and plans may be different than those of the people around you. But regardless of the situation, it's important to follow some general guidelines to ensure that you don't leave your future high and dry.

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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.


Compound It! How I maxed out my HSA without changing my lifestyle

With a family of four and a high-deductible health plan (HDHP), I had the opportunity to contribute up to $6,900 to my health savings account (HSA). A little more than 10 months into the year, I've already reached that limit.

If you were to split up the $6,900 annual contribution limit into monthly savings goals, you'd need to set aside $575 every month. That's a lot of money, especially if you have other important financial obligations to meet. But there are a few reasons why I've made it a priority this year.

Why I've prioritized my HSA contributions

HSAs are a great way to save for future medical expenses, and based on my family's history with healthcare, we've decided to take advantage of the tax benefits HSAs offer.

For starters, I have two children under the age of four. According to the U.S. Department of Agriculture, parents like me will spend roughly $12,978 each year to raise a child. Nine percent of that annual amount — or $1,168 — goes toward health care costs.

Additionally, my wife and I both have lingering back injuries that require regular visits to the chiropractor and physical therapist. Add in other routine physical and mental health care costs, and we'll easily spend more than the $6,900 HSA contribution limit by the end of the year.

With an HSA, our contributions are tax-deductible, and we don't have to pay taxes on withdrawals as long as they're for eligible medical expenses. And since we're going to spend the money anyway, we've opted for the tax savings instead.

There's no way to know for sure how much this decision will save us, at least not until we file our tax return for the year. But even with a relatively low effective tax rate of 15%, we'll save more than $1,000 dollars contributing to the HSA instead of paying for these expenses out of pocket.

How I've maxed out my HSA

Saving $575 every month isn't easy, but there are a few ways you can do it without giving up too much on other important needs and goals. Here's how I did it this year.

Estimating monthly medical expenses

There are some aspects of healthcare that you can't predict. A couple of months ago, for instance, we rushed my son to the hospital because he was crying about his back hurting, only to realize that he was just overtired and had too often heard my wife and I talk about our backs hurting.

But for the most part, I know what our chiropractor, physical therapy and other regular office visits cost, and I contribute that amount to our HSA at the beginning of the month.

Since I'm expecting to spend that money anyway, it doesn't require me to change the rest of my budget. And if we end up not using the full monthly contribution, we can save the remaining amount for future expenses.

Taking advantage of windfalls

In July, the company I was working for at the time was acquired, and I received a decent payout from the sale. While I used most of the windfall for other financial goals like paying off debt and beefing up our emergency fund, I used a little of it to contribute to my HSA.

Obviously, this was a one-off situation, and I'll never expect it to happen again. But there are other windfalls you can use to achieve that same goal. For example, a tax refund, or a performance bonus at work. As you consider the small windfalls you receive now and then, consider how you can use them for something like an HSA instead of spending the money on other things.

A little help from my job

I won't lie. One of the ways I was able to max out my contribution limit before the end of the year was my employer's matching contribution when I first opened the account.

The amount of the contribution was $1,000, which isn't much higher than the average employer contribution of $801, according to the Society for Human Resource Management. That said, less than a quarter of employers offer an HSA plan, so few people get the kind of assistance I've received.

The bottom line

Maxing out our HSA required me to change how I prioritize my budget. But once I figured it out, it didn't change much about my family's lifestyle or how much money we spend on other things. While every situation is different, it's important to consider ways you can use the money you already have more effectively.

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Compound It! is your weekly update of achievable, effective, no-nonsense HSA saving and investment advice, delivered by people who make it work in their own lives. For the latest info about your health and financial wellness, be sure to check out the HSA Learning Center, and follow us on Facebook and Twitter.


Future Healthy: 5 easy ways to get a jumpstart on retiring in your 30s

If you're a young professional, there's a good chance retirement is still decades away. But the sooner you start focusing on your savings, the easier it will be to leave the workforce when you're ready to -- not when your finances allow it. To get started, here are five simple things we've seen work to hit the ground running.

(Of course, always speak with a qualified medical professional before making any changes to your financial planning.)

1. Get your employer match

If your employer offers a 401(k) or other defined contribution retirement plan, it may offer to match some or all of your monthly contributions. For example, if you contribute 3% of your salary each year, your employer would match that contribution, dollar for dollar.

Getting this match is one of the smartest financial decisions you can make, period. Not only does an employer contribution match accelerate your retirement savings plan, but it's also effectively an immediate 100% return on your contribution.

Keep in mind, however, that some employers require that you stay with the company for a certain period to get access to the full match amount. But others will give you ownership of the money from the beginning.

