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.
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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.
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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.
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