Health Savings
How do the unhealthy benefit from an HSA, commonly called a Health Savings Account? They benefit from four items: better benefits, lower premiums, lower taxes, and much greater flexibility. Anyone can participate, regardless of their insurability.
How Much Are You Really Spending?
What You Don’t Know Can Hurt You…

When was the last time you wrote down every stick of gum you bought, or every soda or car wash you purchased? If you’re like most people, you’ve probably never even thought of doing such a thing. Too tedious, right?

That’s what many of our Money Mastery clients think, too, so when we ask them how much they are actually spending each month, they can’t give us a straight answer. They offer a ballpark figure, but usually they’re way off the mark. “I have a general idea,” they say for example, “but how much could candy and soda really be costing me anyway? It’s just small change.” The problem is that when people don’t keep track of their actual spending, they end up wasting hundreds, even thousands of dollars they had no idea they were spending.

Take for example Stan and Arlene Harbrecht*. They desperately wanted to keep their daughter in college, but on their modest income, couldn’t find a way to do so. The Harbrechts came to Money Mastery for help. When Stan began tracking his spending, the results were shocking! His daily routine of stopping in 7-11 to talk with his trucking buddies and buy a Big Gulp was costing him more than $80 a month. When he combined this cost with all the other junk food he was buying, he realized he and Arlene could save as much as $154 a month if he quit hitting the convenience store every day.. Tracking changed the Harbrechts’ lives.

Multi-billion dollar sports associations know the value of tracking. The NBA, the NFL and other organizations keep very close track of each athlete’s playing statistics so that when it comes time to trade or negotiate contracts, they will know the exact value of that player. They also make these playing statistics known to the public to heighten awareness. This awareness creates interest, which in turn creates profits. A system of tracking is vital to any major corporation or organization that wants to stay in business. It should be absolutely necessary for you, too.

Besides feeling (without cause, we might add) that tracking is too tedious, people also resist tracking because they’re afraid to find out just exactly how bad their spending habits have become. Instead of really looking at themselves, they play mind games:

Game #1: Avoid balancing their checkbooks.
Game #2: Blame employers and/or think there isn’t enough money coming in.
Game #3: Claim they never dreamed anything could go wrong when emergencies hit.

If you’re playing any of these games with yourself, now is the time to take responsibility by having the courage to look at your real situation and face it head on.

Those who have become financially successful find power in tracking. That’s because they become aware of where they really place their priorities. They discover things about their spending habits, their emotional needs, and their actual monetary losses that they never knew before.

Does tracking have to be tedious or time-consuming? The truth is no. Here’s why:
  • A good system of tracking can take as little as seven seconds to record each transaction.
  • Examining your habits by recording every expense for a 30-day period will reveal your priorities and values. Rather than being tedious and boring, the experience will be highly emotional and will actually motivate you to make some serious changes that you wouldn’t have felt compelled to do otherwise.
One final thought on tracking. If you think you’re already living on a tight budget and therefore don’t need to track your spending, we strongly encourage you to put that notion aside. If you aren’t tracking the small purchases as well as the big expenses, you cannot get a real feel for how much money you actually have.

A good system of tracking is like a rudder on a boat. It helps steer you in the direction you want to go, not in the direction that mindless spending will take you. A good system of tracking helps you eliminate the “spend as you go” and “month-to-month” attitudes that stamp out financial freedom. We cannot emphasize enough the power that tracking your spending will bring into your life.

Adopting a system like the one Money Mastery offers will bring huge rewards both financially and emotionally. Learn to love keeping track of your money. For more information on tracking, register for a free account to download the full text of MONEY: What Financial "Experts" Will Never Tell You.

* Names have been changed to protect privacy.

Emotional Investment Behavior
Studies have recently come to show that investors over the last 30 years have been very emotional, pulling out of the market right when they should have stayed in, and going into the market right when they should have held out. As they tracked those who had a systematic approach where emotions played no part of it, the decisions were based on a strategy that was in writing, rules that were to be adhered to, over this long period of time they received about an 8% gain on their money per year. Whereas those that were managing their funds, looking at different reports, and emotionally involved, making decisions on emotion not on rules they established, actually got half that, a 4% return, clearly indicating that we have tremendous value in having a system, rules, things that actually help us to control our emotions so that we can make good decisions, and make them prior to when we have emotions running rampant.

In relationship to our spending, which we've purported Money Mastery for many years, is to prepare your spending plan for the future and stay to it. Track it, compare, and check your emotion back at the door so that when you're right in the middle of your spending, you've already prescribed what it is that you are going to spend it on and why and when, rather than willy nilly. We find that this emotional spending and emotions play a huge part in whether we're successful with our money and/or our investments.