2. Max out your IRA

An individual retirement account (IRA) allows you to save for retirement on your own rather than through your employer. With an IRA you can choose how you want your contributions and earnings to be taxed.

For example, you can deduct your contributions from your income when you file your taxes for the year. But earnings grow tax-deferred and will be taxable when you take distributions in retirement.

If you have a Roth IRA, on the other hand, your contributions aren't tax-deductible, but they grow tax-free, and you can withdraw them tax-free in retirement.

3. Consider a health savings account (HSA)

Of course we're going to recommend this! An HSA lets you set aside money for eligible medical and dental expenses on a tax-free basis. Money accrues year over year, earns interest, and can even be invested. Over time, you can use your HSA to save for one of retirement's biggest expenses: health care costs.

(In case you're new here, the caveat is that you need to have a qualified high-deductible health plan to be eligible to contribute to an HSA.)

4. Save your windfalls

If you're due for a bonus at work and don't have any immediate need for the cash, consider setting it aside in your 401(k) or other employer-sponsored retirement plan.

You can do this by asking your payroll manager to change your contribution specifically for the bonus. Alternatively, you can log into your retirement account and change the contribution percentage yourself.

The same goes for other windfalls you might receive. If you get a tax refund, for instance, consider putting at least some of it in your IRA.

5. Steer clear of high fees

Some brokerage firms and investment managers charge high fees to manage your retirement savings for you. But according to Standard & Poor's, close to 95% of investment managers can't do better than the market over a 15-year period.

So instead of paying more to have someone manage your retirement, consider using a low-cost brokerage that allows you to invest in index mutual funds. Another option is a robo-adviser, which can manage your investment portfolio using a mix of human and computer decisions for less than a human adviser would charge.

While this may not seem like a big deal on the surface — we're talking about a 1% to 1.5% difference in fees, those fees can add up over time and eat into your returns. By going with a low-cost alternative, your savings will have more room to grow.

Just get started

Whether you follow any of these pieces of advice, the most important thing you can do is to start saving. Even if you can only manage to save a little each month, developing that habit will make it easier to increase your retirement savings over time.

As you develop good savings habits and use some of these tips, you'll be well on your way to a comfortable retirement.

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Future Healthy: Gen-Z is leading the way with their saving habits

Generation Z might be the youngest group of spenders, but they may actually be the best ones at saving.

You see, Gen-Z — those born between 1995 and 2012 — are in middle school, high school, college, and even a couple years into the workforce. While they may be our youngest generation, it looks like they have a lot to teach everyone else about how to save money.

Save more, save early

As they watched their parents suffer through a bad recession, Gen-Z is taking a different approach to saving money than older generations — they're planning to start sooner.

The National Society of High School Scholars found that 35% of Gen-Z members plan to start saving for retirement in their 20s. Another 10% are planning to save as teenagers.

Saving early and methodically making sure they have money well into their golden years is setting Gen-Z up for high career expectations. In the survey, 71% expect a solid work/life balance for a well-respected company that has proven value.

Less student loans, more free college cash

Not only does Gen-Z plan to work while in college, they expect to cover most college-related costs themselves. Almost half (49%) say they are contributing to their college tuition through personal savings. And 71% plan to pay for college with money they earn from working.

Their desire to work during school might be due to their feelings about earning their own keep. The survey found that 83% of respondents felt like they needed a job while in school.

Along with that, Gen-Z are looking for more economical ways to get a college education. Rave Reviews found that two-thirds of young people are planning to attend an in-state school to save on tuition. Almost 1 in 5 plan to live at home to save on housing costs. Millennials, though, were more interested in attending the best schools possible, even if they're too expensive.

Rave Reviews also found that teens are exploring career paths with job availability in mind. Top expected career paths are healthcare, science, and business.

In it for the long haul

With the instant gratification of the internet, it's easy to want something right away and be upset when you don't get it. But this doesn't apply to Gen-Z and their money.

Current, a debit card and app aimed at teens, found that almost 60% of their audience doesn't expect to hit their savings goals for a year or even longer. And they know this because 83% of teens are tracking their spending, keeping up on their income and goals.

Among the things teens are stashing money away for:

  • 26% are saving for a new phone or other electronic device
  • 17% are saving for their own cars
  • 11% are actively saving for college

Current also found that of the teens with active savings goals, 49% have a goal of $2,500 or more.

Gen-Z: the new savings teacher?

