Money Musings 💠you can’t outearn it
What you’ll find below:
Reflection: Why we all need a budget
Money Move: Major budget win - map out medical expenses
You Gotta See This: Celebrate Black History Month!
Reel of the Week: Little luxuries not to take for granted
Over the last 14 years, I’ve gone behind the scenes with hundreds of people and dug into their bank and credit card statements.
I’ve worked with people making $30K per year. I’ve worked with people who make millions per year.
I have good news and bad news.
What I’ve found is that no matter how much money someone earns, there's a 99% chance they will need to put together a spending plan in order to feel clear about their goals.
You might think that if you just made more money or millions, you’d easily reach your goals and could let go of the tedious work of budgeting.
In my experience, that’s not the case.
No matter how much we earn, expenses can very easily swell to fill our bank accounts. And if we don’t have a plan, we might not be sure how much we can save or if we are even making progress.
The good news? I’m going to show you exactly how to do it.
First, here are some reasons to put together a spending plan.
You want to understand how much you are spendingYou want to know how much you can afford to put towards your goalsYou want to increase the amount of money you put towards your goalsYou know there are ways you could decrease spending (and increase contributions to your goals) but you’re not sure howYou just want some clarity and organization for your money inflows and outflowsYou are looking for some peace of mind
Here’s a template and it comes with an explainer video including the most common questions I get!
Please forward this email to friends who are interested in improving their financial well-being.
P.S. I call budgets and spending plans “happiness allocations” because I think it’s a more fun and fitting term. It’s how we’re going to put our money to work in the ways that will make us the happiest in the short and long term.
MONEY MOVE OF THE WEEK
MAP OUT YOUR MEDICAL EXPENSES FOR 2024.
One area of our budgets that can feel pretty unpredictable yet significant, is our health and medical costs. 🏥 While the plan probably won’t be perfect, it’s better to try and get close than to avoid it completely.
Here’s how I do it:
KNOW YOUR DEDUCTIBLE. This is the amount of money you’ll have to pay out of pocket before your health insurance starts paying for bills. Given we’re a family of four with weekly appointments like therapy and OT, we hit our deductible early on. Others might never hit this number.
WHAT HAPPENS AFTER YOU HIT YOUR DEDUCTIBLE? For many, once you hit your deductible there’s coinsurance. Meaning, your health insurance covers 80% of the cost (or insert your %) and you pay the remainder (20% in this case). I know that my weekly therapy will cost $175 until I hit my deductible and then it will cost $35 ($175 x 20%) until I hit my in-network maximum out of pocket (let's call it "in-network max" for short and I explain what it is below).
KNOW YOUR MAX OUT OF POCKET NUMBERS. Your in-network max is the most you’ll pay for in-network medical expenses in a year and the out-of-network max is the most you’ll pay for out of network expenses. If you commonly hit your max, that’s what you’ll budget for each year. Even if you don’t, it’s still an important number to know as a worst case scenario (think emergency fund!).
MAP OUT YOUR MEDICAL EXPENSES. There might be some medical expenses you can plan for - i.e. therapy, PT, a planned surgery, or any regularly scheduled appointments. You can start by planning to pay for each item in full until your total reaches the deductible. It looks like we’ll reach ours in March and then our coinsurance will kick in. This doesn’t have to be exact but it’s helpful to have an idea for cash flow planning (i.e. when you’ll have to spend the money).
Take a look at last year’s expenses to see if there is anything you missed. If you end up paying $150 each year at the eye doctor, you’ll want to factor that in.
DON’T FORGET YOUR FSA OR HSA. If you participate in a flexible spending account or health savings account you’ll want to account for those reimbursements in your budget. For example, if contribute the max to your HSA, you might want to leave some in (yes, tax-advantaged investment growth! 🥳) but you might also want to use some to lessen the burden of your medical expenses. If you plan to use $1,000 from the account, add in a line for reimbursements to your budget.
I know that mapping out medical expenses can feel complicated and messy. If you have questions, hit reply and let me know. I can create more resources!
You gotta see this
CELEBRATE BLACK HISTORY MONTH.
Black History Month is a wonderful opportunity to celebrate the incredible contributions and history of the Black community. For non-Black folks it’s also an opportunity to support Black-owned businesses and learn from Black creators.
Support a Black-owned business. Great lists here and here!
Learn about history. Check out one (or many) of these movies.
Support Black authors and creators (here are some of our favorite personal finance creators!).
Attend an online or local event.
your weekly money wins
Here are all the amazing money moves you made this week:
Rose: I've been making my own meals.
Maria A: Bonus hit. Paid off credit card, made a small dent in student loans and added to savings
Andrea J: Paid off 1 credit card, 2 personal loans, and part of another credit card!
Janet D: Retired: Taking 4% out of my 401(k) in a 25% growth year
Christina G: Been making my own coffee in the mornings. Only spent $$$ at Starbucks twice in all of January
Stephanie: Started a monthly money date with my husband
Allison: Rolled over traditional and Roth 401(k)s
Kelly J: Stayed in budget for January and I'm 2 months away from paying off 1 student loan
Sara W: Got a new client!!!
Hannah: Transferred $$$ from Group RSPP to Self-Directed RSPP (like a 401(k) => IRA I think)
Melissa B: Made a toddler quilt from scrap material instead of buing more material!!!
Renee: Just paid off my first car I purchased on my own in December. First month without a car payment!
Scarlett: Work bonus, bank switch, 3/yo savings and pension account opened
Aidyl: Opened up a Roth, plan to put $500 in monthly
MR: Moved $1,000 into a high yield savings account
Kayla: Made it 1 month without going to my overspend stores! Here's to going at least one more!