As generations before them suffered through a housing bust, the recession, and trillions of dollars in student loan debt, Gen-Z is proving to take their finances into their own hands. And there's no group better poised to take advantage of savings and investment vehicles like health savings accounts (HSAs).

They're saving earlier than generations before them, making long-term money goals, and becoming financially independent sooner. While still having big career aspirations, they're more conscious about making sure to find a job soon after college to avoid the burden of student loan debt. Even as teens and recent college grads, Generation Z is teaching everyone how to handle money.

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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.

Future Healthy: How to shift your retirement thinking toward the future

We all know that it's a good idea to save for the future. You only need to see the rising costs of things year over year to realize that you want a decent nest egg.

But that doesn't necessarily make it easy to save for your life beyond the workforce. You know you want a comfortable retirement, but you also want to spend your hard-earned money now.

As a result, it's important to shift your thinking a bit to get a good balance between planning for the future and enjoying yourself in the present. Here are some tips.

Think about what you want for your retirement

If your retirement plans are nebulous, it can be hard to get excited about saving for them. Make things easier by writing down exactly how you want to spend your later years in life. Your ideas of a fun time may change between now and then, but the goal is to give yourself something to get excited about.

Maybe you want to travel the world, sell your house and explore the country in an RV, or just focus on enjoying your golden years. Whatever your goals, giving them some definition can help motivate you to stay on track with your retirement savings.

Decide when you want to make it happen

Once you know what you want to do in retirement, the next step is to decide when you want to quit needing to work for a living. If that time is sooner than typical, that means you'll need to be more aggressive with your retirement savings plan.

If, however, you like what you do professionally and don't feel the need to rush, you may be able to get by with saving less and focusing a little more on your current lifestyle.

Don't give up everything you love now

You may feel like you need to choose between investing in your lifestyle now and saving for the future. But unless you're experiencing financial hardship, you should be able to focus on both simultaneously.

Of course, that may mean that you may not be able to go full bore on the present or the future, but it's possible to find a balance between the two that allows you to enjoy yourself now.

You can find that balance by getting an idea of just how much you need to save to achieve your retirement goals. Then use a tax savings calculator and/or a retirement calculator to determine what you'll need to save now to get there.

Then take a look at your budget and lifestyle plans and find an allocation that works. If, for example, you can save the full amount needed for your retirement plan to work out while maintaining the life you want now, great.

If not, you may need to adjust your expectations for the future or your way of life right now. This process of trade-offs won't be easy, but it's worth the peace of mind.

Your takeaway?

Saving for retirement is important. But for some people, the obstacles are more psychological than financial. If you can afford to save for retirement, take the time to paint a picture of what you want yours to look like. Then consider how you can re-prioritize your budget to make it happen without upending your current life.

This process can require some intense introspection and planning, but your future self will thank 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.


Future Healthy: How to know you're not saving enough for retirement

Investing experts generally recommend saving 10-15% of your gross income toward retirement. But depending on how much income you want after you leave the workforce and when you start saving, you may need even more.

Because every situation is different, a rule of thumb isn't necessarily going to tell you whether or not you're on track. There are, however, a few cues that can help you recognize that you're falling short.

You don't know how much you're saving

If you're not sure how much money you're setting aside for the future, chances are that it may not be enough. Maybe you set up your 401(k) contributions when you first started your job and forgot about it, or your income has grown substantially since you first started saving and the percentage has dipped without an increase in savings too.

Either way, find out what you're contributing. Then take some time to walk through the process of figuring out how much money you need to retire comfortably and what it'll take to get there. If it's at or below what you're already saving, keep doing what you're doing.

Otherwise, it may be time to up your contributions.

You worry about retirement often

If you regularly stress or feel anxiety about the state of your retirement savings, it could be a sign that you're unprepared.

Use a retirement calculator to determine what you need to be saving to achieve your retirement goals. Then compare it to what you're currently saving. Even if you can't save what you need right now, it can make you feel better having a way to measure your progress.

Of course, some people do stress without reason, but it's still a good idea to run the numbers to reassure yourself.

You're just getting the 401(k) match

The median employer contribution for a 401(k) account is 4%, according to a report by Vanguard. If you get that full match, you're essentially contributing 8% of your salary to retirement, which isn't bad.

But there's a catch: Only 46% of 401(k) plans offer immediate vesting for employer matches. Among plans that give you access to those contributions over time, the vast majority require that you stay with the employer for 3-6 years to get the full amount.

With an average employee tenure of 4.2 years, according to the Bureau of Labor Statistics, you may not be around long enough to count on an employer match fully.

You haven't increased your contributions lately

The average salary increase in 2018 was 3.1%, according to the Society for Human Resource Management, and it's expected to increase to 3.2% for 2019.

If you've received annual salary bumps, it's a good idea to increase your retirement contributions accordingly. If you haven't been, though, what amounted to a 10% savings rate years ago could be much lower now.

Figure out what percentage of your current salary you're saving for retirement, then compare that to what your goal is. If there's a gap, consider closing it as soon as possible.

The bottom line

It's easy just to say that you should save 10-15% of your income toward retirement. But ultimately, you know best how much you should set aside for your future (and if you don't, don't just listen to us - find a qualified financial adviser to help you make the right choices). Depending on your goals and current budget, take the time to determine if you're on the right track.

If you aren't, take the time to set a plan to get where you need to be. It can take a while — sometimes years — to feel good about where you are, but having a plan and being mindful of how today's actions affect the future can be a great start.


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.

Future Healthy: Savings resolutions already kaput? Try this...

It's no secret that New Year's resolutions aren't always the best way to accomplish a major goal. Depending on which statistics you look at, up to 80% of people fail to keep theirs by the second week of February.

That includes the resolution to save more, which is among the most popular resolutions for 2019. When it comes to saving, it's easy to talk about but difficult to put into action. So if you've already given up on your savings resolution or not feeling very confident, here are some tips I've seen work for getting back on track.

Adjust your goal

Setting goals can be an exciting experience. You're feeling optimistic, and your adrenaline starts pumping when you think about the possibilities. Unfortunately, that sometimes leads to setting unrealistic goals. Then once you come down from the high, reality sets in and you abandon them altogether.

Fortunately, saving for the future doesn't have to be "all or nothing." If you're starting to realize that you were a little too optimistic in your goal setting, take some time to adjust it to conform to reality. Don't take this as an opportunity to sell yourself short, though. If saving is important to you, make it a priority, and be honest about your ability to cut back to make it work.

Automate it

Whether you're saving for retirement, a vacation, or a rainy day, automating your monthly savings makes it so you don't have to re-make the decision to save every month.

To do this, set up an automatic transfer from your checking account to your savings or retirement account each month. It's best to set the transfer date at the beginning of the month or after your first payday of the month.

With your savings out of the way, you can comfortably spend whatever you want without worrying if you're going to have enough to save at the end of the month — as long as you don't overdraw your checking account or go into credit card debt, that is.

Remind yourself of your "why?"

We all know saving money is a good idea, but that general positive sentiment isn't going to be enough to help you sustain your resolution.

Take the time to think about why you want to save. Again, this can be different based on what you're saving for. If it's retirement, for instance, you can think about how you want to spend your years after leaving the workforce.

If it's a vacation, do some research about your desired destination and the activities you want to do. And if it's an emergency fund, think about the peace of mind you'll have knowing that you won't need to resort to credit card debt or payday loans to get by if something goes wrong.

Whatever your goal, think about your very personal reasons for wanting to achieve it. Then make sure you remind yourself of these reasons on a regular basis.

Be patient

Like any long-term goal, it can be frustrating when you don't see immediate results. Saving for retirement doesn't have much of a positive impact on your current life at all, other than the feeling of being prepared.

Saving for anything is a marathon, not a sprint, and it's important to treat it that way. If it helps, set up some way of keeping track of your progress, and update it over the coming months. As you look back, you'll be able to see and celebrate your wins, no matter how small.

You probably know that saving for the future is a key element of financial security, so it's important to make it a priority in your life. That doesn't mean it's easy, though. If you're unsure about whether you can achieve your savings goals, consider these tips to help you stay on track. Even if you can only save a little each month, it'll make a big difference over time.


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.

Future Healthy: Increase retirement savings (without ruining your short-term plans)

Saving for retirement is one of the most important things you can do for your future. But if you're struggling to get by, or you have short-term goals you're working toward, it can be tough to set more aside for something that's decades away.

Fortunately, there are a few things you can do to increase your retirement savings without sacrificing your lifestyle now. Here are five to consider.

Increase your contributions when you get a raise

The average salary raise in 2019 is projected to be 3.2%, according to the Society for Human Resource Management. If you raise your retirement contributions by just 1% each year, you likely won't miss it.

And remember, money contributed to a 401(k) or traditional IRA is deductible. So, if you contribute $100 per month, that's money you're not being taxed on, giving you more savings.

Use windfalls

It's not likely that you'll get a big inheritance from a parent or other family member. But there are plenty of opportunities to make big contributions to your retirement without making it a part of your budget at all.

For example, the average tax refund is $2,825, according to the latest data from the IRS. And depending on your job, you may get a performance bonus once or twice a year. While it's nice to use this extra money to buy more things, contributing at least part of it to an individual retirement account can make a big difference over time.

Dig into your budget

If you're not already on a budget, creating one is one of the best things to do. Having a monthly budget and tracking your expenses helps you understand where your money. It also gives you the chance to prioritize how you spend it.

Take the time to create a budget based on your income and expenses, and target some areas where you can cut back to make more room for retirement savings. You don't need to stop spending on things you don't need entirely, but it can help if you redirect a little money each month toward future goals.

Look at your deductions and withholdings

If you haven't taken a look at your paycheck lately, you may be surprised at how much money goes toward taxes and other deductions. Then talk to your payroll manager to see if there are opportunities to reduce those and contribute them to a 401(k) or IRA instead.

For example, if you get a massive tax refund every year, it's because your tax withholdings are too high. By adjusting them, you can increase your net pay, giving you more money to save for retirement.

The same goes if you have an expensive health insurance plan that you rarely use. If you can downgrade it while still feeling uncomfortable with the lower coverage level, you can save that money instead.

Get help

There are plenty of investment companies and apps out there that can help you save more for retirement without breaking the bank.

Acorns, for instance, rounds up each purchase you make with a connected credit or debit card, and contributes the round-up amounts to your investment account. While that amounts to pennies on every transaction you make, it can add up fast.

Saving for retirement is essential to your financial plan, but that doesn't mean it's going to be easy. As you consider these and other ways to save more for retirement, you'll have more peace of mind knowing that you're closer to your goal.

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.

Compound It! Pros and cons of investing HSA funds

If you have a health savings account (HSA), investing that money can help you maximize the tax benefits the account offers. But depending on your situation, investing your HSA funds could leave you with more risk than you're willing to take on.

Now, we're not investment professionals, so always be sure to speak with one before making financial decisions. But from our experience, before you choose to invest your HSA funds, consider these benefits and drawbacks.

First, the pros of investing HSA funds...

One of the main benefits of using an HSA is that your contributions are tax-deductible and you can withdraw money tax-free as long as it's for eligible medical expenses. If you choose to invest that money instead, here are a few other benefits you'll get:

Tax-free growth: The only other investment account that offers tax-free growth on your investments is a Roth IRA, which earmarks your money for retirement. With an HSA, you can invest your funds now and use them whenever you need to.

You can save for retirement: If your primary goal is to save for retirement, you can use both a Roth IRA and an HSA to achieve your goal. That's because once you reach age 65, you can use HSA funds to pay for some health insurance premiums, including for Medicare Part B and long-term care insurance.

It's better than earning nothing: If you generally don't get sick often and don't need your HSA funds now, it's usually better to invest that money instead of letting it sit there and earning nothing at all.

But there are always some cons...

While there are some killer benefits of putting your HSA funds in the market, there are a few things to consider before you pull the trigger:

Fees: HSA administrators typically charge a fee to allow you to invest your funds. What's more, you may also have to pay fees based on the mutual funds and other investments you choose. Depending on what rate of return you want, fees could reduce what you end up with.

Volatility: If you plan on using your HSA funds within the next few years, it's generally best to keep the money as safe as possible. That way, if the stock market crashes, you don't watch your HSA balance decrease right before you need it.

You may not have the option: Many HSA administrators require that you have a minimum balance in your account before you can invest your money. If you reach that amount and start investing, you'll have to be careful not to go below the threshold again. Otherwise, you won't be able to continue investing until you've brought the balance back up.

The bottom line? That's up to you...

Investing your HSA funds can be a great way to save for the future. But it's generally only a good option if you're not consistently dipping into the account to cover current medical expenses.

If you're using your HSA mostly for short-term needs, it may be better to keep the balance safe rather than risking it in the market. So, if you're considering it, take a look at your past account activity. Then look ahead to planned expenses where you may be taking a withdrawal from the account.

Depending on how you've used the account in the past and what your plans are for it in the future, you'll have a better idea of whether it's worth it to invest the money.


Note: The information provided on or through this website does not constitute legal or tax advice and no attorney-client relationship is created. If you are seeking or need legal or tax advice, please contact an attorney or tax professional directly.

Compound It! is your weekly update of achievable, effective, no-nonsense HSA saving, buying and investment advice, delivered by people who make it work in their own lives. For the latest info about your health and financial wellness, be sure to check out the HSA Learning Center, and follow us on Facebook and Twitter.